Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Happy Sdn Bhd is involved in manufacturing a single product, Toffee, which is sold at RM45 per unit. The following is budgeted cost data: RM

Happy Sdn Bhd is involved in manufacturing a single product, Toffee, which is sold at RM45 per unit. The following is budgeted cost data:

RM per unit

Direct materials 8.00

Direct labour 3.50

Variable production overhead 2.50

Variable selling and distribution costs 3.00

Fixed production overhead costs are budgeted at RM550,000 per annum.Normal production level is 100,000 units per annum. The predetermined overhead absorption rate is computed based on normal production units. The actual production for the year ended 30 November 2018 was 120,000 units.The store ledger card of the business showsclosing stock balance of 25,000 units as at 31 October 2019.

The summarized income statement for the year ended 31 October 2019 below was prepared using marginal costing:

RM'000RM'000

Sales revenue 4,500

Less: Variable costs (1,700)

Contribution margin 2,800

Less: Fixed costs

Production overhead 550

Administrative expenses 220

Selling and distribution expenses200 (970)

Net profit 1,830

REQUIRED:

i.Calculate production cost per unitunder marginal and absorption costing methods. (9 Marks)

ii.income statement for the year ended 31 October 2019 based on the Absorption Costingapproach. Your answer must clearly show the opening and closing stock values.(11 Marks)

iii.Justify which approach you will use if the report required for your company to get loan from the bank. (5 Marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Audit Sampling

Authors: Ray Whittington, Dan M Guy, D R Carmichael

5th Edition

047137590X, 9780471375906

More Books

Students also viewed these Accounting questions

Question

2. In what way can we say that method affects the result we get?

Answered: 1 week ago