Management Accounting

PROJECT-BASED : ROTI SEGAR (M) SDN BHD
FACULTY OF MANAGEMENT AND ECONOMICS

PAM 3023 MANAGEMENT ACCOUNTING
ASSIGNMENT 2 : PROJECT BASED
GROUP: A
SEMESTER 1 2018/2019
DR ANIS SURIATI BINTI AHMAD
NAMA NO. MATRIK

DZULAIFATUN NAJWA BINTI ZOLKFLI D20161073703
SITI SUHAINI BINTI MOHD SUBRI D20161073709
NURFATIN AMIRAH BINTI AHMAD FADZLI D20161073712
NURUL SYAFFIQAH SYAZWANI BINTI JAAFAR D20161073733
FATIN NUR SHAHIRAH BINTI KAMARUZZAMAN D20161073748
1
CONTENT
DETAILS PAGE
PART 1
Company Background
Process Of Production
PART 2
Classification Of Different Type Of Costs
PART 3
Schedule Of Cost Of Goods Manufacture
PART 4
Description Of Other Management Accounting

Practices/ Techniques/ Strategies Adopted By The
Company To Support Managerial Planning, Control
And Decision Making
PART 5
Conclusion and recommendations
2
PART 1 : COMPANY BACKGROUND
BACKGROUND OF COMPANY
Roti Segar started operating in year 1981 based on concept family business and was
recorded above single business or Sendirian Berhad. After 13 years operating, Roti Segar
(M) was incorporated under Act Company 1965 with Roti Segar Sdn. Bhd. named in
year 1994. Roti Segar main business is manufacturer and distributor of various species of
bread, cake, pastry and pizza.
Roti Segar Sdn. Bhd. (M) at that time were founded by Allahyarham Mew Hamzah Bin
Mew Ramli as Managing Director. He is important person that has been ranked highly Roti
Segar for more 20 years in field bread, cake and pastry. At the moment, Pn. Badariah
Binti Abu Samah acts as Managing Director that new and aided by authoritative line
manager, cooking line that is experienced, supervisors and more
than 90 operators manufacturer consisting of man and woman. Roti Segar Sdn. Bhd. (M) has
started the move commercial by registering ROSEGAR brand. This make it own identity that
is distinctive. As products manufacturer based on flour, Roti Segar got major raw
material supply from suppliers like Malayan Flour Mill, Federal Flour
Mill and Kuantan Flour Mill. These companies proven produce flour that
is high quality and suitable with Roti Segar product. Because of high quality
control and market management, Roti Segar had already more than 385 network sales
agent that consisting of retail store and mini market in most Perak like in Lumut, Parit
Belanja, Ipoh, Kg. Gajah, Seberang Perak and Pantai Remis.
Apart from that, Roti Segar has successfully opened a few outlet under company management
that located in Tapah, Batu Gajah, Kuala Kangsar and also Kelana Jaya. Besides that , Roti
Segar has penetrate international market by dispatching product sample consisting of
various biscuit type to London, Dubai, Brunei and Singapore through
Perak Company Trading House as distributor representative and government agency like
FAMA, MIDA and with own initiative.
3
Until now, Roti Segar's customer will not suffer with delay problem because Roti
Segar company will make delivery directly from factory by using facility
of 10 vans and company lorry. It is suitable with policy company production namely 'Just In
Time' whereby every product can be marketed according to total needed in
time scheduled and quality and fulfil demand.
Roti Segar is bumiputera company that able to compete with

products manufacturer companies that has long based and famous. This is proven
because Roti Segar (M) Sdn. Bhd. had management that experienced by
their founder, Allahyarham Mew Hamzah Bin Mew Ramli and continues by new
management that succeed to survive by tektikal although in country with uncertain economic
condition. This shows that Roti Segar product is one of the product that ran in Malaysian
heart. With this opportunity, Roti Segar (M) Sdn. Bhd will try to improve quality and produce
new innovative product meets the taste of Malaysian.
Overall, Roti Segar had mastered most markets which involves food like
bread, cake, pastry and pizza. This is proven because Roti Segar had successfully
controlled more than one over three markets all over northern region and also in central
region peninsular and the overflow in areas of eastern,southern and west peninsular Malaysia.
Apart from that, sales network Roti Segar covering direct sales from factory, ordered from
school canteens, factory and government department. At the same time Roti Segar also
cater product to premise in Plaza Rawat & Rehat in Lebuh Raya North South, not
forget ordered from customer and dealer which carried out same types of business.
4
PROCESS OF PRODUCTION
From all the production that produces by the factory, we decided to choose bread as a
production in our research and there are some of processes in making the bread for the
production such as mixture, shaping, baking, packaging. Roti Segar (M) Sdn Bhd has a store
as a service department.
Process 1: Order material

