BKAM3023 MANAGEMENT ACCOUNTING II

QUESTION 1

Pumpkins Enterprise is considering whether to make or buy a component that is used in the production of pump machines. The annual cost of producing the 100,000 units needed by the enterprise is as follows:

Traceable variable manufacturing costs RM300,000

Traceable fixed manufacturing cost RM100,000

Allocated corporate overhead RM50,000

If Pumpkins Enterprise were to discontinue production of the component, traceable fixed manufacturing costs would be reduced by 80%

(a)PE should buy the 100,000 components if the per-unit cost of purchasing is less than what amount?

(b)The irrelevant costs in the company's make-or-buy decision total: what?

QUESTION 2

2. HT Sdn Bhd (HTSB) manufactures two products: shoes and socks. The results of operations for 2020 follow.

Shoes Socks Total Units 10.000 3.700 13.700 Sales RM240,000 RM740,000 RM980,000 Less Cost of Sales RM180,000 RM481,000 RM661,000 Gross Margin RM60,000 RM259,000 RM319,000 Less Selling RM60,000 RM134,000 RM194,000 Expenses Income RM125,000 RM125,000