costing - Multimedia College

STUDENT IDENTIFICATION NO
MULTIMEDIA COLLEGE
JALAN GURNEY KIRI
54100 KUALA LUMPUR
FOURTH, FIFTH SEMESTER FINAL EXAMINATION, 2013/2014 SESSION
FIN2143 – COSTING
DIAW-E-F1/12, DIAW-E-F2/12
19 FEBRUARY 2014
2.00 PM – 5.00 PM
(3 Hours)
INSTRUCTION TO STUDENT
1.
This Examination paper has TWELVE (12) printed pages.
2.
This question paper consists of THREE (3) sections.
3.
Section
A
: Answer ALL questions.
Section
B : Answer SIX (6) questions ONLY.
Section
C
: Answer THREE (3) questions ONLY.
Please write all your answers in the Answer Booklet provided.
FIN2143
COSTING
SECTION A
:
OBJECTIVE QUESTIONS - (10 Marks)
INSTRUCTION
:
Answer ALL questions.
1.
2.
3.
19 FEBRUARY 2014
Which of the following are TRUE about Prime Cost?
A.
All cost incurred in manufacturing a product.
B.
The total of direct cost.
C.
The material cost of product.
D.
The cost of operating a department.
Which of the following would be classified as indirect labour?
A.
Assembly workers in a company manufacturing television.
B.
A stores assistant in a factory store.
C.
Plasters in a construction company.
D.
Audit clerk in a firm of auditor.
The times allowed for production of Product A are 120 hours. But the actual times taken
by the operator are 80 hours. Thus, bonus of 60% will be given for the saving of time by
the operator. The hourly rate is RM10 per hour. Calculate the total wages.
A.
RM1440
B.
RM1400
C.
RM1840
D.
RM1040
Continued...
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Page 2 of 12
FIN2143
4.
COSTING
19 FEBRUARY 2014
The effect of using last in, first out (LIFO) method of stock valuation rather than first in,
first out (FIFO) method in a period of rising prices is ________________.
5.
6.
A.
to report lower profit and lower value of closing stock
B.
to report higher profit and a higher value of closing stock
C.
to report lower profit and a higher value of closing stock
D.
to report higher profit and a lower value of closing stock
The objective of the Economic Order Quantity (EOQ) is to ensure that __________.
A.
the company never run out of stock
B.
the cost of being out of stock is minimized
C.
the combined cost of ordering and holding stock is minimized
D.
stock is purchased from suppliers are the cheapest price
A company uses the Economic Order Quantity (EOQ) model to establish re-order
quantities. The following information relates to the period :
Order cost
$25 per order
Holding cost
10% of purchase price = $4/unit
Annual demand
20,000 units
Purchase price
$40 per units
EOQ
500 units
Note: No safety stocks are held.
What are the total annual cost of stock (i.e the total purchase cost plus total order cost,
total holding cost)?
A.
RM22,000
B.
RM33,500
C.
RM802,000
D.
RM803,000
Continued...
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Page 3 of 12
FIN2143
7.
8.
9.
COSTING
19 FEBRUARY 2014
Indirect labour is a ____________.
A.
non – manufacturing cost
B.
raw material cost
C.
product cost
D.
period cost
Which of the following is NOT an element of manufacturing overhead?
A.
Sales manager’s salary
B.
Plant manager’s salary
C.
Factory repairman’s wages
D.
Product inspector’s salary
Constraint of Activities Based Costing:
A.
ABC's decision in pools cost used to determine overhead costs for products.
B.
Results in control on the ABC will reduce overhead.
C.
Overhead costs are identified based on the purpose of the variable costs such as
labor hours or machine.
D.
ABC influence weak decision making.
Continued...
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Page 4 of 12
FIN2143
10.
COSTING
19 FEBRUARY 2014
Mart Toop manufacturing company producing chips using job order costing system to
calculate the cost of contract customers. KUK1 is one of contract taken from the final
account. The costs involved were:
Direct material
RM 1,500
Direct cost
RM 3,500
Hour period is 230 hours of work in the contract KUK1, where 30 hours is overtime.
Overtime is calculated at a premium rate that is 30% of the basic salary of RM 25.00 per
hour. Calculate the cost of the contract KUK1 product.
A.
RM10,975
B.
RM10,000
C.
RM8,500
D.
RM6,500
Continued …
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Page 5 of 12
FIN2143
COSTING
SECTION B
:
SHORT QUESTIONS – (30 Marks)
INSTRUCTIONS
:
Answer SIX (6) questions ONLY.
19 FEBRUARY 2014
Question 1
Budgeting is a plan showing what and how resources are to be used over a specified time
period. List and explain FOUR (4) benefits of budgeting.
(5 Marks)
Question 2
Standard Costing is a planned cost per unit and can also be considered as expected or
predetermined cost per unit.
List FIVE (5) purposes of Standard Costing.
(5 Marks)
Question 3
Describe the differences between Management Accounting and Financial Accounting.
(5 Marks)
Question 4
List the users of accounting information.
(5 Marks)
Question 5
Distinguish the difference between Product Cost and Period Cost.
(5 Marks)
Continued …
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FIN2143
COSTING
19 FEBRUARY 2014
Question 6
Provide an example of each of the following item:
a)
Direct labour
b)
Indirect labour
c)
Direct materials
d)
Indirect material
e)
Direct expenses
(5 Marks)
Question 7
ABC costing is the abbreviation of Activity Based Costing.
a)
Explain what is ABC costing.
b)
Lists the comparison between traditional and ABC system.
(5 Marks)
Question 8
A business currently order 1000 unit of product X at a time. It has decided that it may be
better to use the Economic Order Quantity method to establish an optimal recording quantity.
Order cost
RM200 per order
Holding cost
8% of purchase price
Annual demand
12,000 unit
Purchase price
RM15 per unit
No safety stocks are held. Calculate the EOQ and explain what is the purpose of holding
stock.
(5 Marks)
Continued …
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Page 7 of 12
FIN2143
COSTING
SECTION C
:
LONG QUESTIONS – (60 Marks)
INSTRUCTIONS
:
Answer THREE (3) questions only.
19 FEBRUARY 2014
Question 1
A company is manufacturing 1,850 units of a product. The present costs and sales data are as
follows:
Selling price per unit
$15
Variable cost per unit
$6
Fixed costs
$ 4,000
The management is considering the following two alternatives:
1.
To accept an export order for another 210 units at $ 7 per unit. The expenditure of the
export order will increase the fixed costs by $ 500.
2.
To reduce the production from present 1,850 units to 600 units and buy another 400
units from the market at $ 6 per unit. This will result in reducing the present fixed costs
from $ 4,000 to $ 3,000.
a)
b)
c)
Calculate the company’s TOTAL COST:
i.
at the present situation (business as usual)
ii.
if the company choose alternative 1 (accept an export order)
iii.
if the company choose alternative 2 (to reduce the production)
Calculate the company’s PROFIT:
i.
at the present situation (business as usual)
ii.
if the company choose alternative 1 (accept an export order)
iii.
if the company choose alternative 2 (to reduce the production)
Which alternative should the management accept? Explain.
Continued …
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FIN2143
d)
COSTING
19 FEBRUARY 2014
Define the following:
i.
Sunk Cost
ii.
Opportunity Cost
(20 Marks)
Question 2
Understanding and identifying Breakeven Point is important in Cost-Volume-Profit Analysis.
a)
Write down the formula for Break-Even Point in RM, Contribution Margin and
formula to determine the unit sales required to achieve a target profit.
(6 Marks)
b)
There are two types of constructing (drawing) the Breakeven Chart. Draw TWO types
of the Break-Even Chart:
i)
Label the Cost and Units at the axis (create your own figure for cost and unit)
ii)
Show the line for Total Fixed Cost
iii)
Show the line for Total Cost
iv)
Show the line for Total Revenue (Total Sales)
v)
Show the Break-Even Point
vi)
Indicate the “loss area” and the “profit area”
vii)
Write down the formula for Break Even in units
(14 Marks)
Continued …
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Page 9 of 12
FIN2143
COSTING
19 FEBRUARY 2014
Question 3
Ishaq Ltd uses material Waz for production purpose. The following information on material
Waz is available:
PURCHASES
Jan 1 100 kg at RM1.50 per kg
ISSUES
March 4 80 kg
5 300 kg at RM1.56 per kg
6 140 kg
15 150 kg at RM1.60 per kg
18 130 kg
25 150 kg at RM1.70 per kg
20 110 kg
29 140 kg
Draw up a store ledger account and record the above transaction using the following method:
a) First-in-first-out (FIFO)
(6 Marks)
b) Weighted Average
(7 Marks)
c) Last-in-first-out (LIFO)
(7 Marks)
Question 4
Answer ALL questions below:
a)
Haikal worked 40 hours in the first week of March. The rate per hours is RM1.55. What
will be his gross wages?
(2 Marks)
Continued …
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FIN2143
b)
COSTING
19 FEBRUARY 2014
If Haikal produces 100 units. He is paid RM1.25 per unit. What will be his gross
wages?
(4 Marks)
c)
Haikal produces 38 units of product per day. He will be paid guaranteed minimum of
RM40 daily if output falls below 40 unit day. The rate per unit is RM1.15. What will be
his wages if he produces 39 units? What will be his wages if he produces 49 units per
day?
(4 Marks)
d)
Haikal produce 300 unit of output. The rates paid will be as follows :

