1980 WordsJun 7, 20138 Pages

Answer all questions
Question 1
An industrial product may be manufactured by two methods of production.
Using Method X, fixed costs are RM6,540,000 per period and variable costs are RM57 per unit.
Using Method Y, fixed costs are RM7,800,000 per period and variable costs are RM45 per unit.
a) Calculate the level of output per period for which the total costs are the same. (3 marks)
b) Calculate the total cost per period for Method X at this output. (2 marks)
c) State which method should be chosen for sales and production of 100,000 units per period.
(1 mark)
(d) Explain how your answer to (a) supports your answer to (c).
(1 mark)
Method X is chosen for production, and a selling price is set for*…show more content…*

(2 marks)
(Total 10 marks)
Question 6
A factory machine that costs RM350,000 is estimated to have a life of 5 years and a scrap value of
RM25,000.
a) Using the equal instalment method, prepare a depreciation schedule that shows, for each year, the annual depreciation, the accumulated depreciation and the book value at the end of each year.
(6 marks)
b) Using the diminishing balance method of depreciation, calculate:
i) the annual rate of depreciation (4 marks) ii) the depreciation in the first year (2 marks) iii) the book value after 3 years (2 marks) iv) the accumulated depreciation after 3 years. (1 mark)
(Total 15 marks)
Question 7
The estimated costs and returns for investment project P are as follows:
RM
Cost 4,750,000
Year 1 net cash inflow 500,000
Year 2 net cash inflow 1,500,000
Year 3 net cash inflow 3,000,000
Year 4 net cash inflow 1,500,000
a) Calculate the payback period of project P in years and months. (4 marks)
The potential investor for project P requires a payback period of 3 years or better.
b) Advise the potential investor for project P. (2 marks)
The investor estimates the following figures for investment project Q:
Initial cost of project RM9,500,000
Expected life of project 6 years
Total return before allowing for repairs and maintenance RM18,600,000
Average cost per annum of repairs and

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