MAF451/SOLUTION/JUNE 2016
SUGGESTED SOLUTION MAF451 (JUNE 2016)
QUESTION 1: Answer
(a) Using Traditional costing method
Products Boboi Boy Yaya Yah Adu Du
(RM) (RM) (RM)
Direct material cost per unit 28.00 24.00 30.00
Direct labour cost per unit 15.00 20.00 20.00
Manufacturing overhead:
RM6.50 per machine hour 16.25 16.25 9.75
Unit Product Cost: 59.25 60.25 59.75
Working: If students answer for Manufacturing OH is wrong then see the working and
give tick accordingly (maximum tick = 6 only)
Total machine hours:
Products Boboi Boy Yaya Yah Adu Du
Annual production and sales unit 82,000 55,000 45,000
x Machine hours per unit 2.5 hours 2.5 hours 1.5 hour
Total machine hours: 205,000 137,500 67,500
Total machine hours: 410,000 hours
Overhead absorption rate using machine hour basis:
= RM2,665,000 = RM6.50 per machine hour
410,000 mhrs
(12 x ½ mark = 6 marks)
(b) Using ABC system:
Computation of cost driver rate:
Activity Cost (RM) Cost Driver volume Cost Driver Rate
Machine set-up 160,000 200 production runs RM800 per run
Machining 1,025,000 410,000 mach. hours RM2.50 per hour
Receiving 400,000 500 receipts RM800 per receipt
Packaging 600,000 400 deliveries RM1,500 per delivery
Quality control 480,000 120 inspections RM4,000 per inspection
Products Boboi Boy Yaya Yah Adu Du
(RM) (RM) (RM)
Direct material cost 2,296,000 1,320,000 1,350,000
Direct labour cost 1,230,000 1,100,000 900,000
Prime cost: 3,526,000 2,420,000 2,250,000
Manufacturing overhead:
Machine set-up 56,000 48,000 56,000
Machining 512,500 343,750 168,750
Receiving 144,000 128,000 128,000
Packaging 210,000 195,000 195,000
Quality control 160,000 120,000 200,000
Total production cost: 4,608,500 3,254,750 2,997,750
Cost per unit: 56.20 59.18 66.62
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MAF451/SOLUTION/JUNE 2016
(28 x ½ mark = 14 marks)
OR
Products Boboi Boy Yaya Yah Adu Du
(RM) (RM) (RM)
Direct material cost 28.00 24.00 30.00
Direct labour cost 15.00 20.00 20.00
Prime cost: 43.00 44.00 50.00
Manufacturing overhead:
Machine set-up 0.68 0.87 1.24
Machining 6.25 6.25 3.75
Receiving 1.76 2.33 2.84
Packaging 2.56 3.55 4.33
Quality control 1.95 2.18 4.44
Cost per unit: 56.20 59.18 66.62
(c) Discuss the result:
Traditional costing applies a blanket rate over the overheads absorbed, result above
showed Overhead Absorption rate is RM6.50 per machine hour to the products.
Whereas, ABC justifies that products which have a high consumption of certain activities
should be charged accordingly as show in (b).
Or any other accepted answer.
(6 x ½ mark = 3 marks)
(Total = 23 marks)
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MAF451/SOLUTION/JUNE 2016
QUESTION 2 : Answer
2 (A)
a. Cost per unit = 57,150 √ – (750 √ x 0.20 √)
15,000 √ – 750 √
= 57,000 ÷ 14,250
= RM4.00 per unit
Total cost transfer to process N = 14,000 √ x 4.00 of√
= RM56,000√
(√8 x ½ = 4 marks)
b. Preparation of Process N Account
PROCESS N ACCOUNT
OWIP 2,000 6,000√ Finished goods 13,500√ 134,183
From Process M 14,000 56,000 Normal loss 800√ 1,200√
Additional material 38,875√ Abnormal loss 200√ 2,059
Conversion cost 48,150√ CWIP 1,500√ 11,582
16,000 149,025 16,000 149,024
Statement of Equivalent Units and Cost per Equivalent Units
Output Units From Process M Add. material Convers. cost
OWIP 2,000 - - 800√
CPDP 11,500 √ 11,500 11,500 11,500
Normal loss 800 √ 800 800 800
Abnormal loss 200 √ 200 200 200
CWIP 1,500 1,500 √ 1,050 √ 750 √
Equivalent units 14,000 13,550 14,050
Cost 56,000 √ 38,875 √ 48,150 √
Cost per equivalent units 4.00 √ 2.869 √ 3.427 √
Statement of Evaluation
Output From Process G Add. material Conversion cost Total
OWIP - - (800 x RM3.427) √ 2,742
CPDP (13,500 x RM10.296) 118,404 √
Normal loss (800 x RM10.296) 8,237 √
Normal loss scrap value (1,200) √
NL to FG 7,037
Abnormal loss (200 x RM10.296) 2,059 √
CWIP (1,500 x RM4.00) (1,050 x RM2.869) (750 x RM3.427)
6,000 √ 3,012 √ 2,570√ 11,582
Cost of Finished goods:
OWIP – b/f 6,000 √
OWIP – current 2,742 √
CPDP 118,404 √
NL to FG 7,037 √
134,183√
(√ 34 x ½ = 17 marks)
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MAF451/SOLUTION/JUNE 2016
2 (B)
a. Calculation of net joint costs
Material input cost 45,500√
Conversion cost 25,000√
Normal loss scrap value (10% √ x 10,000 √ x 2.00 √) (2,000)
