MAF451 – DEC 2015

MAF 451
SUGGESTED SOLUTION
____________________________________________________________________________
QUESTION 1

a)
Keir Mour
Volume 5,000 units 2,500 units
Total cost:
-DM per unit RM40√ RM50√
-DL per unit RM15√ RM20√
-OH cost per unit RM105 (35*3hrs) √√ RM52.50 (35*1.5) √√
Total cost per unit RM160 RM122.50
Selling price per unit RM205.00 RM280.00
Profit per unit RM45.00√ RM157.50√
(10√ x ½ marks = 5 marks)

b)
Keir Mour
Volume 5,000 units 2,500 units
Total cost:
-DM per unit RM40 RM50
-DL per unit RM15 RM20
-Overhead cost:
 Machine related 12/30* RM290,000 18/30*RM290,000
cost = RM116,000√√ = RM174,000√√
 Set up cost 50%* RM118,000 50%*RM118,000
= RM59,000√√ =RM59,000√√
 Quality control 1/2.5* RM246,000 1.5/2.5*RM246,000
= RM98,400√√ = RM147,600√√
 Purchase orders 750/1200* RM330,000 450/1200*RM330,000
= RM206,250√√ = RM123,750√√
Total OH cost RM479,650 RM504,350
-OH cost per unit RM95.93 RM201.74
Total cost per unit RM150.93√ RM271.74√
Selling price per unit RM205.00 RM280.00
Profit per unit RM54.07√ RM8.26√
(20√ x ½ marks = 10 marks)

c)
Product ‘Keir’ is overcosted√ and this tends to mislead the total profit earned√ for high volume product.
Meanwhile, product ‘Mour’ is undercosted√ and this will give problem to Ellipse Berhad when they
continue selling more of this product when actually it gives lower profit√ as compared to product ‘Keir’. It
is advisable for Ellipse Berhad to sell more of product ‘Keir’ as it provides higher profit.√
(5√ x 1 mark= 5 marks)
(TOTAL: 20 marks)
1
 MAF451 – DEC 2015

QUESTION 2
a)
Process MH
Qty CPU RM Qty CPU RM

Material 12,500 60,000√ To Process KJ 12,000√ 6.35 76,200√

DL & DE 15,500√ Normal Loss 625√ 0.20 125
Abnormal
Gain 125√ 6.35 794
12,625 76,325 12,625 76,325

Cost per unit = RM (75,500√ – 125√) / 12,500√-625√ = RM6.35 per unit

(10√ x ½ mark = 5 marks)
b)

Process KJ
Qty CPU RM Qty CPU RM
From Process KJ 12,000 6.35 76,200 Normal Loss 100 1 100√
OWIP 1,000 4,000√ Finished goods:
Add. materials 36,390√ -Multi 6,000√ 58,527√
Conversion cost 24,500√ -Ultra 6,000√ 73,158√
CWIP 700√ 7,035
Abnormal Loss 200√ 2,270
13,000 141,090 13,000 141,090

Statement of EU:
INPUT OUTPUT Transfer Material Conversion
to Process Cost
KJ
OWIP : 1,000 kg OWIP: 1,000 kg - 200 (20%)√ 600 (60%)√
Transfer KJ : 12,000 kg CPDP:11,000 kg√ 11,000 11,000 (100%) 11,000 (100%)
CWIP : 700 kg 700√ 630 (90%)√ 350 (50%)√
NL : 100 kg√ 100 100 (100%) 100 (100%)
AL : 200 kg√ 200 200 (100%) 200 (100%)
TOTAL : 13,000 kg 13,000 kg 12,000 kg 12,130√ 12,250√

Statement of Costs:
Transfer to Material Conversion
Process KJ Cost
Cost incurred 76,200 36,390√ 24,500√
(RM)
Equivalent units 12,000 12,130 12,250
(kgs)
CPU (RM) 6.35 3.00√ 2.00√ Total: RM11.35/ unit

2
 MAF451 – DEC 2015

Statement of Evaluation:
Transfer to KJ Material Conversion Cost Total (RM)
OWIP - 200@RM3 = 600√ 600@RM2 = 1,200√ 1,800
CPDP 11,000 kg x RM11.35 per unit 124,850√
CWIP 700 @ RM6.35 = 4,445√ 630@RM3 = 1,890√ 350@RM2 = 700√ 7,035
NL 100 kg x RM11.35 per unit 1,135√
AL 200 kg x RM11.35 per unit 2,270√
Transfer to finished goods = OWIP + OWIP b/d + CPDP + NET NL
= (1,800 + 4,000 + 124,850 + [1,135-100])
= RM131,685
(32√ x ½ = 16 marks)

c) .
Total joint cost: RM131,685
Allocation of joint cost;
Product Sales Value Joint Cost Allocation
(RM)
Multi 6,000@RM12=RM72,000√ 131,685@72/162√=58,527
Ultra 6,000@RM15=RM90,000√ 131,685@90/162√=73,158
Total =RM162,000 Total = 131,685

Net Profit / (Loss):

Product Sales-Process cost Profit/(loss)
Multi (RM12@6,000) – 58,527√ RM13,473√
Ultra (RM15@6,000) – 73,158√ RM16,842√
Total profit: RM30,315
(8√ x 1/2 = 4 marks)

d)
NORMAL LOSS ABNORMAL LOSS
Inherent loss based on normal production√ Uncommon loss occurred in the production
plan, unexpected event √
Can be sold at scrap value if have any When actual loss is higher than normal loss√
value√
Example: Example:
factory waste fire
evaporation process√ theft
machine breakdown√

(4 marks + examples 2 x 0.5 mark = 5 marks)

(Total: 30 marks)

