shank68
May 12, 2017, 03:11 AM
QUESTION 1
Sedili enterprise is a manufacturer of school uniforms. The company's income statement for year 2016 is shown below.
Sales (49,000 units @ RM26.00)
RM1,274,000
Cost of goods sold (49,000 units @ RM20.00)
980,000
Gross Profit
294,000
Sales and Administrative expenses
99,000
Net income
RM195,000
The General Manager went to a seminar in management accounting and learn about variable costing method. As he was trying to improve the Company’s profitability, he gathered the following data to assess the behavioural patterns of the cost. The following is incurred:
Direct material, direct labour & variable
manufacturing overhead cost
RM15 per unit
Sales and Administrative expenses
RM 1.00 per unit
Required:
a) Compute the cost of a pair of uniforms based on variable costing method.
b) Prepare the income statement for the Company using variable costing approach.
c) Explain why the net income reported under variable costing method different from that recorded by the absorption method (show the calculation the income reconciliation).
d) Based on the answers obtained in (b) and using cost-volume-profit analysis, determine:
i. Break-even point (in unit and ringgit).
ii. Calculate the unit sales given that the Company is targeting an operating income of RM250,000.
iii. The marketing manager believe that an increase of RM 5,000 in advertising expenditures will generate sales of 50,000 units. Should this action be taken? QUESTION 1
Sedili enterprise is a manufacturer of school uniforms. The company's income statement for year 2016 is shown below.
Sales (49,000 units @ RM26.00)
RM1,274,000
Cost of goods sold (49,000 units @ RM20.00)
980,000
Gross Profit
294,000
Sales and Administrative expenses
99,000
Net income
RM195,000
The General Manager went to a seminar in management accounting and learn about variable costing method. As he was trying to improve the Company’s profitability, he gathered the following data to assess the behavioural patterns of the cost. The following is incurred:
Direct material, direct labour & variable
manufacturing overhead cost
RM15 per unit
Sales and Administrative expenses
RM 1.00 per unit
Required:
a) Compute the cost of a pair of uniforms based on variable costing method.
b) Prepare the income statement for the Company using variable costing approach.
c) Explain why the net income reported under variable costing method different from that recorded by the absorption method (show the calculation the income reconciliation).
d) Based on the answers obtained in (b) and using cost-volume-profit analysis, determine:
i. Break-even point (in unit and ringgit).
ii. Calculate the unit sales given that the Company is targeting an operating income of RM250,000.
iii. The marketing manager believe that an increase of RM 5,000 in advertising expenditures will generate sales of 50,000 units. Should this action be taken?
Sedili enterprise is a manufacturer of school uniforms. The company's income statement for year 2016 is shown below.
Sales (49,000 units @ RM26.00)
RM1,274,000
Cost of goods sold (49,000 units @ RM20.00)
980,000
Gross Profit
294,000
Sales and Administrative expenses
99,000
Net income
RM195,000
The General Manager went to a seminar in management accounting and learn about variable costing method. As he was trying to improve the Company’s profitability, he gathered the following data to assess the behavioural patterns of the cost. The following is incurred:
Direct material, direct labour & variable
manufacturing overhead cost
RM15 per unit
Sales and Administrative expenses
RM 1.00 per unit
Required:
a) Compute the cost of a pair of uniforms based on variable costing method.
b) Prepare the income statement for the Company using variable costing approach.
c) Explain why the net income reported under variable costing method different from that recorded by the absorption method (show the calculation the income reconciliation).
d) Based on the answers obtained in (b) and using cost-volume-profit analysis, determine:
i. Break-even point (in unit and ringgit).
ii. Calculate the unit sales given that the Company is targeting an operating income of RM250,000.
iii. The marketing manager believe that an increase of RM 5,000 in advertising expenditures will generate sales of 50,000 units. Should this action be taken? QUESTION 1
Sedili enterprise is a manufacturer of school uniforms. The company's income statement for year 2016 is shown below.
Sales (49,000 units @ RM26.00)
RM1,274,000
Cost of goods sold (49,000 units @ RM20.00)
980,000
Gross Profit
294,000
Sales and Administrative expenses
99,000
Net income
RM195,000
The General Manager went to a seminar in management accounting and learn about variable costing method. As he was trying to improve the Company’s profitability, he gathered the following data to assess the behavioural patterns of the cost. The following is incurred:
Direct material, direct labour & variable
manufacturing overhead cost
RM15 per unit
Sales and Administrative expenses
RM 1.00 per unit
Required:
a) Compute the cost of a pair of uniforms based on variable costing method.
b) Prepare the income statement for the Company using variable costing approach.
c) Explain why the net income reported under variable costing method different from that recorded by the absorption method (show the calculation the income reconciliation).
d) Based on the answers obtained in (b) and using cost-volume-profit analysis, determine:
i. Break-even point (in unit and ringgit).
ii. Calculate the unit sales given that the Company is targeting an operating income of RM250,000.
iii. The marketing manager believe that an increase of RM 5,000 in advertising expenditures will generate sales of 50,000 units. Should this action be taken?