Net Realisable value of WW (5%√ x 9,000 √√ x 1.20 √√) (540)
67,960
(10√ x ½= 5 marks)
b. Allocation of joint costs:
Product Units Workings Alloc. Joint Costs
X1 0.65 x 9,000 = 5,850 (5,850/8,550) x 67,960 46,499 √
√√
X2 0.30 x 9,000 = 2,700 (2,700/8,550) x 67,960 21,461 √
√√
8,550 √ 67,960√
(√ 8 x ½ = 4 marks)
(Total: 30 marks)
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MAF451/SOLUTION/JUNE 2016
QUESTION 3 : Answer
3 (A)
a (i) Calculation of variable cost per unit
RM
Steel Sheet (1.2 x RM5.00) 6.00 √√
Material M (1 x RM4.15) 4.15 √
Direct labour (20/60 x RM12.00) 4.00 √√
Variable overhead (115% x RM 4.00) 4.60 √√
Variable cost per unit 18.75 √
(ii) BEP (units) = RM75,000 √ ÷ (RM25.00 – RM18.75)
= 12,000 units √
BEP (value) = 12,000 x RM25.00 √
= RM300,000 √
MOS (unit) = 25,000 √ - 12,000
= 13,000 units √
MOS (value) = 13,000 x RM25.00 √
= RM325,000 √
(iii) Profit = Contribution Margin – Total Fixed Cost
= [(RM25.00 – RM18.75) √ x 25,000√ ] – RM75,000√
= RM81,250 √
(20√ x ½ = 10 marks)
b. Direct labour rate increase to RM15 per hour
Material steel 6.00
Other material 4.15
Direct labour (20/60 * 15.00) 5.00 √
Variable overhead (115% x 5.00) 5.75 √
New variable cost per unit 20.90
New BEP = RM75,000 √ = 18,293 units √
(25 – 20.90)
(4√ x ½ = 2 marks)
c. New variable cost per unit = RM12.75 √ + (1.2 x RM4.50) √ = RM18.15
New total fixed cost = RM75,000 + RM15,430 = RM90,430 per year √
Target profit = RM100,000 per annum
Target sales = RM90,430 + RM100,000 √
(RM25.00 – RM18.15 ) √
= 27,800 units √
(6√ x ½ = 3 marks)
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MAF451/SOLUTION/JUNE 2016
3 (B)
a. Computation of WACM:
Product S/Price Var Cost CMU Weightage WACM
Hishope 95.00 64.00 31.00 √ 0.45 13.95 √
Modbox 80.00 59.00 21.00 √ 0.25 5.25 √
Hermo 125.00 96.00 29.00 √ 0.30 8.70 √
27.90
BEP (units) = 750,000 √ ÷ 27.90 = 26,882 units √
Total break even units = 26,882
Product Weightage Units Selling Total Revenue
Price (RM) (RM)
Hishope 0.45 12,097 √ 95.00 1,149,215 √
Modbox 0.25 6,720 √ 80.00 537,600 √
Hermo 0.30 8,065 √ 125.00 1,008,125 √
26,882 2,694,940
(14√ x ½= 7 marks)
b. Limitations of CVP Analysis:
1. The separation of total costs into fixed and variable element can be difficult. √√
2. Fixed cost are not likely to stay constant as output increases beyond a certain
range of activity. √√
3. Other factors apart from volume (inflation, efficiency, technology, capacity) may
affect costs. √√
(Any 2 acceptable limitations x 1 mark each = 2 marks)
(Total: 24 marks)
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MAF451/SOLUTION/JUNE 2016
QUESTION 4 : Answer
a. i) Product cost per unit:
MC (RM) AC (RM)
Direct Material 25 25
Direct labour 13 13
VPOH 7 7
FPOH [264,000 ÷ 66,000] 4
45 49
ii) Marginal Costing Approach Profit Statement for the Month of May 2016
RM RM
Sales (60 x 5,800) 348,000
(-) VCOGS:
O/S (200 x 45) 9,000
(+) prod. (6,000 x 45) 270,000
(-) C/S (400 x 45) (18,000) (261,000)
Gross Margin 87,000
(-) Other VC- selling (5 x 5,800) (29,000)
Contribution 58,000
(-) Fixed costs: Production (264,000 ÷ 12) (22,000)
Admin (72,000 ÷ 12) (6,000)
Net profit 30,000
Absorption Costing Approach Profit Statement for the Month of May 2016
RM RM
Sales (60 x 5,800) 348,000
(-) VCOGS:
O/S (200 x 49) 9,800
(+) prod. (6,000 x 49) 294,000
(-) C/S (400 x 49) (19,600) (284,200)
Gross profit 63,800
(-) variable selling OH (5 x 5,800) (29,000)
Fixed Admin (72,000 ÷ 12) (6,000)
Unadjusted net profit 28,800
+ over absorbed 2,000
Adjusted net profit 30,800
Working: OAR fixed OH=264,000 ÷ 66,000 = 4
OH incurred (264, 000 ÷ 12) 22,000
(-) OH absorbed (6,000 x 4) 24,000
Over absorbed 2,000
(38x ½ = 19 marks)
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MAF451/SOLUTION/JUNE 2016
b. Reconciliation
RM
Marginal costing profit 30,000
(-) Opening stock (200)
(+) Closing stock 400
Increase in stock 200 x 4 800
Absorption costing profit 30,800
(4x ½ = 2 marks)
c. Advantages of MC approach:
a. Separation of fixed and variable costs helps to provide relevant information about
costs for making production decisions. Relevant costs are required for variety of
short-term decisions.
b. MC approach avoids fixed production overhead being capitalized in unsold stocks.
(4x ½ = 2 marks)
(Total: 20 marks)
