Flo Beauty Sdn Nhd produces ginger patches and sells to local market since 2020. The product is one of the best natural solutions for lymphatic drainage, body pain, migraine, joint pain and stomach bloating. Due to that, it is outshining several other patches in the market. Selling price for one box ginger patches is RM100.

Standard cost for 10 boxes of ginger patches was as follows: Direct materials cost: RM Fresh Ginger 1,500 grams (RM16 per kg) 24.00 Tumeric 500 grams (RM12 per kg) 6.00 Mixed Honey & Water 5 liters (RM10 per liter) 50.00 Direct labour cost: Skilled 120 minutes (RM20 per hour) 40.00 Semi-skilled 60 minutes (RM10 per hour) 10.00 It is the business policy to absorb production overhead into product costs based on unit produced. Budgeted variable overhead cost was RM900 while budgeted fixed production overhead was RM2,000. Monthly budgeted production was 1,000 boxes. At the end of the period, the following results were reported: Units produced 800 boxes Actual Sales 750 boxes Direct materials costs: RM Fresh Ginger 96 kgs (RM19 per kg) 1,824 Tumeric 48 kgs (RM10 per kg) 480 Mixed Honey & Water 480 liters (RM14 per liter) 6,720 Direct labour cost: Skilled 15 hours @RM22 per hour 330 Semi-skilled 9 hours @RM9 per hour 81 Production overhead 4.000 Further investigations of the production process revealed that the price of fresh ginger has increased to RM20 per kg due to the short supply in the market. To maintain profitability of the business, Flo Beauty Sdn Bhd reduced the usage of Tumeric by 20%. Fixed production overhead costs were 30% from total production overhead. Note: Assuming one (1) liter Mixed Honey & Water equivalent to 1.2 kgs