The first process in produce the bread, we need to make an order of the raw materials. The
material that we need to produce the bread as stated in part 2. For the ordering process, the
company make an order to the ordinary suppliers based on material needed.
Process 2: Measure
When all the raw materials are sufficient, one employee will measure the material needed to
produce dough of bread before proceed to next process.
Process 3: Mixing
The dough was mixed together into a high speed mixture machine. All of the ingredients are
mixed step by step to get the perfect results. After 30 minutes the mixture will be fluffy and
the dough will be rested for 30 minutes so that the dough can expand to the maximum level.
Process 4: Shaping
After the dough has been expanding, the dough will be cut according to the desired weight.
Then, the dough will be shaped and decorated according to the preferred type. Rest the dough
about 45 minutes or until the dough expands and fill the tray space.
Process 5: Baking
Dough will be entered into oven at 190ºC for 12 to 15 minutes. The temperature and speed
are carefully calculated so that when the loaves emerge from the tunnel, they are completely
baked and partially cooled.
5
Process 6: Packaging
The baked bread continues to cool as it moves from the oven to the slicing machine. Pre-
printed plastic bags are mechanically slipped over each loaf. The sliced bread will be
wrapped by the workers with wire twists.
Process 7: Selling and distributions

After completing all of the bread manufacturing process, the breads are readily to be
distributing to bakery, grocery store and canteen. For the bread sale process, the company
adopts cash transaction to facilitate sale and purchase.
6
PART 2 : DESCRIPTION OF COSTING FOR MATERIALS, LABOUR AND

OVERHEADS AND PRICING DECISION
PART 2 (A) - CLASSIFICATION OF DIFFERENT TYPE OF COSTS

: A1 - CLASSIFICATION OF COSTS
 PRODUCT COSTING PROCESS
Roti Segar (M) Sdn Bhd produce various type of bread and cake. Company need to make
process costing of their products which is bread and cake. Process costing traces and
accumulates direct costs, and allocates indirect costs, through a manufacturing process. Costs
are assigned to products, usually in a large batch, which might include an entire month's
production. Eventually, costs have to be allocated to individual units of product. Roti Segar
(M) Sdn Bhd need to allocate total product costs to units of products because products are
manufactured in large quantities, but products must be sold in small quantities, sometimes
one at a time. product costs must be transferred from Finished Goods to Cost of Goods Sold
as sales are made. This requires a correct and accurate accounting of product costs per unit, to
have a proper matching of product costs against related sales revenue.
Items purchased as “raw materials” are used to produce finished goods. If the product is
only partially completed, it is called “work in process”. Once the product no longer requires
processing and is ready to be consumed or distributed, it becomes “finished goods”.
However, finished goods is a relative term, and a seller’s finished goods may become a
buyer’s raw materials. For this company which is Roti Segar (M) Sdn Bhd, the flour is a raw
material used to produce their finished goods, bread and cakes.
Roti Segar (M) Sdn Bhd uses ABC Costing as their cost analysis to allocate all
manufacturing overhead. ABC Costing is a little more sophisticated that the single-driver
method covered in the lesson on job costing but it is really not much more difficult. ABC
Costing assumes that company may have more than one cost driver that is relevant. A single
cost driver may incorrectly allocate costs to products or departments of too much or too little
costs, or costs allocated to the wrong department or product.
7
Costing For Materials
 LIST OF COSTS
BREAD
COSTS PRODUCT PERIOD CATEGORY OF

COST COST COST
White Flour / Direct Material
Water / Direct Material
Yeast / Direct Material
Salt / Direct Material
Milk / Direct Material
Buttermilk / Direct Material
Cream / Direct Material
Juice / Direct Material
Sugar / Direct Material
Eggs / Direct Material
Butter / Direct Material
Margarine / Direct Material
Shortening / Direct Material
Flavors / Direct Material
Cooking oil / Direct Material
Cream Cheese / Direct Material
Labour / Direct Labour
Factory rent / Manufacturing
overhead
Supervisor salaries / Manufacturing
overhead
Set-up machines / Manufacturing
overhead
Insurance of building / Manufacturing
overhead
Depreciation on production equipment / Manufacturing
overhead
Electricity and water / Manufacturing
overhead
Indirect wages / Manufacturing
overhead
Selling expenses /
Advertising expenses /
Administrative expenses /
Manager salaries /
Interest expenses /
Utilities /
A2 - COSTING FOR MATERIALS
 PROCUREMENT AND CONTROL PROCEDURES
The procurement and control procedures involves several department consisting of

