Maf420 Essay

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CONFIDENTIAL AC/APR 2009/MAF420 UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION COURSE : MANAGEMENT ACCOUNTING AND CONTROL COURSE CODE MAF420 EXAMINATION APRIL 2009 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. Do not bring any material into the examination room unless permission is given by the invigilator. Please check to make sure that this examination pack consists of: i) ii) the Question Paper an Answer Booklet - provided by the Faculty DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO This examination paper consists of 8 printed pages © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL CONFIDENTIAL AC/APR 2009/MAF420 2 QUESTION 1 The directors of Satria Manufacturing Berhad have received a proposal to acquire a new turbine to replace the existing turbine. The new turbine provides operating efficiencies in terms of labour, production capacity and lower overhead. As such, the savings through operating costs are estimated to be RM180,000 per annum for the next five years. The new turbine will cost RM260,000. Workers require training to operate the new turbine. An additional training cost is estimated to be RM10,000. The training cost qualifies for capital allowance. The new turbine will be fully operational in the second quarter of the year in which it is installed. This will result in only 70% savings in the first year. The existing turbine has been fully depreciated and the turbine has a zero book value. Satria Manufacturing Berhad could dispose its existing turbine for RM3.000. The new turbine qualifies for an initial capital allowance of 20% and annual allowance of 15% on cost. The tax rate is 28%, payable one year in arrears and its cost of capital

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