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Wawasan OPEN UNIVERSITY The people’s university Academic Session 2021 January 2021 Semester ASSIGNMENT BAC301/03 Cost and Management Accounting INSTRUCTIONS TO CANDIDATES: 1

Accounting

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Wawasan

OPEN UNIVERSITY

The people’s university

Academic Session 2021

January 2021 Semester

ASSIGNMENT

BAC301/03 Cost and Management Accounting

INSTRUCTIONS TO CANDIDATES:

1. This assignment is the alternative assessment to replace the proctored examination.

2. Answer ALL questions.

3. You are allowed a maximum of one (1) attempt to submit your assignment.

4. The assignment will be made available from 15th March 2021, Monday (00:00) until 7th April 2021, Wednesday (23:59).

5. Completed assignment must be submitted by 7th April 2021, Wednesday (23:59).

Question 1)

Tak Lakoo sells only one product. The statement of comprehensive income for 2020 provided below.

	RM
Sales	50,000
Less variable expenses	(30,000)
Contribution margin	20,000
Less fixed expenses	(12,500)
Net income	7,500

 

Required:

Complete the statements below. Show relevant calculations.

(a) Contribution margin ratio is ____ %

(b) Breakeven point in total sales ringgits is RM ________

(c) To achieve RM40,000 in net income, sales must total RM _____

(d) If sales increase by RM50,000, net income will increase by RM _____

Question 2

Lintang Bistari manufactures and sells tablets and uses standard costing.

For the month of September 2020 there was no beginning inventory, there were 3,000 units produced and 2,500 units sold. The manufacturing variable cost per unit is RM385 and the variable operating cost per unit was RM312.50. The fixed manufacturing cost is RM450,000 and the fixed operating cost is RM75,000. The selling price per unit is RM925.

Required:

Prepare the income statement for Lintang Bistari for September 2020 under variable costing.

Question 3)

Perniagaan Angsana uses departmental cost driver rates to apply manufacturing overhead costs to products. Manufacturing overhead costs are applied on the basis of machine-hours in the Machining Department and on the basis of direct labor-hours in the Assembly Department. At the beginning of 2021, the following estimates were provided for the coming year:

	Machining	Assembly
Direct labour-hours	10,000	90,000
Machine-hours	100,000	5,000
Direct labor cost	RM 80,000	RM 720,000
Manufacturing overhead costs	RM 250,000	RM 360,000

 

The accounting records of the company show the following data for Job #846:

	Machining	Assembly
Direct labor-hours	50 dIh	120 dIh
Machine-hours	170 mh	10 mh
Direct material cost	RM 2,700	RM 1,600
Direct labor cost	RM 400	RM 900

 

Required:

(a) Compute the manufacturing overhead allocation rate for each department.

(b) Compute the total cost of Job #846.

(c) Provide possible reasons why the company uses two different cost allocation rates.

Question 4

Island Hospital Supplies planned to be in operation for three years.

• During the first year, 2019, it had no sales but incurred RM240,000 in variable manufacturing expenses and RM80,000 in fixed manufacturing expenses.
• In 2020, it sold half of the finished goods inventory from 2019 for RM200,000 but it had no manufacturing costs.
• In 2021, it sold the remainder of the inventory for RM240,000, had no manufacturing expenses and went out of business.
• Marketing and administrative expenses were fixed and totaled RM40,000 each year.

Required:

Prepare statements of comprehensive income for each year using

(a) Absorption costing.

(b) Variable costing.

Question 5

Fantasy Sdn Bhd manufactures two models of widgets, a standard and a deluxe model. The following activity and cost information has been compiled:

Product	Number of Setups	Number of Components	Number of Direct Labor Hours
Standard	3	30	650
Deluxe	7	50	150

 

Overhead costs RM40,000                RM120,000

Assume a traditional costing system applies the RM160,000 of overhead costs based on direct labor hours.

Required

(a) Calculate the total amount of overhead costs assigned to the standard model.

(b) Calculate the total amount of overhead costs assigned to the deluxe model.

Assume an activity-based costing system is used and that the number of setups and the number of components are identified as the activity-cost drivers for overhead.

Required

(c) Calculate the total amount of overhead costs assigned to the standard model.

(d) Calculate the total amount of overhead costs assigned to the deluxe model.

(e) Explain the difference between the costs obtained from the traditional costing system and the ABC system.