Question
Q4: Tools and Parts Engineering Berhad supplies radiators to a local company assembling motor vehicles. The following information is provided in relation to the production
Q4: Tools and Parts Engineering Berhad supplies radiators to a local company assembling motor vehicles. The following information is provided in relation to the production of this product:
Production and sales volumes:
Production (Radiators) Sales (Radiators)
January 600 400
February 480 600
Cost data:
Selling price per Radiator RM300
Direct materials Water pump per unit RM70
Direct materials Copper per unit RM30
Direct materials Gasket per unit RM10
Direct labour per radiator RM15
Variable production overheads per unit RM4
Fixed production overheads are budgeted at RM5,000 per month and are absorbed on a unit basis. The normal level of production is budgeted at 500 units per month.
Other costs
Variable sales commission 5% of sales value
Fixed selling RM5,000 per month
Fixed administration RM3,000 per month
Notes:
- There was no opening inventory of the product as at 1 January.
Prepare the management accounts showing profit calculated using Absorption costing system.
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