2 BBMC1113 MANAGEMENT ACCOUNTING Answer ALL FOUR (4) questions. Question 1 ABC Sdn. Bhd. sells a single product, which is a flower pot. The managing director is aware that there are different methods of product costing. However, he does not understand their impact on profitability. He has provided you with the information relating to the most recent two-month trading period as stated below. He has asked for your assistance in highlighting the difference in profit that may arise from using these costing methods. Production and sales volumes: November December Production (pots) 26,000 28,000 Sales (pots) 23,000 26,000 Cost data per pot: Selling price RM25 Direct materials RM8 Direct labour RM0.50 Variable production overheads 200% of direct labour Sales commission 5% of sales valueNotes: 1. Variable production overheads are 200% of direct labour. 2. Sales commission is 5% of sales value. 3. There were 5,000 flower pots in inventory at 1 November. 4. Fixed production overheads are budgeted at RM600,000 per annum and are absorbed into the products based on a normal output of 300,000 per annum. 5. The actual fixed production overheads is RM50,000. Required: (a) Prepare the management accounts for the months of November and December showing the profit calculated using the following methods: (i) Marginal / variable costing; (ii) Absorption costing. (18 marks) ( b ) Reconcile the profits calculated in parts (a)(i) and (ii) above. (3 marks) (c) Suggest ANY TWO (2) reasons why the marginal costing method is more suitable for short- term decision making as compared to the absorption costing method. (4 marks) [Total: 25 marks]