Question 2

In the coming year, Power Company expects to sell 70,000 units of product X at RM13 each. Power Controller provided the following for the coming year.

Units of production	110,000
Direct material per unit	RM4.50
Direct labour per unit	RM3.00
Variable overhead per unit	RM1.50
Variable selling expenses per unit	RM1.10
Total fixed overhead	RM132,000
Total fixed selling expenses	RM30,000
Total fixed administrative expenses	RM15,000

Required:

(a) Calculate the cost of one unit of product X under absorption costing.

(b) Calculate the cost of one unit of product X under variable costing.

(c) Calculate Powers net year operating income under absorption costing.

(d) Calculate Powers next year operating income under variable costing.