Up to 100 units per day RM0.55 per unit

101-150 units per day RM0.63 per unit

151-200 units per day RM0.72 per unit

201-250 units per day RM0.76 per unit

251-300 units per day RM0.81 per unit
What will be his gross wages?
(4 Marks)
e)
The details given below relate to Haikal on Job no 11.
Direct wages rate per hours
RM 1.65
Time Allowed
30 hours
Time Taken
20 hours
Calculate the basic pay, the bonus paid at 50% of time saved and the total pay.
(6 Marks)
Continued …
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Page 11 of 12
FIN2143
COSTING
19 FEBRUARY 2014
Question 5
Shaquille Office Furniture Company manufactures executive desk, which are sold to various
office supply’s companies. The company’s accounting period is for the calendar year.
Table below is a list of account balances at the beginning and ending of the accounting period,
December 31, 2013. Using this data:
a)
Prepare Statement of Goods Manufactured for Shaquille Office Furniture Company.
(10 Marks)
b)
Income Statement for 2013 for Shaquille Office Furniture Company.
(10 Marks)
SHAQUILLE OFFICE FURNITURE COMPANY
Schedule of Selected Accounts
January 1, 2013 and December 31, 2013
Jan. 1, 2013
Raw Materials Inventory
Dec. 31, 2013
$60,000
$70,000
Work in Process Inventory
85,000
90,000
Finished Goods Inventory
300,000
350,000
Raw Materials Purchased
350,000
Direct Labor Used in Production
300,000
Depreciation, Factory
250,000
Taxes for Factory Building
22,000
Maintenance, Factory
10,000
Utilities, Factory
20,000
Supplies Used in Factory
4,000
Indirect Labor, Factory
200,000
Sales
3,100,000
Selling Expenses
200,000
Administrative Expenses
750,000
End of Page.
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