2010 DMG5034 - Individual Assignment Question 25082020

DMG5034 Management Accounting Tri 1, 2020/2021 Individual Assignment Question
DMG5034: MANAGEMENT ACCOUNTING

INDIVIDUAL ASSIGNMENT QUESTION
QUESTION 1
Azion Manufacturing is a company that produces two types of cleaning detergents, Sunny Clear
and Rosy Nice. Previously, Azion Manufacturing used single rate/ traditional costing system in
computing its product overhead costs. Mr. Yeong, the newly appointed Chief Finance Manager
decides to implement the Activity- Based Costing (ABC) system starting this year in computing
the product costs. Below is the information gathered relates to the cost production of 40,000
units of Sunny Clear Detergent and 50,000 units of Rosy Nice Detergent:
Sunny Clear Rosy Nice

Direct material cost RM15 per unit RM10 per unit
Direct labour hour 1 hour per unit 1 hour per unit
Wages rate RM10 per hour RM10 per hour
Mr. Yeong suggests the following cost pools to compute the overhead costs using the Activity-
Based Costing (ABC) system as stated below:
Activity Cost Cost Drivers Estimated Expected Usage

Pools Overhead Sunny Clear Rosy Nice
(RM)
Machine setups No. of setups 300,000 1,000 2,000
Mixtures No. of mixtures 180,000 600 900
Inspections No. of inspections 240,000 10,000 15,000
Instructions
(a) If the estimated total overhead costs are computed based on total direct labour hours,
compute the overhead costs for both products using the single rate / traditional costing
system. (4 marks)
(b) Based on answers in (a), compute the unit cost for each product using the single rate /
traditional costing system. (2 marks)
(c) Compute the activity rate for each activity cost pool. (4.5 marks)
(d) Determine the unit cost for each product according to the ABC system.
(8 marks)
(e) Comparing the answers in (b) and (d), which system is more appropriate to determine the
overhead cost for both products. Explain. (1.5 marks)
(Total: 20 marks)
QUESTION 2
1
FMS, ND, NDH, NHZ, SZA
Daniel Office Supplies shows the following data related to shipping costs for the first six months
of the year:
Month Numbers of Shipping Cost

Packages Shipped (RM)
January 100 1,200
February 120 1,300
March 125 1,350
April 130 1,500
May 110 1,400
June 90 1,100
Instruction
Compute the fixed and variable cost elements using the high-low method. (10
marks)
(Total: 10 marks)
QUESTION 3
In 2020, Oriental Company sold 800 units at RM500 each. Variable costs were RM250 per unit,
and fixed costs were RM200,000. The selling price is expected to increase by 10% for 2021 and
unit sold is 1,250 units. Oriental Company is tentatively planning to invest in equipment that
would increase fixed costs to RM255,000, while decreasing variable costs per unit by 12%.
Instructions
(a) Compute the break-even point in Ringgit Malaysia (RM) for the year 2020 by using
mathematical equation. (Show all workings). (4 marks)
(b) Compute the break-even point in Ringgit Malaysia (RM) for the year 2021 by using
mathematical equation. (Shows all workings). (6 marks)
(c) Compute the total sales in Ringgit Malaysia (RM) that the company need to generate, if
the company wish to earn net income of RM900,000 in the year 2021 by using
mathematical equation. (Shows all workings). (6 marks)
2
(d) Compute margin of safety in Ringgit Malaysia (RM) and in ratio for the year 2021.
(Show all workings). (4
marks)
(Total: 20 marks)
QUESTION 4
Bright Home Furniture is a well-known wooden display cabinet’s manufacturer in Seremban.

Given below are the budgeted sales for the first four months of the year 2020:
Month Unit to be produced

January 168
February 198
March 185
April 226
It requires 20 meters of wood to produce one unit of wooden display cabinet, at a cost of RM25
per meter. Assume that the company maintains an inventory of wood equal to 15 percent of the
next month's needs. At the beginning of the year, 980 meters of wood are on hand.
Instructions
(a) Prepare a Direct Materials Budget, in Ringgit Malaysia (RM), for the first quarter in year
2020. (Show all workings). (14 marks)
(b) Identify the SIX (6) benefits of budgeting. (6 marks)
(Total: 20 marks)
QUESTION 5
Detech Company developed the following standard costs for its product for 2019:
Detech COMPANY
Standard Cost Card
Cost Elements Standard Quantity × Standard Price = Standard Cost

Direct materials 4 kilograms RM 6 RM 24
Direct labor 2 hours 11 22
Variable overhead 2 hours 5 10
Fixed overhead 2 hours 3 6
RM 62
The company expected to work at the 130,000 direct labor hours level of activity and produce
65,000 units of product.
3
Actual results for 2020 were as follows:

 60,000 units of product were actually produced.
 Direct labor costs were RM1,250,000 for 125,000 direct labor hours actually worked.
 Actual direct materials purchased and used during the year cost RM1,386,000 for 277,200
kilograms.
 Total actual manufacturing overhead costs were RM900,000.
Instructions
Compute the following variances for Detech Company for 2020 and indicate whether the
variance is favorable or unfavorable.
1. Direct materials price variance. (4 marks)
2. Direct materials quantity variance. (4 marks)
3. Direct labor price variance. (4 marks)
4. Direct labor quantity variance. (4 marks)
5. Total overhead variance. (4
marks)
(Total: 20 marks)
QUESTION 6
Grand Scarf Company manufactures 3 products using the same production process. The costs
incurred up to the split-off point are RM20,000. These costs are allocated to the products on the
basis of their sales value at the split-off point. Data for the operation is as below:
Product Number of Selling Price Selling Price Additional

Units at Split-off after Processing Processing
Produced (per unit) (per unit) Costs
(RM) (RM) (RM)
Kate 2,000 6.20 11.00 11,000
Embun 3,000 7.70 12.50 8,000
Catalina 1,000 16.30 19.40 2,000
Instructions
(a) Prepare an incremental analysis for the sell-or-process-further decision.
(9 marks)
(b) Determine whether Grand Scarf Company should sell at split of point or
process further. (1 mark)
(Total: 10 marks)
(Grand Total 100 marks)
4

2010 DMG5034 - Individual Assignment Question 25082020

Uploaded by

Copyright:

Available Formats

2010 DMG5034 - Individual Assignment Question 25082020

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

2010 DMG5034 - Individual Assignment Question 25082020

Uploaded by

Copyright:

Available Formats

DMG5034 Management Accounting Tri 1, 2020/2021 Individual Assignment Question

DMG5034: MANAGEMENT ACCOUNTING

Sunny Clear Rosy Nice

Activity Cost Cost Drivers Estimated Expected Usage

Month Numbers of Shipping Cost

Bright Home Furniture is a well-known wooden display cabinet’s manufacturer in Seremban.

Month Unit to be produced

(b) Identify the SIX (6) benefits of budgeting. (6 marks)

Cost Elements Standard Quantity × Standard Price = Standard Cost

Actual results for 2020 were as follows:

Product Number of Selling Price Selling Price Additional

(Grand Total 100 marks)

You might also like