Matric no: 255843

Name: Morgan Phrasaddha Naidu A/L Puspakaran

Group: S

Att. List no.: -

Tutorial 5: Chapter 8- MANAGERIAL ACCOUNTING

DUE DATE: 29 April 2018

1. The purposes of management accounting are as follows EXCEPT:

A. plan and control business operations
B. allocate the resources of the business
C. determine the amount of business income taxes
D. makes strategic decisions

2. The FALSE statement about cost concept is:

A. a fixed cost does not change when the value of activities changes
B. a variable cost changes in proportion to the changes in volume of activity
C. cost is payment of cash or its equivalent for the purpose of generating revenues
D. the classification of cost based on their functions are fixed, variable and mixed cost

3. A variable costs in total:

A. increases as output increases and decreases as output decrease
B. increases as output increases and remains constant as output decrease
C. remains constant no matter the level of output
D. increases as output decreases and decreases as output increases

4. All of the items would be reported as a current asset on the Statement of Financial Position
of a manufacturing company EXCEPT:
A. cost of goods manufactured
B. direct materials inventory
C. cash
D. work in process inventory

Use the following information for Questions 6 to 8:

In July, Econo Sdn Bhd purchased direct materials costing RM42, 000 and incurred direct labor
cost of RM36, 000. Overhead totaled RM64, 000 for the month. Information on inventories is as
follows:
1 July 31 July
Direct materials RM12,400 RM14,200
Work in process RM1,400 RM2,400
Finished goods RM6,600 RM5,400

1
5. What is the cost of direct materials used in July?
A. RM42,000
B. RM40,200
C. RM43,800
D. RM41,000
6. What is the conversion cost in July?
A. RM100, 000
B. RM78, 000
C. RM106, 000
D. RM142, 000

7. What are the total manufacturing costs in July?

A. RM142,000
B. RM100,000
C. RM138,200
D. RM140,200

8. Last year Sayang Enterprise incurred the following costs:

Direct materials used RM40,000

Direct labor RM60,000
Factory overhead RM90,000
Selling expenses RM24,000
Administrative expenses RM22,000

What is the period cost for Sayang Enterprise?

A. RM24,000
B. RM190,000
C. RM46,000
D. RM250,000

9. In year 2013, Prestar Enterprise incurred the following costs:

RM
Work in process inventory, beginning 32,000
Work in process inventory, ending 44,000
Finished goods inventory, beginning 94,000
Finished goods inventory, ending 76,000
Factory overhead costs 150,000
Direct labor 120,000
Direct material used 102,000

Calculate the costs of goods manufactured and the cost of goods sold for Prestar Enterprise.
A. RM360,000 and RM390,000
B. RM384,000 and RM366,000
2
 C. RM360,000 and RM378,000
D. RM384,000 and RM468,000

10. Managerial accounting information:

A. is used mainly by external users.
B. involves gathering information about costs for planning and control decisions.
C. is generally the only accounting information available to shareholders.
D. can be used for control purposes but not for planning purposes.

11. Managerial accounting is different from financial accounting in that

A. managerial accounting is more focused on the organization as a whole and financial
accounting is more focused on subdivisions of the organization.
B. managerial accounting never includes nonmonetary information.
C. managerial accounting includes many projections and estimates whereas financial
accounting has a minimum of predictions.
D. managerial accounting is used extensively by investors, whereas financial
accounting is used only by creditors.

12. Costs that are incurred as part of the manufacturing process but are not clearly
associated with specific units of product or batches of production, including all
manufacturing costs other than direct material and direct labor costs, are called:
A. administrative expenses. B. nonmanufacturing costs.
C. sunk costs. D. factory overhead.

13. The three major cost components of a manufactured product are:

A. marketing, selling, and administrative costs.
B. indirect labor, indirect materials, and miscellaneous factory expenses.
C. direct materials, direct labor, and factory overhead.
D. differential costs, opportunity costs, and sunk costs.

14. Which of the following items appears only in a manufacturing company's financial
statements?
A. Cost of goods sold. B. Cost of goods manufactured.
C. Goods available for sale. D. Gross profit.

15. Current information for the Austin Company follows:

RM

Beginning raw materials inventory 15,200

Beginning goods in process inventory 22,400
Ending raw materials inventory 16,600
Ending goods in process inventory 28,000
Direct labor 42,800
Total factory overhead 30,000
Raw material purchases 60,000
3
 All raw materials used were traceable to specific batches of product. Austin Company's
cost of goods manufactured for the year is:
A. RM125, 800. B. RM128, 600.
C. RM131, 400. D. RM137, 000.