production department, stores department, quality control department, costing and finance
department. From procurement point of view, material control is a system that ensures that
the right quantity of material, of the right quality, from the right supplier, at the right time is
provided at the right price or with a minimum capital investment.
In the Roti Segar (M) Sdn Bhd of business operations, the storekeeper alerts when a
particular material stock item has reached its planned re-order level (ROL). Materials from
the stores are frequently issued into production, whenever materials are requested by the
production personnel. Each time materials are issued into production, the stock level at the
stores will keep reducing and when the stock level reaches the planned re-order level, the
storekeeper will initiate the procurement process. In order to avoid materials stock-out, the
storekeeper will raise and issue a material requisition note (MRN), thus initiating the
procurement.
Upon receipt of the MRN, the stores personnel will check the records and duly raise a
purchase requisition note (PRN). Traditionally, a PRN received from stores control
department will trigger the purchase order (PO) process. The procurement department will
duly initiate the PO process.
The PO process begins with the identification/selection of the right supplier. The
procurement department is also responsible for ensuring the timely delivery of goods. Based
on the purchase order, the selected supplier will deliver the goods and support it with a
delivery order document.
The store department will inspect the goods against the delivery order and appropriately
accept delivery of the goods from supplier. Then, the storekeeper will record the actual
acceptance of goods in a goods receipt note (GRN) and sent the GRN to the cost and finance
department. The supplier will follow up the delivery order with a purchase invoice. The
purchase invoice is often sent to the cost and finance department proceed with processing the
invoice for payment.
 COST OF MATERIALS (PRICE AND QUANTITY).
No. Raw materials Quantity (2500 unit) Price/Unit (RM)

1 White Flour 100 Kg 1.80
2 Water 30 Liter 1.00
3 Yeast 20 Kg 3.50
4 Salt 20 Kg 0.80
5 Milk 30 Liter 4.00
6 Buttermilk 60 Kg 2.30
7 Cream 60 Kg 3.80
8 Juice 30 Liter 2.50
9 Sugar 50 Kg 1.80
10 Eggs (Grade A) 10 Cart (300 unit) 0.37
11 Butter 40 Kg 4.50
12 Margarine 40 Kg 2.10
13 Shortening 40 Kg 2.30
14 Flavors 40 Kg 12.00
15 Cooking oil 20 Kg 2.00
16 Cream cheese 20 Kg 13.50
 INVENTORY INVESTMENT AND CONTROL
Inventory investment refers to the monetary value of all stock held by a company at any
point in time. When investing on stock items, management has to consider the efficient
operations of the business. Management needs to strike a balance between overstocking and
under stocking materials. Overstocking can result in capital being tied down in unwanted
stock, while under stocking can result in the risk of suffering a stock-out crisis.
In Roti Segar (M) Sdn Bhd, they use an effective inventory control system includes the
adoption of the following techniques which are setting inventory control levels, economic
order quantity model, maintaining proper inventory records, stocktaking, classification of
inventory and pricing of issues. In setting stock levels, consideration must be given to two
variables which are the usage of materials (issues to production) and lead time. Example, Roti
Segar (M) Sdn Bhd used calculation to plan and maintenance their stock levels. The
calculation are Re-order level (ROL) which the stock is allowed to fall before an order for
stock replenishment is placed. Next, minimum stock level is lower than the ROL but above
the absolute zero level. The minimum stock level acts as a buffer stock. Maximum stock level
also one of the calculation that use in Roti Segar (M) Sdn Bhd, which represents the largest
quantity of materials should ever be held. Re-order quantity (ROQ) is the amount in quantity
that will be ordered from the supplier when the stock level reaches the ROL.
After that, economic order quantity (EOQ) is the optimal order quantity that minimizes the
total inventory cost. The total inventory cost consists of cost of ordering and cost of holding.
Ordering cost related to prepare and issuing purchase orders. Holding cost is the cost incurred
in keeping inventory and includes warehouse costs, wastage and opportunity costs of cash
tied up in inventories.
Roti Segar (M) Sdn Bhd, using a perpetual inventory recording system. A perpetual inventory
system is a system of records whereby the receipts and issues of stores are continuously
updated after each transaction, and the balance shows the up-to-date position. This company
also used continuous stocktaking system complements the perpetual inventory recording
system. The checking of stock items is carried out around monthly and each item of stock is
verified at least two times a month.
Besides, most organizations classify their inventories according to type and value. The types
of inventory range from raw materials, parts, components, supplies to finished goods, whilst
the value can range from low costs to extremely high-value items. This techniques that this
company used is ABC inventory analysis. Last but not least, First-in-first-out (FIFO) are the
cost method that Roti Segar (M) Sdn Bhd choose to issued and priced their materials. In other
words, the materials issued are priced in the order in which they are received in the stores.
Using the FIFO method, the closing stock is valued at the latest purchase price and thus it
represents the current market conditions as far as possible.
Roti Segar (M) Sdn Bhd, using just-in-time system (JIT) to ensure they produce the required
items, at the required quality and in the required quantity at the right time. They categorized
the system into JIT production and JIT purchasing. In JIT production, it can reduce of
finished goods stock; reduce of WIP and flexible work force. In JIT purchasing also can
consider frequent deliveries, fewer suppliers and clear raw material specifications.
A3 - COSTING FOR LABOUR
 THE LABOUR COST ACCOUNTING PROCEDURES.
Labour cost is classified as direct and indirect. In manufacturing organizations, there

