FF Sdn. Bhd. produces and sells a single product. The following information is available for preparing...

 

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FF Sdn. Bhd. produces and sells a single product. The following information is available for preparing the budgeted profit statement for financial year 2021: Selling price Direct material costs Direct labour costs RM per unit 50 10 4 Budgeted fixed production overheads will be RM200,000 per year absorbed based on an activity level of 40,000 units per year. Sales Production Opening stock Units per year 60,000 65,000 15,000 Fixed selling costs are budgeted to be RM400,000 per year and variable selling costs at RM1.50 per unit. Required: (a) (b) (c) Prepare the budgeted income statement for financial year 2021 using the marginal costing method. (10 marks) Reconcile the net profit calculated in part (a) above with the net profit under the absorption costing principle. (4 marks) Discuss the effects of marginal costing and absorption costing on inventory valuation and profit determination. (11 marks) [Total: 25 marks] FF Sdn. Bhd. produces and sells a single product. The following information is available for preparing the budgeted profit statement for financial year 2021: Selling price Direct material costs Direct labour costs RM per unit 50 10 4 Budgeted fixed production overheads will be RM200,000 per year absorbed based on an activity level of 40,000 units per year. Sales Production Opening stock Units per year 60,000 65,000 15,000 Fixed selling costs are budgeted to be RM400,000 per year and variable selling costs at RM1.50 per unit. Required: (a) (b) (c) Prepare the budgeted income statement for financial year 2021 using the marginal costing method. (10 marks) Reconcile the net profit calculated in part (a) above with the net profit under the absorption costing principle. (4 marks) Discuss the effects of marginal costing and absorption costing on inventory valuation and profit determination. (11 marks) [Total: 25 marks]

Answer rating: 100% (QA)

a Budgeted Income Statement for 2021 using Marginal Costing Method Sales 60000 units x RM50 per unit ... View the full answer