Huracan Sdn Bhd has just completed its first year of operations. The company's absorption costing income statement for the year appears below: RM Sales (35,000 units x RM36 per unit) 875,000 Cost of goods sold (35,000 units x RM22.40 per unit) (560,000) Gross profit 315,000 Selling and administrative expenses (280,000) Net operating income 35,000 The company's selling and administrative expenses consist of RM210,000 per year in fixed expenses and RM2 per unit sold in variable expenses. The RM18.40 per unit product cost given above is computed as follows: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead (RM160,000 / 40,000 units) Absorption costing unit product cost RM 5 6 1 4 16 Required: (a) Compute the unit product cost using marginal costing. (b) (c) Compile the company's income statement in the contribution format using marginal costing Reconcile any difference between the net operating income on your marginal costing income statement and the net operating income on the absorption costing income statement above.
Huracan Sdn Bhd has just completed its first year of operations. The company's absorption costing income statement for the year appears below: RM Sales (35,000 units x RM36 per unit) 875,000 Cost of goods sold (35,000 units x RM22.40 per unit) (560,000) Gross profit 315,000 Selling and administrative expenses (280,000) Net operating income 35,000 The company's selling and administrative expenses consist of RM210,000 per year in fixed expenses and RM2 per unit sold in variable expenses. The RM18.40 per unit product cost given above is computed as follows: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead (RM160,000 / 40,000 units) Absorption costing unit product cost RM 5 6 1 4 16 Required: (a) Compute the unit product cost using marginal costing. (b) (c) Compile the company's income statement in the contribution format using marginal costing Reconcile any difference between the net operating income on your marginal costing income statement and the net operating income on the absorption costing income statement above.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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rm.4
Transcribed Image Text:Huracan Sdn Bhd has just completed its first year of operations. The company's
absorption costing income statement for the year appears below:
RM
Sales (35,000 units x RM36 per unit)
875,000
Cost of goods sold (35,000 units x RM22.40 per unit)
(560,000)
Gross profit
315,000
Selling and administrative expenses
(280,000)
Net operating income
35,000
The company's selling and administrative expenses consist of RM210,000 per year in
fixed expenses and RM2 per unit sold in variable expenses. The RM18.40 per unit
product cost given above is computed as follows:
Direct materials
Direct labour
Variable manufacturing overhead
Fixed manufacturing overhead (RM160,000 / 40,000
units)
Absorption costing unit product cost
RM
5
6
1
4
16
Required:
(a)
Compute the unit product cost using marginal costing.
(b)
(c)
Compile the company's income statement in the contribution format using
marginal costing
Reconcile any difference between the net operating income on your marginal
costing income statement and the net operating income on the absorption
costing income statement above.
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