TEST 1 NOV 2017_Q AND A_maf551-1.doc

10 marks b compute direct material price planning

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Fixed Production Overhead Expenditure Variance. (10 marks) b. Compute direct material price planning variance for material BB. (2 marks) c. Explain three (3) reasons for favourable labour rate variance. (3 marks) (Total: 15 marks) QUESTION 2 a. i. Define the term budget. (1 mark) Ii. State four (4) purposes of budgeting (4 marks) © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL
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CONFIDENTIAL 3 AC/NOV 2017/TEST 1/MAF551 b. Vesarell Sdn Bhd manufactures two products, Topaz and Ruby. The following information applies to the budget preparation for the year ending 31 December 2017. All inventories are to be reduced by 10% from their opening levels by the end of 2017. i. The sales forecast for Topaz is 26,000 units and Ruby is 15,000 units, selling at a price of RM 540 and RM680 respectively. ii. The inventories of finished goods and raw materials on 1 January 2017 are expected to be: Topaz 1,800 units @ RM 440 per unit Ruby 1,300 units @ RM 500 per unit Material X 18,000 kgs @ RM 6.80 per kg Material Y 14,000 kgs @ RM 9.20 per kg iii. In order to produce one unit of Topaz and Ruby, the following raw materials and skilled labour are required: Topaz Ruby Material X 14 kg 10 kg Material Y 12 kg 16 kg Skilled labour 9 hours 10 hours iv. The expected prices for raw materials and skilled labour rate during 2017 are: Material X RM 8 per kg Material Y RM 10 per kg Skilled labour rate RM 26 per hour Required: For the year ending 31 December 2017, prepare the following budget: i. Production budget showing opening inventory, production and closing inventory. ii. Raw materials purchases budget showing opening inventory, purchases and closing inventory in units and cost iii. Labour budget (hours and RM) (10 marks) c. Explain on two (2) major differences between feedforward and feedback controls in a budgeting system. (5 marks) (Total: 20 marks) END OF QUESTION PAPER © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL
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CONFIDENTIAL 4 AC/NOV 2017/TEST 1/MAF551 SUGGESTED ANSWER QUESTION 1 a. Compute the following variance: i. Direct material usage variance for material AA only =SQ OF AP ~ AQ USED)SP
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