Singapore Institute of Management Cost & Management Accounting Discussion

DIPLOMA PROGRAMMESONLINE ASSESSMENT (MAIN)
Date
:
30 August 2022
Module
:
ACC0002 Cost and Management Accounting
Time
:
10:00 – 12:00
Duration
:
2 hours
Total no. of pages :
9 + 1 page of Formula Sheet
(including this cover page)
INSTRUCTIONS TO CANDIDATES:
1.
This examination contains FOUR (4) questions with a total of 100 marks. Answer
ALL questions.
2.
Students are required to write their answers for Questions 1 – 4 on A4 papers and take
pictures of the answers and convert to PDF format, combine them to one PDF file
and upload only the combined PDF file into the Dropbox.
3.
All answers must be clearly written. Please ensure that your workings are clearly
shown for all your answers. Begin each question on a fresh page.
4.
The use of non-programmable calculators IS permitted in this assessment.
5.
A ONE (1) – page Formula sheet is attached to the back of this assessment paper.
6.
This is a closed-book assessment. Please note that the answer script will be submitted
through Turnitin to detect plagiarism.
At the end of the assessment:
Please save the answer script using the file name ACC0002_XXXXX (where XXXXX is
your full name) and upload the answer script in Canvas.
SIM GLOBAL EDUCATION RESERVES THE RIGHT NOT TO MARK YOUR
Question 1SCRIPT IF YOU FAIL TO FOLLOW THESE INSTRUCTIONS.
DIPL/ACC0002/Aug2022/MainEQP
Page 1 of 10
Part A
At an activity level of 8,800 units, Palmer Corporation’s total variable cost is $146,520 and
its total fixed cost is $219,296.
Required:
For the activity level of 8,900 units (assuming that this activity level is within the relevant
range), compute:
(a)
the total cost and;
(5 marks)
(b)
the average total cost per unit.
(3 marks)
Part B
Shien Clothing applies manufacturing overhead to jobs on the basis of direct labour-hours.
The following information relates to the company for last year:
Direct labour hours
Estimated
15,000
Actual
14,800
Manufacturing overhead cost
$300,000
$287,120
Required:
What was Shien Clothing’s underapplied or overapplied overhead for last year?
(7 marks)
DIPL/ACC0002/Aug2022/MainEQP
Page 2 of 10
Part C
SIM Industrial Pte Ltd uses the weighted-average method in its process costing system.
Operating data for the first processing department for the month of May appear below:
Beginning work in process inventory
Started into production during May
Completed and transferred out
Ending work in process inventory
Units
500
9,700
9,100
1,100
Percent Complete with
Respect to Conversion
10%
75%
According to the company’s records, the conversion cost in beginning work in process
inventory was $2,100 at the beginning of May. Additional conversion costs of $376,400
were incurred in the department during the month.
Required:
(Note: Round your answers to 2 decimal places)
(a)
Calculate the equivalent units of production for conversion costs.
(5 marks)
(b)
Calculate the cost per equivalent unit for conversion costs.
(5 marks)
DIPL/ACC0002/Aug2022/MainEQP
Page 3 of 10
Question 2
Part A
I’kea Woods Pte Ltd manufactures two types of storage cabinets—Deluxe and Executive—
and applies manufacturing overhead to all units at the rate of $120 per machine hour.
Production information are as follows:
Direct material per unit
Direct labour per unit
Budgeted volume (in units)
Deluxe
$52.50
$30
8,000
Executive
$90
$30
15,000
The management accountant has determined that the firm’s overhead can be identified with
three activities: manufacturing setups, machine processing and product shipping. Data on
the number of setups, machine-hours and outgoing shipments, which are the activities’ three
respective cost drivers, are given below:
Expected Activity
Estimated
Deluxe Executive
Overhead Cost
Total
Manufacturing setups
setups
$1,008,000
50
30
80
Machine processing
Machine-hours
2,772,000 16,000
22,500 38,500
Product shipping
Outgoing shipments
840,000
100
75
175
$4,620,000
Activity Cost Pools
Activity Measures
Required:
(Note: Round your answers to 2 decimal places)
(a)
Compute the unit product cost of Deluxe and Executive cabinets using the
company’s current costing method.
(8 marks)
(b)
Compute the unit product cost of Deluxe and Executive cabinets using the activitybased costing approach.
(12 marks)
DIPL/ACC0002/Aug2022/MainEQP
Page 4 of 10
Part B
Grounded Corporation Ltd makes four products in a single facility. Data concerning these
products appear below:
Products
A
B
C
D
Selling price per unit ………………………. $78.70 $71.10 $67.90 $62.60
Variable cost per unit ……………………… $40.20 $49.20 $38.80 $33.20
Fixed manufacturing overhead………….