16. The following information is available for the year ended December 31:
RM

Beginning raw materials inventory 2,500

Raw materials purchases 4,000
Ending raw materials inventory 3,000
Office supplies expense 1,000

The amount of raw materials used in production for the year is:
A. RM4, 100. B. RM5, 100.
C. RM3, 500. D. RM6, 500.

17. The three most common cost behavior classifications are:

A. variable costs, product costs, and sunk costs

B. fixed costs, variable costs, and mixed costs
C. variable costs, period costs, and differential costs
D. variable costs, sunk costs, and opportunity costs

18. Costs that remain constant in total dollar amount as the level of activity changes are
called:
A. fixed costs B. mixed costs
C. opportunity costs D. variable costs

19. All of the following are examples of indirect labor EXCEPT:

A. production operators
B. forklift operators
C. plant managers
D. security personnel

20. Costs which are reported on the Statement of Comprehensive Income as part of cost of
goods sold are:
A. cost of goods manufactured
B. period cost
C. selling costs
D. administrative costs

4
STRUCTURED QUESTION

21. Use the following information to answer questions:

Work in process inventory, 1 January 2012 RM88,000

Work in process inventory, 31 December 2012 60,000
Direct labor 20,000
Factory overhead costs 10,000
Material inventory, 1 January 2012 3,000
Material inventory, 31 December 2012 2,000
Material purchases 14,000

Determine the:
a. Prime cost
Prime cost = raw material + direct labor
= 3,000 + 20,000
= 23,000

b. Conversion cost
Conversion cost = direct labor + manufacturing overhead cost
= 20,000 + 10,000
= 30,000

c. Manufacturing costs
Manufacturing costs = direct material + direct labor + manufacturing overhead
= (3,000 + 14,000 – 2,000) + 20,000 + 10,000
= 45,000

d. cost of goods manufactured

Cost of goods manufactured = manufacturing cost+ opening progress–closing progress
= 45,000 + 88,000 – 60,000
= 73,000

5
22. Business ABC Trading provide the following information from the period ended 31
December 2017

RM
Raw materials, 1 January 2017 35,000
Work in process, 1 January 2017 13,000
Finished goods, 1 January 2017 29,000
Raw materials purchases 180,000
Direct labor 288,000
Insurance expenses 167,000
Indirect labor 55,000
Factory machine depreciation 180,000
Utilities 50,000
Selling and administrative expenses 135,000
Sales 1,000,000

At the end of period, the balance of inventories is as follows:

Raw materials 64,000
Work in process 42,000
Finished goods 33,000

The following cost is divided as follows:

Factory building Administration
Insurance Expenses 35% 65%
Utilities expenses 70% 30%

Calculate the followings:

a. Direct materials used

Beginning raw material inventory = 35,000

Raw materials purchases (+) = 180,000
= 215,000
Ending raw inventory (-) = 64,000
Direct material used = 151,000

b. Manufacturing overhead

Insurance expenses = 167,000

Indirect labor = 55,000
Factory machine depreciation = 180,000
Utilities = 50,000
= 452,000

6
c. Prepare statement of cost of manufacturing and state the cost of goods manufactured

Business ABC

Statement of Cost of Manufacturing

Direct material:
Beginning raw material inventory = 35,000
Raw materials purchases (+) = 180,000
= 215,000
Ending raw inventory (-) = 64,000
Direct material used = 151,000

Direct labor = 288,000

Factory overhead:
Insurance expenses = 167,000
Indirect labor = 55,000
Factory machine depreciation = 180,000
Utilities = 50,000
= 452,000

Total current manufacturing cost = 891000

(+) opening work in progress = 13,000

(-) closing work in progress = 42,000

Total cost of goods manufactured = 862000

7
d. Prepare statement of comprehensive income statement

Statement of Comprehensive Income

Sale: 3,000,000

COGS :

Opening FG : 40,000
(+) COGM : 1, 7404,400
(-) Closing : (32,000) 1,748,400
GROSS PROFIT: 1,251,600
Insurance: (70%) : 89,600
Utilities : 48,000
Sell and Admin. Ex. : 285,000 422,600
NET PROFIT : 829,000