AA025 PYQ 2015 - 2014 (ANS) by Section

KMP SUGGESTED ANSWER – PSPM AA025 SESSION 2014/2015
SECTION A
(a)
Elements Managerial Accounting Financial Accounting
Purpose of report Assist internal users in Assist external users in
decision making decision making
Type of report Internal reports Financial Statements

according to the needs of
the management. General report, bounded
by the rules
Detailed, not bounded by
the rules
Frequency of report According to the needs of Interim and yearly
the management (periodic)
Type of users Internal users External users
(b)
i) Direct Materials: Rattan
ii) Direct Labour: Carpenter’s wages
iii) Factory Overhead: Factory machine insurance
Factory repair
Factory supervisor’s salary
Glue, nail and paint
iv) Period Costs: Salesperson’s salary
Administrative Expense
(c) CVP Assumptions:

- Fixed and variable cost can be identified
- The selling price is fixed
- Cost and revenues are linear
- Units sold are equal to units produced
(d) Actual overhead: Overhead actually involved in the current period
Budgeted overhead: Overhead costs over the coming period
Applied overhead: Overhead charged at the level of actual activity
SECTION B
QUESTION 3
(i) Predetermined Overhead Rate
Cutting Department Assembling Department

= Estimated Overhead = Estimated Overhead x 100
Estimated Direct Labour Hours Estimated Direct Labour Cost
= RM360,000 = RM54,000 x 100
60,000 hours RM90,000
= RM6.00 per hour = 60% of direct labour cost
Page 1
(ii)
Cutting Department Assembling Department
Applied Overhead (RM6 x 4,000 hours) RM24,000 Applied Overhead (60% x RM8,000) RM4,800
(-) Actual Overhead RM28,000 (-) Actual Overhead RM4,000
Underapplied overhead RM 4,000 Overapplied overhead RM 800
(ii) Cutting Department:

Jan 31 Dr. Cost of goods sold 4,000
Cr. Manufacturing Overhead 4,000
(To record adjustment of underapplied overhead)
Assembling Department:
Jan 31 Dr. Manufacturing Overhead 800
Cr. Cost of goods sold 800
(To record adjustment of overapplied overhead)
(iv)
Costs Cutting Department Assembling Department Total
(RM) (RM) (RM)
Material Cost:
Nyatoh Wood 1,600
Kitchen 2,400
Oven 3,400
Total 1,600 5,800 7,400
Direct Labour:
RM45 x 50 hours 2,250
RM30 x 20 hours 600
Total 2,250 600 2,850
Applied Overhead
RM6 x 50 hours 300
60% x RM600 360
Total 300 360 660
Manufacturing Cost for Job D24 10,910
QUESTION 4
(i)
Absorption Costing Marginal Costing
Direct Materials RM24 RM24
Direct Labour RM11 RM11
Variable Manufacturing Overhead RM10 RM10
Fixed Manufacturing Overhead RM25 -
Total Manufacturing Cost per pair RM70 RM45
(ii) (a)
Beginning Inventory = 9,000 – 7,000 = 2,000

Ending Inventory = (2,000 + 7,000) – 8,000 = 1,000
Page 2
D’rine Chanteque Sdn. Bhd.

Statement of Comprehensive Income – Absorption Costing
for the month ended 28 February 2015
RM RM
Sales (8,000 x RM120) 960,000
Less: Cost of Goods Sold

Beginning Inventory [2,000 x RM70] 140,000
(+) Cost of Goods Manufactured (7,000 x RM70) 490,000
Cost of Goods Available For Sale 630,000
(-) Ending Inventory [1,000) x RM70] (70,000)
Cost of Goods Sold 560,000
(+) Underapplied Manufacturing Overhead *50,000
Adjusted Cost of Goods Sold (610,000)
Gross Profit 350,000
Less: Operating Expenses

Fixed Administrative Cost (36,000/12) 3,000
Commission Expense (RM960,000 x 5%) 48,000
Total Operating Expense (51,000)
Net Income 299,000
* Over/ Under-applied Manufacturing Overhead:

Applied Fixed Manufacturing Overhead (RM25 x 7,000) = RM175,000
Forecasted Fixed Manufacturing Overhead [RM25 x (108,000/12)] = RM225,000**
Underapplied Manufacturing Overhead = RM 50,000
** Forecasted manufacturing overhead is to be/ should be used as actual fixed

manufacturing overhead in this calculation because at the beginning of the year, actual
information has not yet been obtained.
[In industrial practice, there is no over or underapplied variable manufacturing overhead.

