UNIVERSITI TEKNOLOGI MARA

COMMON TEST

COURSE
:
INTRODUCTION TO COST ACCOUNTING
COURSE CODE
:
ACC116
EXAMINATION
:
NOVEMBER 2017
TIME
:
1 HOUR 30 MINUTES

INSTRUCTIONS TO CANDIDATES

1.

This question paper consists of TWO (2) questions.

2.
Answer ALL questions.

3.
Do not bring any material into the examination room unless permission is given by the invigilator.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 4 printed pages

QUESTION 1
A. Citra Clay Sdn Bhd produced exclusive and handmade ceramic plates. The company
expects to sell 350 plates for half of the year and the demand is expected to be
constant. One of the materials used to produce ceramic plates is white clay which is
supplied by Hidayah Supplies Enterprise. 1 kg of white clay produces about 10 plates

Currently, Citra Clay Sdn Bhd purchases 50 kg of white clay per order. Below are the
costs related to the purchase of white clay:

Cost of white clay per kg RM100 per kg

Requisition cost RM25 per order
Transportation cost RM10 per order
Receiving, inspecting and storing RM5 per order
Warehouse cost RM5 per kg
Insurance and breakage cost 10% of stock value

Required:

a. Determine the annual demand, cost per order and carrying costs per kg for the white
clay.

(4 marks)
b. Tabulate the relevant costs for order sizes of 20 kg, 40 kg and 60 kg of white clay.
Determine the economic order quantity (EOQ) and the total minimum cost.
(Please show your answer in two decimal places)
(8 marks)

B. Kilauan Sinar Berhad produces bracelets called Suci Hati. The exclusive bracelet is
produced with gemstone jewellery in Sterling silver and in beaded designs. The
gemstone used in producing Suci Hati is Ruby, which can be purchased from the
market. The production of Suci Hati bracelet is between 300 to 500 units per week.
Each Suci Hati bracelet requires 5 pieces of Ruby.

The Company usually purchases 6,000 pieces of Ruby at a time and the lead time of
purchases varies between 2 to 3 weeks.

Required: Calculate the followings for the gemstone:

a. Reorder level
b. Maximum stock level
c. Minimum stock level
(5 marks)

C. Busana Jelita Sdn Bhd imports clothing from Korea and resells it throughout Malaysia.
The company maintains a perpetual inventory and values its stock using First In, First
Out (FIFO) method.

The information below relate to their bestselling product, 'Kimchi Maxi Skirt'. Their
records disclosed that 6,000 units were in stock at the beginning of the current period,
where 5,000 units were valued at RM25.00 per unit, plus 1,000 units from delivery in
April 2017 when the cost was RM22.00 per unit. The following transactions took place
for May 2017:

2 Sold 5,500 units

5 Received 9,000 units at RM25.50 each
8 Sold 8,000 units
11 Stock returned to store 1,000 units at the latest issued price
17 Received 6,000 units at RM26.00 each
20 Sold 2,250 units
25 Received 4,000 units at RM27.00 each
28 Sold 8,500 units

Based on physical counting on 31 May 2017, there were 1,700 units of materials in the
store.

Required:

a. Prepare the store ledger card using First In, First Out (FIFO) method.
(16 marks)
 b. Briefly explain the terms 'perpetual inventory system' and 'continuous stocktaking
system'.
(2 marks)
(Total: 35 marks)

QUESTION 2

Masa Emas Sdn Bhd is a sole proprietor manufacturing men sport watches since 2000. The
skilled workers are paid using time-based method whilst the semi-skilled worker is being
paid based on piecework method. The business operates eight (8) working hours a day from
Monday to Friday.

The following information is obtained from the weekly time sheet of the workers for the first
week of October 2017.

Worker Category Total hours Total watches Rate per Rate per
worked produced (units) hour (RM) unit (RM)
Ali Skilled 50 90 12.00 -
Asna Skilled 42 85 15.00 -
Iskandar Semi-skilled 45 110 - 6.50
Sarah Semi-skilled 45 101 - -

Overtime premium is 75% of the regular rate if the worker works beyond the normal working
hours of 40 hours a week.

Iskandar and Sarah will be paid under the scheme of straight piecework and differential
piecework respectively. Both is offered with guaranteed minimum wage of RM2000 per
month.

Below is the scheme for differential piecework:

First 50 units RM3.00 per unit

51 – 70 units RM5.00 per unit
71 – 95 units RM7.00 per unit
96 units and above RM10.00 per unit

Required:

a. Calculate the total gross wages of each worker for the first week of October 2017.
(14 marks)
b. Define guaranteed minimum wage.
(1 mark)
(Total: 15 marks)
Solution – TEST ACC116

QUESTION 1

A. a. Annual demand = (350 plates/10 plates) x 2

= 70 kg

OC = RM25 + 10 + 5
= RM40

HC = RM5 + (10% x RM100)

= RM15
b.
Order quantity 20 40 60
Average stock 10 20 30
No of PO 3.5 1.75 1.17
Total OC (RM) 140 70 46.80
Total HC (RM) 150 300 450
Total costs (RM) 290 370 496.80
B. Kilauan Sinar

a. ROL = max usage x max LT

= (500 units x 5 pieces) x 3 weeks
= 7,500 pieces

b. Max SL = ROL - (min usage x min LT) + EOQ

= 7,500 – (1,500 pieces x 2 weeks) + 6,000 pieces
= 12,000 pieces

c. Min SL = ROL – (average usage x average LT)

= 7,500 – (2,000 pieces x 2.5 weeks)
= 2,500 pieces

C. SLC
KIMCHI MAXI SKIRT

Date Receipts Issues Balance

May Quantity CPU Amount Quantity CPU Amount Quantity CPU Amount
1 1000 22.00 22000
5000 25.00 125000
2 1000 22.00 22000
4500 25.00 112500 500 25.00 12500
5 9000 25.50 229500 500 25.00 12500
9000 25.50 229500
8 500 25.00 12500
7500 25.50 191250 1500 25.50 38250
11 1000 25.50 25500 2500 25.50 63750
17 6000 26.00 156000 2500 25.50 63750
6000 26.00 156000
20 2250 25.50 57375 250 25.50 6375
6000 26.00 156000
25 4000 27.00 108000 250 25.50 6375
6000 26.00 156000
4000 27.00 108000
28 250 25.50 6375
6000 26.00 156000
2250 27.00 60750 1750 27.00 47250
31 50 27.00 1350 1700 27.00 45900
(stock loss) (closing stock)

Question 2

Employee
Ali GW = (40 hrs x RM12.00) + (10 hrs x RM12.00 x 1.75)
= RM690

Asna GW = (40 hrs x RM15.00) + (2 hrs x RM15.00 x 1.75)

= RM652.50

Iskandar GW = 110 units x RM6.50 per unit

= RM715

GMW = RM500

 GW = RM715

Sarah GW = (50 units x RM3) + (20 units x RM5) + (25 units x RM7) + (6 units x RM10)
= RM485

GMW = RM500

 GW = RM500