Question 2

Nabita Sdn Bhd(NSB) manufactures small camping tents. NSB produced 3,000 units during the year. These camping tents sell for RM150 each. NSB had 500 units in finished goods inventory at the beginning of the year. At the end of the year.there were 800 units in finished goods inventory. The following information was supplied by its accountant:

RM Direct labour cost 10,500 Purchases of raw materials 15,000 Depreciation of machinery 1,000 Insurance expenses 4,500 Factory rent 2,000 Factory supervision 3,000 Utilities expenses 2,500 Indirect labour cost 3,500 Administration salaries 15,000 Sales Commission 12,000

Advertising 20,000 Materials inventory, May 1 6,000 Work in process inventory, May 1 12,000 Finished goods inventory, May 1 2,100 Materials inventory, May 31 8,000 Work in process inventory, May 31 7,000 Finished goods inventory, May 31 800

Additional information:

Only 70% of the utilities expense and 80% of the insurance expense apply to factory operations. The remaining amounts should be charged for selling and administrative activities.

Required:

a) Compute prime cost, manufacturing cost, and cost of goods manufactured. (11 marks)

b) Compute the cost of goods sold.