Question 1

1. Describe the FOUR (4) methods of allocating joint costs to products. (12 marks)

2. Weng Tai company simultaneously produces three products (X, Y and Z) from a single process. X and Y are processed further before they can be sold; Z is a by-product that is sold at split off point for RM2 per unit without incurring any further process costs. Joint costs are apportioned using the final sales value method. The sales prices of X and Y after further processing are RM40 per unit and RM35 per unit respectively. Data for April are as follows:

	RM
Joint production costs that produced 5,000 units of X, 5,500 units of Y and 3,500 units of Z	150,000
Further processing costs for 5,000 units of X	30,000
Further processing costs for 5,500 units of Y	40,000

Required:

Calculate the total costs and profit for the production of X and Y. (14 marks)

3. Discuss THREE (3) arguments in support of variable costing and absorption costing. (12 marks)

4. Zency Sdn Bhd produces pens. Data concerning the companys operations last year appear as follows:

Units in beginning inventory	5,000
Units produced	50,000
Units sold	46,000
Selling price per unit	RM2.50
Variable costs per unit:
Direct materials	RM0.80
Direct labor	RM0.50
Variable manufacturing overhead	RM0.10
Variable selling and administrative overhead	RM0.05
Fixed costs in total:
Fixed manufacturing overhead	RM20,000
Fixed selling and administrative overhead	RM10,000

Required:

Prepare an income statement for the year using absorption costing. (12 marks)