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Excell Bhd produces and sells a single product named Champ. The company operates at its normal capacity of 30,000 units per year. Costs associated with this level of production and sales are as follows: Unit Total (30,000 units) RM RM 15 Direct materials 450,000 240,000 Direct labour 8 Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total cost 3 90,000 9 270,000 120,000 180,000 1,350,000 4 45 The product is sold for RM50 each. Fixed manufacturing overhead is constant at RM270,000 per year within the range of 25,000 units to 30,000 Champs per year. Required: Due to Covid-19 pandemic, Excell Bhd expects to sell only 25,000 units of Champ through regular channels in year 2021. Assuming the following special orders have been received by the company in year 2021.

Excell Bhd produces and sells a single product named Champ. The company operates at its normal capacity of 30,000 units per year. Costs associated with this level of production and sales are as follows: Unit Total (30,000 units) RM RM 15 Direct materials 450,000 240,000 Direct labour 8 Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses Total cost 3 90,000 9 270,000 120,000 180,000 1,350,000 4 45 The product is sold for RM50 each. Fixed manufacturing overhead is constant at RM270,000 per year within the range of 25,000 units to 30,000 Champs per year. Required: Due to Covid-19 pandemic, Excell Bhd expects to sell only 25,000 units of Champ through regular channels in year 2021. Assuming the following special orders have been received by the company in year 2021.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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b. The Ministry of Defense Malaysia (MinDef) would like to make a one-time only purchase of 5,000 units of Champs. MinDef would pay a fixed fee of RM1.80 per unit, and it would reimburse Excell Bhd for all cost production (variable and fixed) associated with the units. MinDef would pick up the product with its own trucks, therefore would be no variable selling expenses associated with this order. Advise Excell Bhd whether to accept or reject the order.
Transcribed Image Text:b. The Ministry of Defense Malaysia (MinDef) would like to make a one-time only purchase of 5,000 units of Champs. MinDef would pay a fixed fee of RM1.80 per unit, and it would reimburse Excell Bhd for all cost production (variable and fixed) associated with the units. MinDef would pick up the product with its own trucks, therefore would be no variable selling expenses associated with this order. Advise Excell Bhd whether to accept or reject the order.
Excell Bhd produces and sells a single product named Champ. The company operates at its normal capacity of 30,000 units per year. Costs associated with this level of production and sales are as follows: Unit Total (30,000 units) RM RM Direct materials 15 450,000 Direct labour 8 240,000 Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses 3 90,000 9 270,000 4 120,000 6 180,000 1,350,000 Total cost 45 The product is sold for RM50 each. Fixed manufacturing overhead is constant at RM270,000 per year within the range of 25,000 units to 30,000 Champs per year. Required: Due to Covid-19 pandemic, Excell Bhd expects to sell only 25,000 units of Champ through regular channels in year 2021. Assuming the following special orders have been received by the company in year 2021.
Transcribed Image Text:Excell Bhd produces and sells a single product named Champ. The company operates at its normal capacity of 30,000 units per year. Costs associated with this level of production and sales are as follows: Unit Total (30,000 units) RM RM Direct materials 15 450,000 Direct labour 8 240,000 Variable manufacturing overhead Fixed manufacturing overhead Variable selling expenses Fixed selling expenses 3 90,000 9 270,000 4 120,000 6 180,000 1,350,000 Total cost 45 The product is sold for RM50 each. Fixed manufacturing overhead is constant at RM270,000 per year within the range of 25,000 units to 30,000 Champs per year. Required: Due to Covid-19 pandemic, Excell Bhd expects to sell only 25,000 units of Champ through regular channels in year 2021. Assuming the following special orders have been received by the company in year 2021.
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