Question 3

Bonika Sdn Bhd (BSB) manufactures small camping tents. BSB produced 3,000 units during the year. These camping tents sell for RM150 each. BSB 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 to selling and administrative activities.

Required:

1. Compute prime cost, manufacturing cost and cost of goods manufactured.

(8 marks)

2. Compute cost of goods sold.

(2 marks)

(Total: 10 Marks)