incur two types of labour costs, which is direct wages paid to the production workers in the
normal working hours, while indirect wages include the payment of overtime premium and
the salary of the supervisors. Direct labour cost relates to the remuneration of employees
directly involved in the completion of a product or service and it is classified under the prime
cost. Indirect labour cost is wages cost other than direct wages and it is classified as
production overheads.
Labour costing involved two departments, which are human resource department and
cost accounting department. Timekeeping is under human resource department. So, the
human resource department of this organization is responsible to manage the people issues
and the preparation of payroll, designing a competitive remuneration and incentive package
for the employees and organizing and conducting relevant trainings as part of an
organization’s ongoing employee development scheme. They also play role as timekeeper,
which are responsible to record the employee attendance and the time spent y each of the
employee in the factory and/or on each job. The employee attendance and the time spent in
the factory are important to provide the basic input for the preparation of the payroll and
developing the cost accounting and control procedures. Roti Sedap (M) use clock card to
make it easier for them to record the employee attendance. The cost accounting department is
to ascertain costs, which includes the labour cost. This is because of to maintaining a job cost
card for each job.
 THE REMUNERATION METHOD ADOPTED
The labour remuneration method that Roti Sedap (M) Sdn Bhd adopted is the time-based
schemes, which is a day rate system. In this system, workers would be paid for the number of
hours worked at a basic rate per hour. In Roti Sedap (M), the basic rate is RM5 per hour and
the normal working hours per day is 8 hours, while for a month is 160 hours (8 hours per day
× 20 working days). If an employee works more than their basic hours then an overtime
payment might be made. Overtime hours will usually be paid at a premium rate. Roti Sedap
(M) Sdn Bhd has set time and a half for hours worked in excess of the normal working hours,
which is 8 hours per day or 160 hours for a month.
 COST OF LABOUR
There are 20 workers in the Roti Sedap (M)’ s manufacturing organization, which are 4
workers in mixture department, 4 workers in shaping department, 6 workers in baking
department and 6 workers in packaging department. The basic rate to be paid is RM5 per
hour and any workers will be paid time and a half (1.5 times) for hours worked in excess of
the normal 160 hours. Example, if one of the packaging department workers work for 200
hours for the month, so the calculation of the worker’s basic pay and overtime premium
would be calculated as follows:
RM
Basic pay (200 hours × RM5) 1000
Overtime premium (200 hours-160 hours) × [(1.5×RM5)- 100
RM5]
Total remuneration for the month 1100
A4 - COSTING FOR OVERHEADS

 Overhead cost pool and units as the cost driver (2500 units)
OVERHEADS TOTAL (RM) RATE (RM/units)

Factory rent 1 500 0.60
Supervisor salaries 2 000 0.80
Set-up machines 8 000 3.20
Insurance of Building 250 0.10
Depreciation on production equipment 500 0.20
Electricity and water 800 0.32
Indirect wages 3200 1.28
 Why the process of allocating overhead different from tracing direct material and direct
labour costs
When activity-based costing is used, the allocated of overheads is by activities, the

denominator can also be called estimated cost driver activity. One cost pool accounts for all
overhead costs, and therefore one predetermined overhead rate is used to apply overhead
costs to products. where one predetermined rate typically based on direct labor hours, direct
labor costs, or machine hours was used to allocate overhead costs. Remember, the focus here
is on the allocation of overhead costs. Direct materials and direct labor are easily traced to the
product and therefore are not a part of the overhead allocation process. The choice of an
allocation method depends on how managers decide to group overhead costs and the desired
accuracy of product cost information. The more activities use, the more it will be charge on
production.
In conclusion, “Direct costs” are those that can be directly traced to a specific cost object.
(As a reminder, a cost object is typically a product.) “Indirect costs” are those that cannot be
directly traced to a single cost object. Because they cannot be traced directly to a specific cost
object, indirect costs must instead be allocated to all of the products they are used to produce.
PART 2B : ANALYSE AND CALCULATE THE COST DATA

