WT Steel Sdn Bhd is a manufacturer of steel products which are used as raw materials...
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WT Steel Sdn Bhd is a manufacturer of steel products which are used as raw materials for heavy industries. The most popular products that the company produces is High Tensile Deformed Bar (HTDB). The production of one unit of HTDB requires 3 kilograms of raw materials at a cost of RM 8 per kilogram and 1.5 hours of direct labour at RM10 per hour. The selling price per unit of HTDB is RM180. The company's production overhead costs consist of the following: RM7 per unit Variable production overhead Fixed production overhead RM20 per unit Other costs incurred are as follows: General administration cost Marketing cost Variable selling and distribution The fixed production overhead is absorbed based on a budgeted normal production of 120,000 units. It is assumed that all fixed costs are the same as budgeted and to be incurred evenly throughout the year. The following information is made available pertaining to the production and sales of HTDB as follow: RM3,300,000 per annum RM900,000 per annum 5% of sales. January 2022 Production 10,200 units Sales 9,980 units Note: The opening inventory in December 2021 was 1,200 units. Required: a. i. ii. b. i. December 2021 9,950 units 9,720 units Compute the production cost per unit under marginal and absorption approach. (4 marks) Prepare the Marginal Costing and Absorption Costing Income Statement of WT Steel Sdn Bhd for the month of January 2022. (14 marks) Prepare a Net Profit Reconciliation Statement to show the differences in the net profit under both costing approaches. (3 marks) State the reasons when net profits reported in (a) above marginal costing equal to profit calculated under absorption costing. (2 marks) (Total: 23 marks) WT Steel Sdn Bhd is a manufacturer of steel products which are used as raw materials for heavy industries. The most popular products that the company produces is High Tensile Deformed Bar (HTDB). The production of one unit of HTDB requires 3 kilograms of raw materials at a cost of RM 8 per kilogram and 1.5 hours of direct labour at RM10 per hour. The selling price per unit of HTDB is RM180. The company's production overhead costs consist of the following: RM7 per unit Variable production overhead Fixed production overhead RM20 per unit Other costs incurred are as follows: General administration cost Marketing cost Variable selling and distribution The fixed production overhead is absorbed based on a budgeted normal production of 120,000 units. It is assumed that all fixed costs are the same as budgeted and to be incurred evenly throughout the year. The following information is made available pertaining to the production and sales of HTDB as follow: RM3,300,000 per annum RM900,000 per annum 5% of sales. January 2022 Production 10,200 units Sales 9,980 units Note: The opening inventory in December 2021 was 1,200 units. Required: a. i. ii. b. i. December 2021 9,950 units 9,720 units Compute the production cost per unit under marginal and absorption approach. (4 marks) Prepare the Marginal Costing and Absorption Costing Income Statement of WT Steel Sdn Bhd for the month of January 2022. (14 marks) Prepare a Net Profit Reconciliation Statement to show the differences in the net profit under both costing approaches. (3 marks) State the reasons when net profits reported in (a) above marginal costing equal to profit calculated under absorption costing. (2 marks) (Total: 23 marks)
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Related Book For
Equity Asset Valuation
ISBN: 978-0470571439
2nd Edition
Authors: Jerald E. Pinto, Elaine Henry, Thomas R. Robinson, John D. Stowe, Abby Cohen
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