Question 2 Heng Bhd manufactures and sells their product Turbo Washer to the various dealers within the country. The budgeted production and sales per month is 7,000 washers. The selling price per unit of the washer is RM180.

The unit production cost is as follows: Direct Materials - RM38 Direct Wages - RM44 Variable Wages - RM28 Fixed overheads - RM20

b. Differentiate a variable cost from a fixed cost and explain why the distinction between variable and fixed costs is important in cost accounting.