Aliah began batik charting several years ago as a hobby. Her work is quite creative, and it has been so popular with friends and others that she has decide to quit her job as account clerk and manufacture batik cloth full time. The salary from account clerk job is RM1,250 per month. Aliah will rent a small building near her home. 80% of this building will be used as a manufacturing batik cloth and another 20% as an office. The rent will be RM1,000 per month. She estimates that the cost of cloth is RM15, for dye RM20 and for wax RM10 for each finished pieces of batik cloth. She will hire 2 workers to help her to produce the batik cloth at a labour rate of RM20 per pieces of batik cloth. Every month she estimates 250 batik to be produced in her factory and sell at RM150 per pieces. In order to sell her batik, Aliah feels that she must advertise heavily in local area. An advertising agency states that it will handle all the advertising and the cost will be RM500 per month. She also estimates the total utility bill will cost her RM100 per month (80% is for manufacturing the batik cloth). A phone will be installed in the office room for taking orders will cost RM50 per month. She also hires one clerk to look after the office work. The salary will be RM1,000 per month. For time being, Aliah does not intend to draw any salary from her new business. Required: Identify the elements in production cost. Determine the total of production cost for 250 pieces of batik cloth. Identify the elements of the period cost. Determine the total of period cost incurred on above batik manufacturing. Explain what cost is Aliah previous salary as account clerk total of RM1,250 per month? (Give your reason)
- Batik Charting
Aliah began batik charting several years ago as a hobby. Her work is quite creative, and it has been so popular with friends and others that she has decide to quit her job as account clerk and manufacture batik cloth full time. The salary from account clerk job is RM1,250 per month.
Aliah will rent a small building near her home. 80% of this building will be used as a manufacturing batik cloth and another 20% as an office. The rent will be RM1,000 per month. She estimates that the cost of cloth is RM15, for dye RM20 and for wax RM10 for each finished pieces of batik cloth. She will hire 2 workers to help her to produce the batik cloth at a labour rate of RM20 per pieces of batik cloth.
Every month she estimates 250 batik to be produced in her factory and sell at RM150 per pieces. In order to sell her batik, Aliah feels that she must advertise heavily in local area. An advertising agency states that it will handle all the advertising and the cost will be RM500 per month. She also estimates the total utility bill will cost her RM100 per month (80% is for manufacturing the batik cloth). A phone will be installed in the office room for taking orders will cost RM50 per month. She also hires one clerk to look after the office work. The salary will be RM1,000 per month. For time being, Aliah does not intend to draw any salary from her new business.
Required:
- Identify the elements in production cost.
- Determine the total of production cost for 250 pieces of batik cloth.
- Identify the elements of the period cost.
- Determine the total of period cost incurred on above batik manufacturing.
- Explain what cost is Aliah previous salary as account clerk total of RM1,250 per month? (Give your reason)
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