Job Cost Sheet

Job Number: 2356 Date initiated: October 1
Department: Production Date completed: October 7
Item: Bread Unit Completed: 1000
Direct Materials Direct Labor Manufacturing Overhead
Req. No. / Amount Ticket Rate per Amount Overheads Rate per Amount
Quantity (RM) hour X (RM) unit (RM)
No. of production
hours X
No.
workers
White 72 001 RM 5 X 2400 Factory rent RM 0.60 X 600
Flour 40 X 12 1000 unit
(40 Kg)
Water 12 002 RM 5 X 640 Supervisor RM 0.80 X 800
(12 Liter)
16 X 8 salaries 1000 unit
Yeast 28 Set-up RM 3.20 X 3 200
(8 Kg)
machines 1000 unit
Salt 6.40 Insurance of RM 0.10 X 100
(8 Kg)
machines 1000 unit
Milk 48 Depreciation RM 0.20 X 200
(12 Liter)
on 1000 unit
production
equipment
Buttermilk 55.20 Electricity RM 0.32 X 320

(24 Kg)
and water 1000 unit
Cream 91.20
(24 kg)
Sugar 36
(20 Kg)
Jucie 24
(12 Liter)
Eggs 44.40
(4 cart)
Butter 72
(16 Kg)
Margarine 33.60
(16 Kg)
Shortening 36.80
(16 Kg)
Cooking oil 16
(8 Liter)
Flavors 192
(16 Kg)
TOTAL PRODUCT COST

Cost RM
Direct Material 767.60
Direct Labour 3 040.00
Indirect wages 3 200.00
Overheads 5 220.00
Total Cost 12 227.60
COST FOR A UNIT OF PRODUCT

Total cost / number unit of products : RM 12 227.60 / 1000
: RM 12.23
PART 3 : SCHEDULE OF COST OF GOODS MANUFACTURE
Production and sales : 25 000 units

Direct material
Quantity (2500
No. Raw materials Price/Unit (RM) Total (RM)
unit)
1 White Flour 100 Kg 1.80 180
2 Water 30 Liter 1.00 30
3 Yeast 20 Kg 3.50 70
4 Salt 20 Kg 0.80 16
5 Milk 30 Liter 4.00 120
6 Buttermilk 60 Kg 2.30 138
7 Cream 60 Kg 3.80 228
8 Juice 30 Liter 2.50 75
9 Sugar 50 Kg 1.80 90
10 Eggs (Grade A) 10 Cart (300 unit) 0.37 111
11 Butter 40 Kg 4.50 180
12 Margarine 40 Kg 2.10 84
13 Shortening 40 Kg 2.30 92
14 Flavors 40 Kg 12.00 480
15 Cooking oil 20 Kg 2.00 40
16 Cream cheese 20 Kg 13.50 270
Total cost of Direct Materials 2 204
Direct Labour Hours

Departments Hours per day No. Of Workers
Process 1 (Mixture) 8 4
Process 2 (Shaping) 8 4
Process 3 (Baking) 8 6
Process 4 (Packaging) 8 6
Store 8 4
Total 32 24
Direct Labour Costs

Departments Workers Rate per No. of Hours Total
hour (RM)
Process 1 4 5 8 4×RM5×8 3200
(Mixture) hours×20
days
Process 2 4 5 8 4×RM5×8 3200
(Shaping) hours×20
days
Process 3 6 5 8 6×RM5×8 4800
(Baking) hours×20
days
Process 4 6 5 8 6×RM5×8 4800
(Packaging) hours×20
days
8 000
Manufacturing Overhead
OVERHEADS COST POOL TOTAL (RM)
Factory rent 1 500
Supervisor salaries 2 000
Set-up machines 8 000
Insurance of Building 250
Depreciation on production equipment 500
Electricity and water 800
Indirect wages 3 200
Total 16 250
Total of product cost = 2204 + 8 000 + 16 250

= RM 26 454
Roti Sedap (M) Sdn Bhd.

