Pangkor Bhd produces one uniform product. The assembly department encounters wide fluctuation in activity levels from month to month. However, the following department overhead budget depicts expectations of currently attainable efficiency for an average or normal level of activity of 20,000 units of production per month:

(2) As the newly appointed director of Pangkor Bhd, you are required to advise the board of directors why it is necessary to employ a management accountant.

Your answer should include the following:-

(iii) Management accounting techniques and its application

(20 marks)

ins Budget Normal month (RM) Actual cost incurred in the month of January 2020 (RM) le Indirect labour (variable) 20,000 19,540 1,000 1,000 Supplies (variable) Power (variable) Repairs (variable) 1,000 980 1,000 880 as al Other variable overhead cost 2,000 1,800 Depreciation (fixed) 10,000 10,000 Other fixed overhead cost 5,000 5,000 din hing 40,000 39,200