Question
Cengkih Manis Sdn Bhd is involved in the Food & Beverage industry. Detail information on inventory, production and revenues are given below: Period 1 Period
Cengkih Manis Sdn Bhd is involved in the Food & Beverage industry. Detail information on inventory, production and revenues are given below: | ||
| Period 1 | Period 2 |
Production (litres) | 50,000 | 60,000 |
Sales (litres) | 55,000 | 35,000 |
Opening Inventory (litres) | 15,000 | - |
Closing Inventory (litres) | - | 25,000 |
Below are the financial data based on the activity level between 50,000 to 60,000 litres. | ||
| Cost/litre (RM) |
|
Direct raw material | 3.50 |
|
Direct labour | 6.50 |
|
Production overheads | 10.00 |
|
Total cost/litre | 20.00 |
|
Selling Price | 35.00 |
|
Administration overheads |
| RM125,000 |
Percentage of Fixed cost in Production overhead | 55% |
Required:
- Prepare Operating Statement for Period 1 and Period 2 using Marginal Costing.
- Prepare Operating Statement for Period 1 and Period 2 using Absorption Costing.
- Illustrate THREE (3) differences between marginal costing and absorption costing.
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