CONFIDENTIAL, ACIJUN 2016/ACC466 UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION COURSE : FINANCIAL AND MANAGEMENT ACCOUNTING COURSE CODE : ACC466 EXAMINATION JUNE 2016 TIME 3 HOURS INSTRUCTIONS TO CANDIDATES 1 This question paper consists of five (5) questions. 2, Answer ALL questions in the Answer Booklet. Start each answer on a new page. 3 Do not bring any material into the examination room unless permission is given by the invigitator. 4 Please check to make sure that this examination pack consists of i) the Question Paper ji) an Answer Booklet ~ provided by the Faculty 6. Answer ALL questions in English, DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO This examination paper consists of 6 printed pages © Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL, 2 ACIJUN 2016/ACC466 QUESTION 1 @. Give two (2) examples each of internal and external users of financial information. (2 marks) b. Discuss three (3) advantages of a sole proprietorship over a company. (6 marks) c. Hazimah, a sole trader has just started his business and is very keen to know about accounting. He is still confused between financial accounting and management accounting. i Explain the two (2) differences of financial and management accounting, (4 marks) ii. Explain the importance of management accounting to the business. (2 marks) 4. Pn. Sabariah, Pn Hafizah and Pn. Husnul are employees in Smart Enterprise. Below are the details of the salary for the next three years: Pn Sabariah | Monthly salary is RM8,750_ : PnHafizah | Monthly salary is RM2,850 together with 5% bonus on the L_ production units produced. [Pn Husnul Monthly salary is paid based on unit produced, i State the cost behaviour of the salary of each of the employees. (3 marks) ii In relation to employees. define the cost behaviour of the salary of each of the (3 marks) (Total: 20 marks) QUESTION 2 a. Explain the following: i Government grant. ii. Government assistance. (4 marks) b, _Bestari Sdn Bhd is searching for possible sources to finance its new development project. The new project is expected to increase the demand for the product and therefore a significant fund is needed to support the development phase. i Explain with examples the possible internal and external sources of finance available to the company. (6 marks) © Hak Cipta Universiti Teknolog! MARA, CONFIDENTIAL,CONFIDENTIAL, 3 ACIJUN 2016/ACC466 ii, Assuming that the company prefers to issue ordinary shares to finance the project. Explain the advantages of ordinary shares. (6 marks) ©. Distinguish between an operating and a finance lease. (4 marks) (Total: 20 marks) QUESTION 3 The following information was extracted from Bestari Jaya Enterprise 30 June 2015. Bestari Jaya Enterprise RM Long term loan 85,500 Short term loan 25,000 Accounts Payables 49,500 Land & Building 2,100,000 Cash at bank 36,000 Cash in hand 5,000 Accounts Receivables 31,500 Total expenses 15,500 Closing stock 14,000 Opening stock 25,500 Sales/Revenue 296,000 Purchases. 55,500 Additional informatior 1 The ratios of Amansari Enterprise, its closest competitor for the year ended 30 June 2016, are as follows: Net profit margin 80% Current ratio 244 Acid test ratio 174 Inventory turnover 4 times Return on Investment 10% Required: a. Caloulate the following ratios for Bestari Jaya Enterprise i, Current ratio ii. Acid test ratio i, Net profit margin iv, Inventory turnover ratio (9 marks) (© Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL, 4 ACIJUN 2016/ACC466 b. Based on your answer above, compare the two companies in term of its liquidity, efficiency and profitability. (8 marks) ©. Which company you would be interested to invest in? (Use ROI in your explanation) (3 marks) (Total: 20 marks) QUESTION 4 Puncak Hebat Sdn Bhd is currently manufacturing three types of products namely Product A, Product B and Product C. Information related to the production of the three products are as follows: Direct labour | Direct labour | Material cost | Machine hour Product | Volume | jour per unit | cost per unit | per unit per unit Product A 100 15 2 5 0.5 Product 8 | 10 0.25 7 4 0.75 Product | 300 05 o | 6 1.25 A total production overhead cost for the year amounted to RM59,500. The details of the overhead costs are as follows: Cost RM. Machining 21,500 Set up 18,000 ‘Ordering materials 20,000 _| The traditional overhead costs are absorbed into products using the basis of machine hour. Required: a. Calculate the overhead absorption rate using the traditional method. (4 marks) b. Additional information below has been supplied by the production department and it refers to the activities which caused the related production costs above: Product Number of set ups | Number of materials ordered Product A 4 7 Product 8 7 5 Product C 4 8 © Hak Cipta Universiti Toknologi MARA. CONFIDENTIAL,CONFIDENTIAL, 5 ACIJUN 2016/ACC466 Required: Using the activity based costing method, calculate the following i Cost driver rate for each activity ii. Overhead cost per unit for each product il, Production cost per unit for each product (13 marks) c. Explain three (3) advantages of activity based costing (ABC). (3 marks) (Total: 20 marks) QUESTION 5 Acek Tailor Sdn Bhd is planning to open a new branch in Puncak Alam Selangor. The initial cost of investment is RM100,000 whilst the estimated income and expenses for the next five years for the project are as follows: Year Revenue (RM) Cost of sales (RM) 1 55,000 15,000 [2 45,000 25,000 3 32,000 10,000 4 45,550, [ 15,000 [os l Additional information: 1. Tax rate is 10% from the profit before tax and it is applicable for all the five years. 2. Alllcash flows are assumed to arise annually in arrears. 3. The company’s desirable payback period is less than 3 years and the minimum internal rate of reform (IRR) is 10%. 4. The cost of capital for this company is 8% but it could increase to 16%. Discount factor table is given as follows: Year 8%. 16% 1 0.9259 0.8621 2 0.8573 0.7432 3 0.7938 0.6407 4 0.7350 0.5523 5 0.6806 0.4761 (© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL,CONFIDENTIAL, 6 ACIJUN 2016/ACC486 Required: a. Calculate the project's net present value (NPV) and approximate internal rate of return (IRR) (12 marks) b. Determine the payback period for the project using 8% cost of capital, (3 marks) c. Explain whether the company should invest in the project if the cost of capital had been increased to 15%. (3 marks) d. State two (2) examples of capital investment. (2 marks) (Total: 20 marks) END OF QUESTION PAPER (© Hak Cipta Universiti Teknolog! MARA, CONFIDENTIAL,