Therefore, if the question is silent, the applied and actual/forecasted variable manufacturing
overhead is the same]
(ii) (b) D’rine Chanteque Sdn. Bhd.

Statement of Comprehensive Income – Marginal Costing
for the month ended 28 February, 2015
RM RM
Sales (8,000 x RM120) 960,000
Less: Variable Costs

Cost of Goods Sold:
Beginning Inventory (2,000 x RM45) 90,000
(+) Cost of Goods Manufactured (7,000 x RM45) 315,000
Cost of Goods Available For Sale 405,000
(-) Ending Inventory (1,000 x RM45) (45,000)
Cost of Goods Sold 360,000
Commission Expense (RM960,000 x 5%) 48,000
Total Variable Costs (408,000)
Contribution Margin 552,000
Less: Fixed Cost
Page 3
Forecasted Fixed Manufacturing Overhead [RM25 x (108,000/12)] 225,000

Fixed Administrative Cost (36,000/12) 3,000
Total Fixed Costs (228,000)
Net Income 324,000
(iii) Net profit adjustment for both methods
Net profit for Absorption Costing RM299,000

(+) Fixed overhead in beginning inventory (2,000 x RM25) RM 50,000
(-) Fixed overhead in ending inventory (1,000 x RM25) RM(25,000)
Net profit for Marginal Costing RM324,000
QUESTION 5
(i) (a)
APAQ SPAQ SPSQ
Direct Material Price Variance Direct Material Quantity Variance
4.30 4.50 (220,000) 4.50 (10 x 21,000)
(220,000)
= 946,000 = 990,000 = 945,000
RM44,000 F RM45,000 U
(i) (b)
ARAH SRAH SRSH
Direct Labour Rate Variance Direct Labour Efficiency Variance
7.20 (61,500) 7 (61,500) 7 (3 x 21,000)
= 442,800 = 430,500 = 441,000
RM12,300 U RM10,500 F
(i) (c)
ARAH SRAH SRSH
Variable Overhead Expenditure Variable Overhead Efficiency
Variance Variance
178,200 4 (61,500) 4 (3 x 21,000)
= 246,000 = 252,000
RM67,800 F RM6,000 F
(i) (d)
ARAH SRBH SRSH
Fixed Overhead Budget Variance Fixed Overhead Volume Variance
110,000 2 (3 x 20,000) 2 (3 x 21,000)
= 120,000 = 126,000
RM10,000 F RM6,000 F
Page 4

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KMP SUGGESTED ANSWER – PSPM AA025 SESSION 2014/2015

Type of report Internal reports Financial Statements

(c) CVP Assumptions:

(d) Actual overhead: Overhead actually involved in the current period

Budgeted overhead: Overhead costs over the coming period

Applied overhead: Overhead charged at the level of actual activity

(i) Predetermined Overhead Rate

Cutting Department Assembling Department

(ii) Cutting Department:

Beginning Inventory = 9,000 – 7,000 = 2,000

D’rine Chanteque Sdn. Bhd.

Less: Cost of Goods Sold

Less: Operating Expenses

* Over/ Under-applied Manufacturing Overhead:

** Forecasted manufacturing overhead is to be/ should be used as actual fixed

[In industrial practice, there is no over or underapplied variable manufacturing overhead.

(ii) (b) D’rine Chanteque Sdn. Bhd.

Less: Variable Costs

Less: Fixed Cost

Forecasted Fixed Manufacturing Overhead [RM25 x (108,000/12)] 225,000

(iii) Net profit adjustment for both methods

Net profit for Absorption Costing RM299,000

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