MANAGEMENT ACCOUNTING URGENT

PLEASE ANSWER ALL PARTS IT IS ONE QUESTION

Question 1 You are the Assistant Management Accountant for a manufacturing company. You have been assigned to assist the Marketing Director in price setting for a new product to be introduced by the company. You are provided with the following product information: 1. Two types of materials are required: Material P and Q. 2. Each finished goods unit requires 3kg of material P, at cost of RM10 per kg. 3. Each finished goods unit requires net 4kg of processed material Q. Unprocessed material Q is purchased at cost of RM12 per kg. Each processing of 5kg of unprocessed material Q will yield the net 4kg of processed material Q needed for each finished goods unit. 4. Both skilled and semi-skilled labour work on the production. Each unit requires 2.5 hours and 4 hours of skilled and semi-skilled labour hours respectively. The skilled labour is paid RM20 per hour. The semi-skilled labour is paid half of the rate of skilled labour. 5. Both the fixed and variable overhead is to be absorbed to production cost using skilled labour hours. Variable overhead absorption rate is RM6 per hour. 6. The annual fixed overhead is budgeted to be RM800,000. A total of 65,000 units is expected to be produced and sold per annum. It is assumed the production and sales are accrue evenly throughout the year. Required: (a) Calculate the total production cost per unit. (6 marks) (b) Assume price is set using full cost plus approach, with profit of 50% mark-up on total production cost. Calculate the selling price per unit. (3 marks) (c) A recent survey was conducted and it was revealed customers are willing to pay much lesser than the price set by your at part (b) above. Assume the original selling price per unit calculated by you (at part b above) is RM300 per unit. The market survey revealed customers are only willing to pay RM290. Explain to the Marketing Director over target costing strategy (the profit on cost of 50% is desired). Recommend THREE (3) steps of actions under target costing strategy. (9 marks) [Total: 18 marks]