Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Uptown Sdn Bhd is a company located in Melaka specialises in manufacturing of calculator. The company's famous products are two models of pocket calculator that

Uptown Sdn Bhd is a company located in Melaka specialises in manufacturing of calculator.

The company's famous products are two models of pocket calculator that are Basic model

and Scientist model. The Basic model is sold for RM20 each, has a direct material cost of RM5

and requires 0.25 hours of labour time to produce. The other model, the Scientist, sells for

RM30 each, has a direct material cost of RM6.50 and requires 0.375 hours to produce.

Due to the Covid-19 pandemic crisis, the company is facing a shortage of labour. The labour

of the company is paid at RM24 per hour and is currently very scarce. The existing labour has

been working at full capacity. At the same time, the demand for the company's calculator is

increasing. The company is currently producing 8,000 units of the Basic model and 4,000 units

of the Scientist model per month, while fixed costs are RM96,000 per month.

An overseas customer Texas Corporation has offered the company a contract, worth

RM140,000 to supply to them a new model of pocket calculator similar to what the company

produced but with certain modification and the new model is called Scientific. Due to the

contract from the overseas supplier the company has made a research and discovered the

following cost to be incurred:

The labour time for the contract would be 1,200 hours

The material cost would be RM36,000 plus the cost of a special component XX1.

Special component XX1 is not normally used in the company's models. It could be

purchased from a supplier for RM10,000 or alternatively, it could be made internally

for a material cost of RM4,000 and additional labour time of 150 hours.

Analyse which model of the calculator should be reduced by the company to accommodate the special order from the overseas customer.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Information Systems

Authors: Pat Wheeler, Ulric J Gelinas, Richard B Dull

9th Edition

0538469315, 9780538469319

More Books

Students also viewed these Accounting questions

Question

6. How can a message directly influence the interpreter?

Answered: 1 week ago