27.50
14.40
14.50
16.50
Grinding machine minutes per unit ……
2.00
1.10
0.70
0.30
Monthly demand in units …………………
3,000
2,000
2,000
4,000
The grinding machines are potentially the constraint in the production facility.
Required:
Rank the products in order of their profitability from the most profitable to the least
profitable. Round your answers to 2 decimal places.
(5 marks)
DIPL/ACC0002/Aug2022/MainEQP
Page 5 of 10
Question 3
Part A
SIM Apex Solutions Limited produces a single product, and has provided the following data
for the most recent month of operations:
Selling price
$84
Units in beginning inventory
Units produced
Units sold
Units in ending inventory
500
1,900
2,100
300
Variable costs per unit:
Direct materials
Direct labour
Variable manufacturing overhead
Variable selling and administrative
$25
$10
$7
$10
Fixed costs:
Fixed manufacturing overhead
Fixed selling and administrative
$38,000
$21,000
The company produces the same number of units every month, although the sales in units
vary from month to month. The company’s variable costs per unit and total fixed costs have
been constant from month to month.
Required:
(a)
Compute the cost of a single unit of product under BOTH the absorption costing and
variable costing approaches.
(6 marks)
(b)
Prepare a contribution margin format income statement for the month using variable
costing.
(7 marks)
(c)
Prepare an income statement for the month using absorption costing.
(6 marks)
DIPL/ACC0002/Aug2022/MainEQP
Page 6 of 10
Part B
Ikee Corporation is estimating the following sales for the first four months of the new
financial year:
January
February
March
April
$260,000
$230,000
$270,000
$320,000
Ikee Corporation estimates that 60% of the sales will be collected in the month of the sale,
35% in the month following the sale, and the remaining 5% uncollectible.
Required:
Compute the expected cash receipts for April.
(6 marks)
DIPL/ACC0002/Aug2022/MainEQP
Page 7 of 10
Question 4
PART A
The operations of TimberLink Inc are made up of two divisions – Lumber and Sawdust.
Projections for the new financial year are as follows:
Lumber
Division
Sawdust
Division
TimberLink
Sales
$60,000
$40,000
$100,000
Variable expenses
20,000
15,000
35,000
Contribution margin
40,000
25,000
65,000
Direct fixed expenses
12,500
30,000
42,500
Segment margin
27,500
(5,000)
22,500
Allocated common costs
10,000
7,500
17,500
Operating income
$17,500
$(12,500)
$5,000
The direct fixed expenses are specific expenses incurred by the divisions. These expenses
can be avoided if the division is dropped.
Required:
(a)
Determine the operating income of TimberLink if the Sawdust Division is dropped.
(7 marks)
(b)
Should the Sawdust Division be dropped?
(2 marks)
DIPL/ACC0002/Aug2022/MainEQP
Page 8 of 10
PART B
Pro-Clean Pte Ltd provides deep cleaning services for office spaces. Operating costs are
difficult to control, so standard costs and standard cost variances are reported. The following
standards were developed for the ‘maxiprotect’ sanitising service. This is one of the
company’s major products:
Direct materials (ethanol)
Direct labour
Total
Standard
Quantity
8 litre
2 hours
Standard
Price/Rate
$1.75 per lite
$20 per hour
Standard
Cost
$14.00
$40.00
$54.00
During May, Pro-Clean Pte Ltd purchased 160,000 litre of ethanol at a total cost of
$304,000. The total wages for May were $5,000, 40 per cent of which was direct labour cost
of the maxiprotect sprays. Pro-Clean completed 40 maxiprotect sanitizing services during
May, using 400 litres of ethanol and 90 direct labour hours.
Required:
(a)
Calculate the direct materials price variance and materials usage variance, indicating
a favourable or unfavourable variance.
(6 marks)
(b)
Give ONE (1) possible reason for each the variances computed in (a).
(2 marks)
(c)
Calculate the labour rate variance and labour efficiency variance, indicating a
favourable or unfavourable variance.
(6 marks)
(d)
Give ONE (1) possible reason for each of the variances computed in (c).
(2 marks)
—- END OF PAPER —-
DIPL/ACC0002/Aug2022/MainEQP
Page 9 of 10
ACC0002 Cost and Management Accounting Formula sheet
MPV = (AP × AQ) – (SP × AQ)
= (AP – SP) × AQ
MUV = (SP × AQ) – (SP × SQ)
= (AQ – SQ) × SP
LRV = (AR × AH) – (SR × AH)
= (AR – SR) × AH
LEV = (AH × SR) – (SH × SR)
= (AH – SH) × SR
DIPL/ACC0002/Aug2022/MainEQP
Page 10 of 10