MANAGEMENT ACCOUNTING URGENT

PLEASE ANSWER ALL PARTIS IT IS ONE QUESTION

Question 2 Superior Markets Bhd operates three stores in a large metropolitan area. A segmented absorption costing income statement for the company for the last quarter is given below: Superior Markets Bhd Income statement for the quarter ended 30 September 2020 North Total Store RM RM Sales 3,300,000 820,000 Cost of goods sold (1,657,200) (403,200) Gross margin 1,642,800 416,800 Store selling and administrative expenses (1,100,000) (237,400) Net operating profit 542,800 179,400 South Store RM 1,300,000 (660,000) 640,000 East Store RM 1,180,000 (594,000) 586,000 (465,900) 174,100 (396,700) 189,300 Superior Markets Bhd operates via centralised purchasing and warehouse system. All Stores (i.e. North store, South store and East store) share the purchasing and warehouse facility, which operates under the control of Headquarter. As such, all centralised costs incurred by the centralised purchasing and warehouse system, as well as Headquarter administrative expenses are shared by all three stores. All these while, the centralised costs are shared equally by North store, South store and East store. During a recent meeting, the North Store manager expressed his dissatisfaction on the basis used in the sharing of centralised costs. He argued, sales generated by North Store is the lowest among three stores, thus the sharing of centralised costs equally is unfair to North Store. He suggested centralised costs to be shared on the basis of sales value. The centralised costs are as below: Purchasing staff salaries Warehouse rental Headquarter office expenses Top management staff salaries RM 42,000 120,000 18,000 96,000 276,000 A recent meeting concluded activity-based costing is be considered as the basis in allocating the centralised cost. As such, information pertaining suitable cost drivers were extracted. It was agreed that the only basis on which to allocate the "Headquarter office expenses" was sales revenue. Suitable cost drivers North Store Total 100% South Store 35% East Store 35% 30% % of time spent by top management staff in solving store matters Number of requisitions processed by purchasing staff Warehouse floor area (feet) 7,150 1,800 3,050 2,300 5,000 1,000 2,500 1,500 Required: (a) Calculate for each store, the net profit after deducting centralised costs, using the following basis in allocating the centralised costs: (i) Sales value; and (6 marks) (ii) Activity-based costing. (15 marks) (b) Discuss which of the above basis (at part a above) is a better approach in allocating the centralised costs. Please provide ONE (1) example (using one of the centralised costs) to illustrate and support your discussion. Note: General discussion is not allowed, you are required to discuss using information from Superior Markets Bhd. (11 marks) [Total: 32 marks]