MAF 451 COSTS AND MANAGEMENT ACCOUNTING

SEMESTER 2 SESI 2018/2019

TUTORIAL 1: COST CLASSIFICATION

QUESTION 1

A. Briefly explain the following items. Give two (2) examples for each.
i) Fixed cost
ii) Variable cost
(4 marks)

B. Sunsun Sdn Bhd is a confectionery company producing chocolate. The information below
is related to the production of chocolate for the second quarter of 2014.

COST RM
Dairy milk and cocoa powder 13,000
Depreciation on plant and equipment 6,000
Direct labour wages 12,000
Depreciation on salesman motor vehicle 1,400
Indirect labour wages 3,000
Salesman commission 5,000
Production supervisors salary 8,000
Rental of office space for administrative personnel 2,500
Cost of delivery of direct material to factory 4,650

Required:

Calculate the following costs by listing the details of the item:

i) Total Prime Cost

ii) Total Conversion Cost
iii) Total Product Cost
iv) Total Period Cost
(4 marks)
(Total: 8 marks)
QUESTION 2

A. Identify the behavior of the following costs:

Cost Fixed or Variable

Advertising cost
Sugar used in producing soft drinks
Store keeper salary
Salesman commission
Royalty paid to author of the book ‘Cost and
Management Accounting’
Wages for production workers
Road tax paid for the company vehicles
Production manager salary
(4 marks)

1
B. Delima Sdn Bhd is a company that produces children’s wear. The information below is
related to the production of children t-shirt for the first quarter of 2014.

Cost RM
Advertisement in newspaper 500
Factory rental 6,000
Direct labour wages 10,000
General manager salary 7,500
Production manager salary 7,500
Depreciation on photostat machine 1,500
Cotton 15,000
Royalty for ‘Angry Bird’ character 3,000
Depreciation on sewing machine 3,000
Thread and button 1,500

Required:

Summarize the above costs in a form of cost statement by showing the Prime Cost,
Production Overhead, Production Cost, Administrative Cost and Selling Cost.
(4 marks)
(Total: 8 marks)

2
QUESTION 3 [MAF451 DEC 2017]

CIMA defines cost as “the amount of expenditure (actual or notional) incurred on, or attributable
to, a specified thing or activity”.

Required:

a. Explain briefly the following items.

i. Direct cost
ii. Indirect cost
iii. Conversion cost
(3 marks)

b. Sour Sweet Sdn Bhd is a manufacturer of a variety of frozen doughnuts such as

chocolate-heaven doughnuts, strawberry-burst doughnuts and vanilla-smooth
doughnuts. Below are the costs incurred by the company for January 2018:

Cost Item
Flour 20 bags of flour at RM55 per bag
Sugar 15 bags of sugar at RM70 per bag
Other direct materials RM1,500
The wages of production workers RM1,200 per worker per month for 5
workers
Supervisor’s salary RM1,700 per month
Depreciation expense of machinery RM2,400 per year
Administrative expenses RM1,500 per month

Classify the above costs into the following categories:

i. Prime costs per month

ii. Fixed costs per month
(7 marks)

3
QUESTION 4 [MAF451 JUNE 2017]

The costs for decision making can be broadly classified into two categories, namely cost of
behavior and relevant/irrelevant costs.

Required:

a. Briefly explain the following items. Give TWO (2) examples for each.

i. Cost of behavior
ii. Relevant and irrelevant costs
(6 marks)

b. The following information is available for IQ Pintar Study Center for the month of
April 2017.

Cost items
General administration staffs salaries RM800 per staff per month
Teaching staffs salaries RM1,200 per staff per month
Rental of shop lots RM2,000 per month
Depreciation of office furniture RM1,000 per month
Utilities RM1,500 per month
Stationeries RM10 per student per month
Printing RM 5 per student per month
Number of teaching staffs 6 staffs
Number of general administration staffs 2 staffs
Number of students 100 students

Calculate the total variable cost, total fixed cost and total cost per student.
(6 marks)

4
QUESTION 5 [MAF451 DEC 2018]

The classification of costs depends on the purpose for which costs are required. Cost is
required to ascertain profit, to prepare budgets and to make decisions.

Required:

a. Briefly explain three (3) types of behavior costs.

(6 marks)

b. The following are the costs incurred for the month of December 2018 by Salwani
Hair Saloon.

Costs Amount
(RM)
Hairstylists’ salary 1,600 per stylist per month
Assistant’s salary 800 per month
Rental of shop 2,000 per month
Shampoo 600 per month
Hair dye 500 per month
Business licence 480 per annum

Salwani hires two hairstylists and an assistant.

Compute the following costs for the month ended 31 December 2018:

i. Total variable cost

ii. Total fixed cost
(4 marks)