Statement for cost of goods manufactured for 31st October 2018
RM RM
Direct material 2 204
Direct labour 8 000

Prime cost 10 204
Manufacturing overhead 16 250
Production cost 26 454
Work-in-process at 1 October 2018 5 000
(-) Work-in-process stock at 31 October 2018 (2 000) 3 000
Cost of goods manufactured for October 29 454
Roti Sedap (M) Sdn Bhd

Statement of cost of goods sold for 31st October 2018
RM RM
Finished goods stock at 1 October 2018 5 400
(+) Cost of goods manufactured for October 29 454
34 854
(-) Finished goods stock at 31 October 2018 10 000
Cost of goods sold 24 854
Roti Sedap (M) Sdn Bhd

Statement of profit and loss for 31st October 2018
RM RM
Sales revenue (120% x 24 854) 29 824.80
(-) Cost of goods sold 24 854
Gross margin 4 970.80
(-) Expenses:
Selling expenses 150
Advertising expenses 200
Utilities 250
Administrative expenses 340
Manager salaries 2 000
Interest expenses 80
3 020
Net profit 1 950.80
PART 4 : DESCRIPTION OF OTHER MANAGEMENT ACCOUNTING

PRACTICES/ TECHNIQUES/ STRATEGIES ADOPTED BY THE
COMPANY TO SUPPORT MANAGERIAL PLANNING, CONTROL AND
DECISION MAKING
(i) Two other possible ways of allocating the overhead to each job.
1. Plant-wide overhead
2. Departmental overhead
(ii) Product cost and targeted selling price of each job and each unit
using the two methods of allocating overhead identified in (i).
PLANT WIDE APPROACH
Mixtur Shaping Baking Packagin Store Total

e g
Number of set 50 30 60 20 160
up
Area in square 8,000 3,000 4,000 5,000 2,000 22,00
meters 0
Number of 1 1 1 1 1 5
employee
Book value of 200 100 100 50 450
machine (RM)
Cost Apportionme Total Mixtur Shapin Bakin Packa Store

nt basis (RM) e g (RM) g ging
(RM) (RM) (RM)
Cost allocated:
Indirect Allocated 3200 - - - - 3200
wages
Cost apportionment :
Factory Area in 1 545. 204.5 272. 340. 136.3
rent square 500 45 5 73 91 6
meters
Supervis Number 2 400 400 400 400 400
or of 000
salaries employe
Set-up Number 8 2500 1500 300 100 -

machine of set up 000 0 0
s
Insuranc Area in 250 90.9 34.10 45.4 56.8 22.73
e of square 1 5 1
Building meters
Deprecia Book 500 222. 111.1 111. 55.5
tion on value of 22 1 11 6
producti machine
on
equipme
nt
Electricit Area in 800 290. 109.1 145. 181. 72.73
y and square 90 0 45 82
water meters
Total 4 2 3 2 3
Overhea 049. 358.8 974. 035. 471.8
ds 48 6 74 51 2
Reapportionment service :
Store Number 867. 867.9 867. 867. (3
of 96 6 95 95 471.8
employe 2)
es
Total 4 3 4 2 -
overhea 917. 226.8 842. 903.
ds 44 2 69 46
Total cost of production

Cost Bread
Direct materials 2 204
Direct Labour 8 000
Total direct cost 10 204
Overhead cost Mixture 4 917.44
Shaping 3 226.82
Baking 4 842.69
Packaging 2 903.46
Total production 26 094.37

Total selling price (RM) (120%X 26 094.37) 31 313.24
Selling price per unit (RM) 31313.24 / 2500 1.25
DEPARTMENTAL APPROACH
COST POOL
OVERHEADS TOTAL Rate (RM)

(RM)
Factory rent 1 500 0.07
Supervisor salaries 2 000 400
Set-up machines 8 000 50
Insurance of Building 250 0.01
Depreciation on production 500 1.11
equipment
Electricity and water 800 0.04
Indirect wages 3 200
Total 16 250
COST DRIVER
Mixture Shapin Baking Packagi Store Tota

g ng l
Number 50 30 60 20 160
of set up
Area in 8,000 3,000 4,000 5,000 2,00 22,0
square 0 00
meters
Number 1 1 1 1 1 5
of
employe
e
Book 200 100 100 50 450
value of
machine
(RM)
COST OF PRODUCTION
Mixtur Shapin Bakin Packagin Store