3
 MAF451 – DEC 2015

QUESTION 3

a)

Total production cost per unit allocated for marginal and absorption costing approach are:

Absorption costing Marginal costing

Direct material-DM RM4√ Direct material-DM RM4√
DS RM3√ DS RM3√
Direct labour RM6√ Direct labour RM6√
Production overhead RM8√ Production overhead RM5√
RM21√ RM18√

(10√ x ½ marks = 5 marks)

c)

Profit Reconciliation Statement:

RM
MC Profit 1,810,000√√
(+) *Stock Increase (5,000units x RM3 ) 15,000√√
AC Profit 1,825,000√√

(6√ x ½ mark = 3 marks)

d)

The effect on net profit if:

i All chairs manufactured were sold:Net profit calculated for both methods are equal.√ √
ii The number of chairs sold was less than those manufactured in the period:
Net profit calculated using MC is lower than profit calculated using AC√√
iii The number of chairs sold was more than those manufactured in the period:
Net profit calculated using MC is higher than profit calculated using AC√√

(6√ x ½ mark = 3 marks)

4
 MAF451 – DEC 2015

b)
Absorption Costing Profit Statement for December 2014
RM RM
Sales (RM110 x 22,000 units) 2,420,000√
Less: Cost of goods sold:
Direct material - DM (RM4 x 27,000 units) 108,000√
Direct material - DS (RM3 x 27,000 units) 81,000√
Direct labour (RM6 x 27,000 units) 162,000√
Production overhead
VC (RM5 x 27,000 units) 135,000
FC (RM3 x 27,000 units) 81,000 216,000√
567,000
(-) Closing stock (RM21 x 5,000 units) (105,000)√ (462,000)
Gross profit√ 1,958,000
Less: Non production cost
Variable selling (RM1 x 22,000 units) 22,000√
Administrative (RM3 x 30,000 units) 90,000√√
Fixed selling 12,000√ (124,000)
Net Profit 1,834,000
Less : Under absorbed Fixed Production OH (9,000) √√
(RM3 x 27,000 = RM81,000 RM3 x 30,000= RM90,000)
Adjusted NP 1,825,000√

Marginal Costing Profit Statement for December 2014

RM RM
Sales (RM110 x 22,000 units) 2,420,000√
Less: Variable cost of sales:
Direct material - DM (RM4 x 27,000 units) 108,000√
- DS (RM3 x 27,000 units) 81,000√
Direct labour (RM6 x 27,000 units) 162,000√
Variable production overhead (RM5 x 27,000 units) 135,000√
486,000
(-) Closing stock (RM18 x 5,000 units) (90,000)√ (396,000)
Gross margin 2,024,000
Less: Other variable cost
Variable selling (RM1 x 22,000 units) (22,000)√
Contribution margin√ 2,002,000
Less: Fixed costs:
Production (RM3 x 30,000 units) 90,000√√
Administrative (RM3 x 30,000 units) 90,000√√
Selling 12,000√ (192,000)
NP 1,810,000√

(28√ x ½ = 14 marks)
(Total: 25 marks)

5
 MAF451 – DEC 2015

QUESTION 4

a)
RM per unit
Direct material (RM600,000/25,000 units) 24√
Direct labour (RM375,000/25,000 units) 15√
Variable production OH (RM175,000/25,000) 7√
Total variable cost per unit 46

Selling price per unit (RM1,850,000/25,000) RM74

Total fixed cost RM420,000

i. CM per unit = RM(74√-46√) = RM28√

ii. Total profit = RM1,850,000√ – (RM46 x 25,000 units)√ – RM420,000√
= RM280,000√
iii. BEP in units = RM420,000√ / RM28√ = 15,000 units√
BEP in RM = 15,000 units√ x RM74√ = RM1,110,000√
iv. Target sales = RM(420,000√ + 350,000√) / RM28√ = 27,500 units√
(20√ x ½ marks = 10 marks)
b)
Proposal 1
RM per unit
Direct material 24 √
New direct labour (15-3) 12 √
New variable production OH 5√
New variable cost 41

New fixed cost (420,000+75,000) RM495,000√

Profit = RM1,850,000 – (RM41 x 25,000 units) – RM495,000 = RM330,000 √

Proposal 2
RM per unit
New direct material (24 x 1.25) 30.00 √
New direct labour (15 x 1.25) 18.75 √
Variable production OH 7.00
New variable cost 55.75

New selling price per unit (74+18) RM92√

Profit =(RM92 x 25,000 units) – (RM55.75 x 25,000 units) – RM420,000 = RM486,250 √

Decision: Choose Proposal 2 √ as it gives a higher profit.

(10√ x ½ = 5 marks)

6
 MAF451 – DEC 2015

B.
a. WACM = (RM375* x 30%√) + (RM235** x 70%√)
= RM112.50 + RM164.50
= RM277
*
BHdetox = RM725 √ – (RM315√ +RM35√)
= RM375
**
Glutha = RM500 √– (RM245 √+ RM20√)
= RM235
(8√ x ½ = 4 marks)

b. BEP = FC ÷ WACM
= RM110,800 √ ÷ RM277 (of)√
= 400 unit √

BHdetox = 400 units x 30% = 120 unit x RM725 = RM87,000√

Glutha = 400 units x 70% = 280 unit x RM500 = RM140,000 √
Total = RM227,000 √

(6√ x ½ = 3 marks)

c. Sales = (FC + TP) ÷ WACM

= (RM110,800 √ + RM48,100 √) ÷ RM277 (of) √
= 700 units √

BHdetox = 700 units x 30% = 210 unit√

Glutha = 700 units x 70% = 490 unit√
(6√ x ½ = 3 marks)