Eng Tat is a manufacturer. His trial balance as at 31 December 2020 is as follows: Particulars Debit RM Credit RM Delivery van expenses 1,760 Lighting and heating: Factory Office 7,220 1,490 Manufacturing wages 72,100 General expenses: Factory Office 8,100 1,940 Sales representatives : Commission 11,688 Purchase of raw materials 57,210 Rent: Factory Office 6,100 2,700 Machinery (Cost : RM40,000) 28,600 Office equipment ( RM9,000) 8,200 Office salaries 17,740 Accounts receivables 34,200 Account payables 9,400 Bank 16,142 Sales 194,800 Van (cost RM6,800) 6,200 Inventory at 31 December 2020: Raw materials Finished goods 13,260 41,300 Drawings 24,200 Capital 155,950 TOTAL 360,150 360,150 Additional information: Inventory at 31 December 2020: Raw materials RM14,510 Finished goods RM44,490 Depreciate machinery RM3,000; office equipment RM6,000; van RM1,200 Manufacturing wages due but unpaid at 31 December 2020 RM550; office rent prepaid RM140 Required: Prepare statement of cost production for the year ended 31 December 2020 Prepare statement of comprehensive income for the year ended 31 December 2020 Prepare statement of financial position as at 31 December 2020.
Cost-Volume-Profit Analysis
Cost Volume Profit (CVP) analysis is a cost accounting method that analyses the effect of fluctuating cost and volume on the operating profit. Also known as break-even analysis, CVP determines the break-even point for varying volumes of sales and cost structures. This information helps the managers make economic decisions on a short-term basis. CVP analysis is based on many assumptions. Sales price, variable costs, and fixed costs per unit are assumed to be constant. The analysis also assumes that all units produced are sold and costs get impacted due to changes in activities. All costs incurred by the company like administrative, manufacturing, and selling costs are identified as either fixed or variable.
Marginal Costing
Marginal cost is defined as the change in the total cost which takes place when one additional unit of a product is manufactured. The marginal cost is influenced only by the variations which generally occur in the variable costs because the fixed costs remain the same irrespective of the output produced. The concept of marginal cost is used for product pricing when the customers want the lowest possible price for a certain number of orders. There is no accounting entry for marginal cost and it is only used by the management for taking effective decisions.
- Eng Tat is a manufacturer. His
trial balance as at 31 December 2020 is as follows:
|
Particulars |
Debit RM |
Credit RM |
|
Delivery van expenses |
1,760 |
|
|
Lighting and heating: Factory Office |
7,220 1,490 |
|
|
Manufacturing wages |
72,100 |
|
|
General expenses: Factory Office |
8,100 1,940 |
|
|
Sales representatives : Commission |
11,688 |
|
|
Purchase of raw materials |
57,210 |
|
|
Rent: Factory Office |
6,100 2,700 |
|
|
Machinery (Cost : RM40,000) |
28,600 |
|
|
Office equipment ( RM9,000) |
8,200 |
|
|
Office salaries |
17,740 |
|
|
|
34,200 |
|
|
Account payables |
|
9,400 |
|
Bank |
16,142 |
|
|
Sales |
|
194,800 |
|
Van (cost RM6,800) |
6,200 |
|
|
Inventory at 31 December 2020: Raw materials Finished goods |
13,260 41,300 |
|
|
Drawings |
24,200 |
|
|
Capital |
|
155,950 |
|
TOTAL |
360,150 |
360,150 |
Additional information:
- Inventory at 31 December 2020:
- Raw materials RM14,510
- Finished goods RM44,490
Depreciate machinery RM3,000; office equipment RM6,000; van RM1,200- Manufacturing wages due but unpaid at 31 December 2020 RM550; office rent prepaid RM140
Required:
- Prepare statement of cost production for the year ended 31 December 2020
- Prepare statement of comprehensive income for the year ended 31 December 2020
- Prepare
statement of financial position as at 31 December 2020.
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