e g g g
Direct Material 2 204 2 204 2 204 2 204 -
Direct Labour 3 200 3 200 4 800 4 800 -
Overheads:
Indirect wages - - - - 3 200
Factory rent 560 210 280 350 140
(0.07)
Supervisor 400 400 400 400 400
salaries (250)
Set-up machines 250 1 500 3 000 1 000
(50)
Insurance of 80 30 40 50 20
building (0.01)
Depreciation on 222 111 111 55.5
production
equipment (1.11)
Electricity and 320 120 160 200 80
water (0.04)
Total overheads 1 832 2 371 3 991 2 055.50 3 840
Reallocated 960 960 960 960 (3 840)
Total Overheads 2 792 3 331 4 951 3 015.50 -
Total production (2 204+8 000+14 089.5)
= RM 24 293.50
Total selling price (120% x 24 293.50 ) = RM 29 152.20
(RM)
Selling price per 29 152.20 / 25 000 = RM 1.17
unit (RM)
(iii) Advantages and disadvantages of the methods identified? Which

method would you recommend?
1. Plant-wide overhead
Advantages Disadvantages
1. Cost effective 1. Used allocation method
It is less complicated than activity- Traditional costing used cost
based costing; a company’s allocation method which is
accountants do not have to spend allocation method is estimated
as much time performing based on the future. This costing
calculations for traditional costing. system does not take into

Therefore, traditional costing is also consideration the factor of why and
less expensive that activity- based where cost goes. Does not give
costing. proper focus on the variables.
2. Simple 2. Limited accuracy
For external reports, because it is Lack of detailed calculations
simpler and easier for outsiders to distorts actual overhead expenses.
understand.
3. Organized 3. Not helpful
Overhead items are listed and Traditional costing does not provide
assigned to various production and that ability because it looks at
service departments. overhead costs in general.
2. Departmental overhead
Advantages Disadvantages
Easier to manage. Inaccuracy.
Determining overhead rates for each Cost of products might be

department level decentralizes control of misstated as the departmental
production costs and delegates it to rate might not cover the true
department managers. This allows for costs charged.
quicker decision-making with regards to
keeping costs in line. It also makes it
easier to identify trends leading to higher
costs when compared to a method
involving company-wide overhead rates.
This flexibility can allow departments to
allocate costs more accurately.
Fits with production realities. Assumption only.
Overhead rate is an estimate used to

Makes the assumption that
calculate the value of cost of goods sold
departmental overheads can be
and inventory, large differentiation in
proportionate to the basis of
overhead inputs will skew calculations.
allocation.
Less complex and costly than Same volume and nature.

activity-based.
Consider similar volume and
Tracking each individual function is
nature of the products.
costly and complex. Departmental
allocation is more streamlined and easier
to measure without a detailed tracking
system.
Plant-wide approach is better than departmental overhead rates because it is less

complicated than activity-based costing, it also simple to understand. Nor do they have to
create costly systems for tracking expenses. Therefore, plant-wide is less expensive than
activity-based costing.
PART 5: CONCLUSION AND RECOMMENDATIONS
Costing systems are information systems that requires a specific type of information such
as direct labour hours and units produced, to be of value. It is from the input data that product
costs and other information are determined according to the specific costing system defined
methodology. The results obtained would depend on the costing system used, since the same
input data could be used in different ways. Usually, costing system provides information to
help minimize waste, but should not be wasteful in it. In other words, the resources required
to design, implement and maintain a costing system should be less than the benefit derived
from the use of the system.
There are two types that can be compared which is departmental approach and volume
based approach. Traditional costing systems utilize a single, volume-based cost driver. This is
the reason why the traditional product costing system distorts the cost of products. This
traditional approach to costing of products fundamentally utilize a system whereby the total
costs to produce a number of products are divided amongst the various products. By making
use of the traditional costing system, it thus means that all the costs incurred have to be
allocated to one or other product. traditional costing systems also have one or a few indirect
cost pools for each department or whole plant. The application of costs in the traditional
costing system is normally based on an indirect cost driver and that the indirect cost
applications are often financially based.
Besides, departmentalizing of manufacturing overhead costs also allows for the

