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ANSWER SCHEME
A.
= RM1,230,000 √
RM6,150,000 √
= 20% √
7 √ @ ½ marks = 3.5 Marks
ii) RI = Income before taxes – (Average operating assets x min rate of return)
= RM1,230,000 – (RM6,150,000 x 0.15) √√√
= RM307,500 √
4 √ @ ½ marks = 2 Marks
(b) Yes, BBSB’s management probably would have accepted the investment if RI were
used. √
The investment opportunity would have lowered BBSB’s 2009 ROI because the
project’s expected return (18%) were lower than the division’s historical returns
(19.3% - 22.1%) as well as the actual 2009 ROI (20%). Management may have
rejected the investment because bonuses are based in part on the ROI performance
measure √√
If RI were used as performance measure, management would accept any and all
investment that would increase RI (RM amount rather than a percentage) including
the investment opportunity it had in 2009. √√
5 √ @ ½ marks = 2.5 Marks
B.
BKAM3023 MANAGEMENT ACCOUNTING II
ii) When there is no excess capacity, the opportunity cost is the foregone
contribution margin on an external sale when a frame is transferred to the GD
√√. The contribution margin equals (RM160 – RM130 = RM30). When there
is excess capacity in the FD, there is no opportunity cost associated with a
transfer √√.
4 √ @ ½ marks = 2 Marks
DL (FD) RM40 √
VOH(FD) RM60 √
DM (GD) RM60 √
DL (GD) RM30 √
VOH(GD) RM60 √
Total incremental cost RM280
Incremental contribution per window RM30 √
The special order should be accepted √√ because the incremental revenue exceeds the
incremental cost √, for PIB as a whole √
12 √ @ ½ marks = 6 Marks
e) The use of transfer price based on the FD’s full cost can caused a cost that is a FC for
the entire company to be viewed as a variable cost in the GD √√. This distortion of
the firm’s true cost behavior has resulted in an incentive for a dysfunctional decision
by the GD’s manager √√.
4 √ @ ½ marks = 2 Marks
BKAM3023 MANAGEMENT ACCOUNTING II
A. (15 MARKS)
Products
ALMA BAFA CITA
RM RM RM
Contribution margin 70 75 95
Processing time 5 3 4
Ranking 3 1 2
a. Products produced:
29,400
(10 x ½ = 5 marks)
687,600
(8 x ½ = 4 marks)
( 8x ½ = 4 marks)
Other factor:
i.Loyal customer might switch to other supplier that can meet their order for other
models.
( 4x ½ = 2 marks)
B. (10 MARKS)
BKAM3023 MANAGEMENT ACCOUNTING II
FC 600,000
= RM2,210,759
( 6x ½ = 3 marks)
=1,149,421/3,360,000
=34.21%
( 4x ½ = 2 marks)
( 6x ½ = 3 marks)
BKAM3023 MANAGEMENT ACCOUNTING II
d.
FC 600,000
( 8x ½ = 4 marks)
B.(13 MARKS)
a. November December
RM RM
Sales 390,000 370,000
====== ======
Schedule of Expected Cash Collections:
Accounts receivable 71,000 √
November sales 351,000 √ 19,500 √
December sales 333,000 √
Total cash collections 422,000 352,500
====== ======
b. November December
RM RM
Cost of goods sold 234,000 222,000
====== ======
Merchandise Purchases Budget:
November sales 70,200 √
December sales 155,400 √ 66,600 √
January sales 159,600 √
Total purchases 225,600 226,200
====== ======
====== ======
c. November December
RM RM
Cash receipts 422,000 √ 352,500 √
Cash disbursements:
Disbursements for merchandise 232,000 √ 225,600 √
Other monthly expenses 21,800 21,800 √
Total cash disbursements 253,800 247,400
Excess (deficiency) of cash available
over disbursements 168,200 105,100 √
====== ======
d. November December
RM RM
Sales 390,000 370,000 √
Bad debt expense 19,500 18,500 √
Cost of goods sold 234,000 √ 222,000 √
Gross margin 136,500 129,500
Other monthly expenses 21,800 21,800 √
Depreciation 18,000 18,000 √
Net operating income 96,700 89,700
===== =====
e.
Assets RM
Cash 298,300 √
Accounts receivable (net of allowance
for uncollectible accounts) 18,500 √
Inventory 159,600 √
Property, plant and equipment (net of
RM540,000 accumulated depreciation) 1,052,000 √
Total assets 1,528,400
=======
Liabilities and Stockholder’s Equity
Accounts payable 226,200 √
Capital and Retained Earnings 1,302,200 √
Total liabilities and Stockholder’s 1,528,400
Equity =======
BKAM3023 MANAGEMENT ACCOUNTING II
( 26x ½ = 13 marks)