Question 1 Roofer Manufacturing produces fireproof data storage containers that

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Question 1 Roofer Manufacturing produces fireproof data storage containers that sell for RM6,000 each. The company has the following cost structure for 2017 and 2018: Manufacturing costs: Direct material per unit Prime Direct labor per unit F Variable production overhead per unit Total variable production costs per unit RM 1,000 2,000 500 3,500 Fixed production overhead per year 2,000,000 Selling costs: Variable selling costs per unit (base on sales amount) Fixed selling costs per year 0.10 600,000 Administrative costs: Fixed administrative costs per year 800,000 At the start of 2017, there was no beginning inventory. During 2017, the company produced and soid 2.000 units, During 2018, the company produced 2,500 units but still sold only 2,000 units Required: A. Calculate the following cost for 2017 and 2018 1. Total prime cost av 2. Total Production cost and unit production cost (10 marks) B. Prepare income statements for 2017 and 2018 (10 marks) Total: 20 Marks

Explanation / Answer

Particulars UOM 2017 2018 Not of Units Manufactured Nos 2000 2500 Direct Material cost RM 1000 1000 Direct Labour cost RM 2000 2000 Total Prime Cost RM 3000 3000 1) Total Prime Cost( Prime Cost x manufactured) RM 6000000 7500000 Fixed production Overhead RM 2000000 2000000 Variable Production overhead PER UNIT RM 500 500 Total Variable Production Overhead RM 1000000 1250000 2) Total production cost RM 9000000 10750000 ( Prime + Variable Production+ Fixed Production Overhead) Production Cost per Unit RM/ Unit 4500 4300 3) Variable Selling cost- based on sale price Per Unit 0.1 0.1 No of Unit Sale Nos 2000 2000 Sale Price per unit RM 6000 6000 Total Variable Selling Cost- based on sale price RM 1200000 1200000 Fixed Selling Cost RM 600000 600000 Fixed Administrative cost RM 800000 800000 Production Cost related with sale units RM 9000000 8600000 Total Cost RM 11600000 11200000 Total revenue RM 12000000 12000000 Net Profit( Loss) RM 400000 800000

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