computation and application of several departmental overhead cost rates instead of having a
single, plant-wide overhead rate. This is important when there are a variety of products and
some require many operations in a department with high overhead rates, while other products
require very few operations in the high cost department. There may also be products which
require many hours of processing, but they occur in low cost departments. For instance, the
assembly and packing departments of a manufacturer are likely to have very low overhead
cost rates. On the other hand, the fabricating and milling departments will likely have much
higher overhead cost rates.
Selling price Roti Segar (M) Sdn Bhd has RM 29 152.20 in method departmental
overheads and plant-wide approach is RM 31 313.24. Through that we can see that using
plant-wide approach, data can be easily accessible. In contrast, departmental overhead rate
which cost of product might be misstated as the departmental rate might not cover the true
costs charged. That is why plant-wide approach selling price is more than departmental
overheads.
Plant-wide approach is better than departmental overhead rates because it is less

complicated than activity-based costing, it also simple to understand. Nor do they have to
create costly systems for tracking expenses. Therefore, plant-wide is less expensive than
activity-based costing.
There are several recommendations can the company do such as increase the number
of machine especially in packaging department. For now, Roti Segar (M) Sdn Bhd used
workers to wrap the product. If they are able to increase the number of machine in this
department, they can increase the number of production and decrease the labor expenses.
Next, Roti Segar (M) Sdn Bhd should find the alternative to expand their market place so that
their product will be spread around the country. Last but not least, company need to be more
competitive. Even though the brand of Roti Segar (M) Sdn Bhd was not popular it does not
mean they are not deserve to compete with other established brand. To be competitive, they
have to increase their marketing, quality of product, an impactful advertisement, provide a
reasonable price of product and improve their efficiency of internal organization.

Management Accounting

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Management Accounting

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PROJECT-BASED : ROTI SEGAR (M) SDN BHD

FACULTY OF MANAGEMENT AND ECONOMICS

DR ANIS SURIATI BINTI AHMAD

NAMA NO. MATRIK

Classification Of Different Type Of Costs

Schedule Of Cost Of Goods Manufacture

Description Of Other Management Accounting

Conclusion and recommendations

PART 1 : COMPANY BACKGROUND

Roti Segar is bumiputera company that able to compete with

Process 1: Order material

Process 7: Selling and distributions

PART 2 : DESCRIPTION OF COSTING FOR MATERIALS, LABOUR AND

PART 2 (A) - CLASSIFICATION OF DIFFERENT TYPE OF COSTS

 PRODUCT COSTING PROCESS

Costing For Materials

COSTS PRODUCT PERIOD CATEGORY OF

A2 - COSTING FOR MATERIALS

 PROCUREMENT AND CONTROL PROCEDURES

The procurement and control procedures involves several department consisting of

 COST OF MATERIALS (PRICE AND QUANTITY).

No. Raw materials Quantity (2500 unit) Price/Unit (RM)

 INVENTORY INVESTMENT AND CONTROL

A3 - COSTING FOR LABOUR

 THE LABOUR COST ACCOUNTING PROCEDURES.

Labour cost is classified as direct and indirect. In manufacturing organizations, there

 THE REMUNERATION METHOD ADOPTED

A4 - COSTING FOR OVERHEADS

OVERHEADS TOTAL (RM) RATE (RM/units)

When activity-based costing is used, the allocated of overheads is by activities, the

PART 2B : ANALYSE AND CALCULATE THE COST DATA

Job Cost Sheet

Buttermilk 55.20 Electricity RM 0.32 X 320

TOTAL PRODUCT COST

COST FOR A UNIT OF PRODUCT

PART 3 : SCHEDULE OF COST OF GOODS MANUFACTURE

Production and sales : 25 000 units

Direct Labour Hours

Direct Labour Costs

Total of product cost = 2204 + 8 000 + 16 250

Roti Sedap (M) Sdn Bhd.

Direct labour 8 000

Roti Sedap (M) Sdn Bhd

Roti Sedap (M) Sdn Bhd

PART 4 : DESCRIPTION OF OTHER MANAGEMENT ACCOUNTING

PLANT WIDE APPROACH

Mixtur Shaping Baking Packagin Store Total

Cost Apportionme Total Mixtur Shapin Bakin Packa Store

Set-up Number 8 2500 1500 300 100 -

Total cost of production

Total production 26 094.37

OVERHEADS TOTAL Rate (RM)

Mixture Shapin Baking Packagi Store Tota

Mixtur Shapin Bakin Packagin Store

(iii) Advantages and disadvantages of the methods identified? Which

calculations for traditional costing. system does not take into

Determining overhead rates for each Cost of products might be

Overhead rate is an estimate used to

Less complex and costly than Same volume and nature.

Plant-wide approach is better than departmental overhead rates because it is less

PART 5: CONCLUSION AND RECOMMENDATIONS

Besides, departmentalizing of manufacturing overhead costs also allows for the

Plant-wide approach is better than departmental overhead rates because it is less