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Q1

(a)

Twenty (20) years ago, your company has purchased a small factory
building costing RM 300,000. However, book value of the building
remains RM 230,000 only due to the decrease in market value. The factory
is sold at the price of RM 180,000.
Determine the value from each of the following cost;

(i)

Cash Cost
(2 marks)

(ii)

Book Cost
(2 marks)

(iii)

Sunk Cost
(2 marks)

(iv)

Opportunity Cost
(2 marks)

(v)

Standard Cost
(2 marks)
Solution:
i.
ii.
iii.
iv.
v.

Cash Cost
- Cost of the factory building =
Book Cost
- Total decrease value

=
=

Sunk Cost
- Book value less Sold prices =
=
Opportunity Cost
- Value of building sold
=
Standard Cost
- Fixed Depreciation

RM 300,000 ............ 2 marks


RM 300, 000 230,000
70,000 .............. 2 marks
230,000 - 180,000
RM 50,000 .......... 2 marks
RM 180,000 ........ 2 marks
RM 7,000 .......... 2 marks

BPK 30902

(b)

A group of EE team is making analysis in a decision to produce a new


product with two alternative plants. Details are as follows:
Details
Labour Cost (RM per unit)
Raw Material Costs (RM per unit)
Factory Manager(RM per month)
Rental (RM per month)
Selling Price (RM per unit)

(i)

Plant A
Plant B
36.00
38.00
73.00
82.00
6,600
5,800
7,800
6,300
150.00
150.00

Calculate the Total Variable Cost (VC)& Fixed Cost (FC)


(4 marks)

(ii)

Determine the Breakeven Pointunits per month


(4 marks)

(iii)

Suggest the most profitable plant for production if the consumer demand is 500 units per
month.
(4 marks)
(iv)

The selling price has reduced by RM5.00 for site chosen in


(iii). Calculate how many units to be sold if the company is
to maintain a profit level of RM2,880.00
(3 marks)

Solution:

1.

Details
Variable Cost (VC)
Labour Cost (RM per unit)
Raw Material Costs (RM
per unit)

Plant A

Plant B

Fixed Cost (FC)


Rental (RM per month)
Factory Manager(RM per
month)

2.

Selling Price (RM per unit)


Breakeven
BEP = FC/ (SP VC)

36.00
73.00

38.00
82.00

109.00

120.00

6,600
7,800

5,800
6,300

14,400

12,100

150.00
150.00
BEP = FC/ (SP VC)
BEP = FC/ (SP
= 14,400/(150 109)
VC)
= 351.2195 units = 12,100/(150 120)
= 403.3333 units

BPK 30902

3.

Profitable site
Revenue RM150 x 500 =
RM75,000

SP 150 to 145
2,880/(145 -109) = 80
units
480 x 145 = 69,600

Production Cost
Production Cost
(109 x 500) + 14,400 (120 x 500) + 12,100
= 68,900
= 72,100
Profit = TR TC
Profit = TR TC
= 75,000 68,900
= 75,000 72,100
= 6,100
= 2,900
Selected plant due
to higher profit &
lower BEP
BEP = FC/ (SP VC)

BEP = FC/ (SP VC)

= 14,400/(145 109) = 12,100/(145 120)


= 400units
= 484 units
BEP + Profit Level
BEP + Profit Level
= 400 + 80
= 484 + 80
= 480 units
= 564 units
(480 x 109) + 14,400
66,720
Profit Level = TR TC

= 69,600 66,720
= 2,880
Q2(a)

The table Q2 (a) below shows the past price of Standard Malaysia Rubber
(SMR) since 2012, whereby 2013 is the reference year having 246 as an
index value. The weight place on SMR CV is one (1) time, SMR L is one
and half (1.5) times and SMR 5 is two (2) time
Table Q2 (a)
SMR

Price (sen / kg ) in Year


2012

2013

2014

SMR CV

1088

919

753

SMR L

1046

832

696

SMR 5

974

794

579

1. Calculate a weighted index for the price of a kg of SMR in 2014.


(4 marks)
2. Calculate the corresponding 2015 prices of SMR from 2014 if 218 is the index
value in 2015.
(6 marks)
Solution:

BPK 30902

W1 (Cn1/Ck2) + W2 (Cn2/Ck2) + W3 (Cn3/Ck3)


---------------------------------------------------------- X In2011
W1 + W2 + W3

In2014 =

1(753/919) + 1.5(696/832) + 2(579/794)


--------------------------------------------------------- X 246 = 193.1163
1 + 1.5 + 2
0.8193 + 1.2548 + 1.4584
------------------------------- X 246 = 193.1100
4.5
193.1163 OR 193.1100
. (4 marks)

=
=
=

Cn2014SMR CV =

Ck2011 (In2013/Ik2011)
=
753(218/193.1163)
=
850.0266 sen/kg

Cn2015SMR L

=
=
=

Cn20153SMR 5 =

Ck2011 (In2013/Ik2011)
=
579(218/193.1163)
=
653.6061 sen/kg

(b)

...... (2 marks)

Ck2011 (In2013/Ik2011)
696 (218/193.1163)
785.6820 sen/kg
...... (2 marks)

... (2marks)

The structural engineering design section of Agile E-Power, a


multinational electrical utility corporation has developed several standard
designs for a group of similar transmission line towers. The detailed design
for each tower is based on one of the standard designs. A transmission line
project involving 60 towers has been approved. The estimated number of
engineering hours needed to accomplish the first detailed tower design is
123.
Determine:
(i)

The number of engineering hours needed to design theeight and


sixteenth towerusing a 95% learning curve.
(5 marks)

(ii)

The reduction percentage when the production is doubled.


(5 marks)

(iii)

The estimated cumulative average hours required to produce the first


fivetower designs.
(5 marks)

SOLUTION:
4

BPK 30902

(i)

K = 123 hours
s = 0.95 (95% learning curve)
n = (log 0.95) / (log 2) = -0.074
Z8 = 123(8)-0.074 = 105.46 hours
Z16 = 123(16)-0.074 = 100.18 hours

(ii)

........................................... (1 marks)
......................................... (2 marks)
......................................... (2 marks)

(Z8 - Z16) / Z8 = (105.46-100.18)/105.46 = 0.05


Assumption / conclusion: The 95% learning curve results in a 5%
reduction in number of engineering hours each time the quantity of the
tower needed to be designed is doubled.
(5 marks)

(iii)

T5

= 123 10 U=1u-0.074
= 123 [1-0.074 + 2-0.074+ 3-0.074+ 4-0.074+ 5-0.074]
= 123[1 + 0.9500 + 0.9219 + 0.3585 + 0.3039]
= 123 [3.5343]
= 434.72 hours
........................................... (3 marks)

Cx

= Tx / x = T5/ 5 = 434.72 / 5 = 86.94 hours

................... (2 marks)