Question
Perwira Holdings (PH) began business at the start of the current year and maintains its accounting records on an absorption-cost basis. The following selected information
Perwira Holdings (PH) began business at the start of the current year and maintains its accounting records on an absorption-cost basis. The following selected information appeared on the company's profit or loss statement and end-of-year statement of financial position:
Profit or Loss Data: RM
Sales revenues (35,000 units @ RM22) 770,000
Gross Margin 210,000
Total sales and administrative expenses 160,000
Financial Position Data:
Ending finished-goods inventory (12,000 units) 192,0000
There is no beginning finished-goods inventory. PH achieved its planned production level for the year. The company's fixed manufacturing overhead totaled RM141,000, and the firm paid a 10% commission based on gross sales (RM) to its sales force.
Required:
a) Compute the number of units that PH planned to produce during the year. (2 marks)
b) Compute the fixed manufacturing overhead per unit for PH. (2 marks)
c) Compute PH's cost of goods sold. (3 marks)
d) Compute the variable cost per unit for PH. (3 marks)
e) Discuss the basic difference between absorption costing and variable costing from a product-costing perspective. (2 marks)
f) PH starts another product under a new subsidiary, Jaguh Sdn Bhd (JSB). The following data are related to JSB:
Planned and actual production 200,000 units
Sales at RM48 per unit 170,000 units
Manufacturing costs:
Variable RM18 per unit
Fixed RM840,000
Selling and administrative costs:
Variable RM7 per unit
Fixed RM925,000
Required:
Prepare JSBs variable costing income and absorption costing income.
(13 marks)
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