QUESTION1 AYOPSdnBhdistheproducerofindustriallubricantsmadefrompalmoilwaste Thefollowingisdata that have been collected prior to production in the beginning of 2023 The allocation basisfor the variable overhead is by direct labor hours The predetermined variable overhead rate isRM5 per direct labor hour Each unit of the product requires 3 direct labor hours The labor rateis RM10 per hour The cost of raw materials is RM5 per kg, and each product will require 2 kg ofrawmaterials Therewillbeamaintenanceexpenseonmachineswhichisbasedonthemachinehours used The maintenance predetermine overhead rate is RM450 per machine hour Thecompany estimates the machine hours for production are 20 hours The company has preparedaproformanetoperatingincomestatementonbudgetedsalesof2,000unitsandsellstheproductat RM100 each AYOPSdnBhdProformaNet OperatingIncomeStatement Units Price(RM) Total(RM) Sales 2000 100 200,000 RawMaterials 4000 5 20,000 DirectLabor 6,000 10 60,000 MachineMaintenance 20 450 9,000 GeneralVariableOverhead 6,000 5 30,000 TotalvariableCost 119,000 ContributionMargin 81,000 FixedOverheadCost 50,000 NetOperatingIncome 31,000 By the end of the year 2023, the company found that actual sales and costs have differed fromthe budget Actual sales made for 2023 were RM220,000 with each unit sold at RM100 Theallocationbasisforthevariableoverheadisbydirectlaborhours Thevariableoverheadexpensewas RM44,000 Each unit of the product used 2 5 direct labor hours The labor rate was RM9 5perhour ThecostofrawmaterialswasRM6perkg,andeachunitofproductused2 5kgofrawmaterials Thecompanyhasutilized40machinehoursintheproduction,andcostofmaintenanceis RM600 permachine hour PreparetheincomestatementliketheProformaNetOperatingIncomestatementbasedontheactualresultsofthe company Prepareavarianceanalysisoftheitemsbelowbetweenthebudgetandtheactualresultsofthecompany Thevarianceanalysisshouldincludeprice,usage,andvarianceanalysisifappropriate Identifyany specificproblemthatthecompany shouldaddress i RawMaterials ii DirectLabor iii GeneralVariableOverhead iv MaintenanceExpense v FixedOverheadCost vi Sales

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QUESTION1 AYOPSdnBhdistheproducerofindustriallubricantsmadefrompalmoilwaste.Thefollowingisdata that have been collected prior to production in the beginning of 2023. The allocation basisfor the variable overhead is by direct labor hours.

QUESTION1

AYOPSdnBhdistheproducerofindustriallubricantsmadefrompalmoilwaste.Thefollowingisdata that have been collected prior to production in the beginning of 2023. The allocation basisfor the variable overhead is by direct labor hours. The predetermined variable overhead rate isRM5 per direct labor hour. Each unit of the product requires 3 direct labor hours. The labor rateis RM10 per hour. The cost of raw materials is RM5 per kg, and each product will require 2 kg ofrawmaterials.Therewillbeamaintenanceexpenseonmachineswhichisbasedonthemachinehours used. The maintenance predetermine overhead rate is RM450 per machine hour. Thecompany estimates the machine hours for production are 20 hours. The company has preparedaproformanetoperatingincomestatementonbudgetedsalesof2,000unitsandsellstheproductat RM100 each.

AYOPSdnBhdProformaNet OperatingIncomeStatement	Units	Price(RM)	Total(RM)
Sales	2000	100	200,000
RawMaterials	4000	5	20,000
DirectLabor	6,000	10	60,000
MachineMaintenance	20	450	9,000
GeneralVariableOverhead	6,000	5	30,000
TotalvariableCost			119,000
ContributionMargin			81,000
FixedOverheadCost			50,000
NetOperatingIncome			31,000

By the end of the year 2023, the company found that actual sales and costs have differed fromthe budget. Actual sales made for 2023 were RM220,000 with each unit sold at RM100. Theallocationbasisforthevariableoverheadisbydirectlaborhours.Thevariableoverheadexpensewas RM44,000. Each unit of the product used 2.5 direct labor hours. The labor rate was RM9.5perhour.ThecostofrawmaterialswasRM6perkg,andeachunitofproductused2.5kgofrawmaterials.Thecompanyhasutilized40machinehoursintheproduction,andcostofmaintenanceis RM600 permachine hour.

PreparetheincomestatementliketheProformaNetOperatingIncomestatementbasedontheactualresultsofthe company.
Prepareavarianceanalysisoftheitemsbelowbetweenthebudgetandtheactualresultsofthecompany.Thevarianceanalysisshouldincludeprice,usage,andvarianceanalysisifappropriate.Identifyany specificproblemthatthecompany shouldaddress.

i. RawMaterials

ii. DirectLabor

iii. GeneralVariableOverhead

iv. MaintenanceExpense

v. FixedOverheadCost

vi. Sales