MAF201: In December 2016, ADAWI Constructions Bhd was awarded a contract to construct a sports complex near Bukit Meranek: Cost and management accounting Assignment, UITM, Malaysia

University Universiti Teknologi MARA (UiTM)
Subject MAF201: Cost and management accounting


In December 2016, ADAWI Constructions Bhd was awarded a contract to construct a sports complex near Bukit Meranek. The RM5,300,000 contract commenced on 1 January 2017 and is expected to complete by the end of June 2018.

The following information relates to costs incurred for the year ended 30 September 2017:

The following additional information was available for the period ending 30 September 2017:

During the year, no materials were returned to the central store or to the suppliers. RM45,000 of unused materials were available on-site on 30 September 2017.

ADAWI Constructions Bhd incurred RM365,000 for wages and RM190,000 for subcontractor charges.

3. Overhead expenses were charged to the contract based on 8% of material used.

4. The original cost of plant brought to site was RM400,000. The plant has a useful life of 10 years and is depreciated at 10% per annum on cost with no scrap value.

Further cost of RM1,500,000 is required to complete the contract. Estimated warranty and rectification cost are RM50,000.

6. Cash collected from the contractee for progress payment was amounted to RM1,800,000 after 10% retention.

7. It is the company’s policy to recognise profits based on cost method.


a. Prepare the following accounts for the year ended 30 September 2017:

i. Construction in Progress account ii. Accounts Receivable

b. State TWO (2) purposes of preparing the Construction in Progress account.


Delicious Sdn Bhd produces a local dessert known as ‘Bubur Kacang Hijau’ in a can. The production passes through two processes: the cooking process and the packaging process.

The cost data for the month of December 2017 for both cooking and packaging processes were as follows:

Losses in cooking and packaging processes are detected upon completion in each process. Any further losses or gains are assumed to arise at the end of each process.


a. Prepare a cooking process account.

b. Prepare packaging process account. (Support your answer with relevant statements) c. List FOUR (4) methods of allocating joint costs. d. Distinguish between normal loss and abnormal loss.


Cendana Sdn Bhd has been operating for a few years manufacturing and selling a household product named Abadi. Last year, a young accountant joined the company and he suggested that a financial statement be prepared based on marginal costing which will help the company in its short-term decision-making process. The following are the projections for budgeted productions and sales of 160,000 units for the year 2017.

The normal annual activity level for the company is 160,000 units. The fixed costs are assumed to incur evenly throughout the year and absorbed into the products based on units produced. There were 10,000 units of Abadi at the end of the third quarter of 2017. In the fourth quarter of 2017, 55,000 units were produced and 40,000 were sold.

a. i. Prepare Statement of Profit and Loss for the fourth quarter of 2017 using marginal costing and absorption costing approaches (10 marks)

ii. Reconcile the profits from the two approaches.

b. Briefly explain the effect on the reported profit from each approach above (a. i) in the following situations:

i. When production and sales are equal.

ii. When sales exceed production.

Question 4

Kelsi Sdn Bhd has been selling chocolate-flavored yogurt in Kuching for a few years. The management of Kelsi Sdn Bhd wants to expand the business to Kota Samarahan. The selling price and variable cost per carton is RM3.50 and RM1.50 respectively. The projected fixed cost is RM5,000 per month. The management estimates that 2,850 cartons will be sold in a month.
As the management accountant of Kelsi Sdn Bhd, you have been asked to analyze the proposal.


a. Identify the following:

i. Break-even point in carton and value (RM) ii. The margin of safety in carton and value (RM)

b. Predict the company’s projected profit if:

i. 3,500 cartons are sold ii. 4,150 cartons are sold, with a discount of RM0.50 per carton given for every carton sold in excess of the break-even point

c. Kelsi Sdn Bhd conducted a survey relating to flavor demanded by the customers in Kota Samarahan. According to the survey, the customers also prefer banana and strawberry-flavored yogurt. Since the demands of these flavors are very high, the management plans to add these flavors in their production line for Kota Samarahan. The introduction of new flavors will increase the fixed costs to RM5,800 while maintaining the estimated sales units at 2,850 cartons per month. The following are the proposal for the additional flavors:


The manager of Castel! Manufacturers have requested you to prepare the cash budget for the company for the fourth quarter of 2018. You are provided with the following information:

1. Annual sales are estimated at 90,000 units with a total revenue of RM1,350,000. Sales and production are spread evenly throughout the year.

2. 50% of the sales are on cash basis with 4% cash discount given. The remaining sales are on credit basis where collection from debtors is to be made one month after sales.

3. Products are produced in batches of 300 units per month and each batch requires 100 kg of raw materials and 100 hours of labour.

4. The material costs are estimated to be RM5.00 per kg and the supplier allows one (1) month credit.

5. Information for the direct labour cost is as follows:

  • Direct labor is expected to be paid at RM10.00 per hour.
  • The labor costs are paid during the month incurred.

6. Production overheads are estimated at RM4,000 in October and is expected to increase by 5% every month. This cost is paid in the month incurred.

7. Sales and distribution costs are estimated at 10% of the monthly sales and are paid in the month of sale.

8. The company plans to purchase a new machine costing RM125,000, which will be paid in twenty (20) months installments starting November 2018. The depreciation is to be charged at 20% per annum using straight-line method.

9. The bank balance in October 2018 is an overdraft of RM50,000.

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