Question 1

Cost Statement of Razak Tun Razak Enterprise

for the year ending March 31st 2010
Particular
1) a
Opening stock of material
Add: Purchase of material
Less: Closing stock of material

Amount
RM
188,000.00
832,000.00
1,020,000.00
200,000.00

820,000.00
238,400.00
32,000.00

Direct wages
Direct expenses-freight inwards
Prime Cost
Add: Production overheads
- Indirect wages
- Repair to plant & machinery
- Factory rent, rate & taxes
- P & M - Depriciation write off
- Electricity charges
- Fuel
- Managers salary

Amount
RM

1,090,400.00

16,000.00
42,400.00
12,000.00
28,400.00
48,000.00
64,000.00
9,600.00
220,400.00

Add: Administration overheads

- Salaries of admin staff
- Bad debt written off
- Office rent, rate & taxes
- Furniture - Depriciation written off
- Directors fee
- General Charges
- Managers salary

40,000.00
18,800.00
6,400.00
2,400.00
24,000.00
24,800.00
38,400.00
154,800.00

Add: Selling overheads

- Cash discount allowed
- Salesmen salary & commission

14,000.00
33,600.00
47,600.00

Add: Distribution overheads

- Freight outwards
- Travelling expenses

20,000.00
12,400.00
32,400.00

Total cost of good produced

1,545,600.00

b (i)

Total cost of good produced

Add: Profit --------->30%
Sales revenue
Sales quantity
Selling price per unit
Nearest RM 5

b (ii)

85.00

Total cost if good produced

Sales quantity
Unit price/ selling cost
* Add: Profit -------->20% (RM77.28-RM61.82)
Selling price per unit
Nearest RM 5

Working
* Profit -------->

1,545,600.00
463,680.00
2,009,280.00
25,000 units
80.37

1,545,600.00
25,000 units
61.82
15.46
77.28
80.00

RM61.82 + 0.2x = x
RM61.82 = x-02x
RM61.82 = 0.8x
x = 61.82 / 0.8
x = RM77.28

Question 2
2 a) Break even units
Formula
Total fixed cost
Contribution/unit

Bee
= RM25,000
RM15-RM10

Zee
= RM72,000
RM35-RM19

= 5,000 units

= 4,500 units

Bee
= RM25,000 x RM15
RM5

Zee
= RM72,000 x RM35
RM16

= RM75,000

=RM157,500

b) Break even value

Formula
Total fixed cost
C/S Ratio

c) The margin of safety (units)

Formula
Bee
Actula sales Qty - Break = 8,200 units-5,000 units
Even Qty (BEP)
= 3,200 units

Zee
= 6,000 units- 4,500 units
= 1,500 units

d) Profit (RM)
Formula
SP - TOC - TFC

Bee
=(8200xRM15) - [(8200xRM10)+RM25000]
=RM123,000- (RM82,000+RM25,000)
=MR123,000 - RM107,000
=RM16,000

Zee
=(6000xRM35) - [6000xRM19)+RM72000
=RM210,000 -(RM114,000+RM72000)
=RM210,000 - RM186,000
=RM24,000

ii) Bee
Output
Unit
0.00
2,500.00
5,000.00
7,500.00
10,000.00
12,500.00

TFC
25,000.00
25,000.00
25,000.00
25,000.00
25,000.00
25,000.00

TVC
o/p x RM10
0.00
25,000.00
50,000.00
75,000.00
100,000.00
125,000.00

T.Cost=
T.Revenue = Profit or Loss
TFC + TVC o/p x RM15
25,000.00
0.00
(25,000.00)
50,000.00
37,500.00
(12,500.00)
75,000.00
75,000.00
0.00 -------> BEP
100,000.00
112,500.00
12,500.00
125,000.00
150,000.00
25,000.00
150,000.00
187,500.00
37,500.00

TVC
o/p x RM10
0.00
28,500.00
57,000.00
85,500.00
114,000.00
142,500.00
171,000.00

T.Cost=
T.Revenue = Profit or Loss
TFC + TVC o/p x RM15
72,000.00
0.00
(72,000.00)
100,500.00
52,500.00
(48,000.00)
129,000.00
105,000.00
(24,000.00)
157,500.00
157,500.00
0.00 -------> BEP
186,000.00
210,000.00
24,000.00
214,500.00
262,500.00
48,000.00
246,000.00
315,000.00
72,000.00

Zee
Output
Unit
0.00
1,500.00
3,000.00
4,500.00
6,000.00
7,500.00
9,000.00

TFC
72,000.00
72,000.00
72,000.00
72,000.00
72,000.00
72,000.00
72,000.00

Question 3
a)

b)

Fixed cost
Selling price/unit
Variable cost/Unit
Sales Q

RM30000
RM5
RM3
20,000 units

Break even (units)=

Total fixed cost

Contribution/Unit

RM30,000 =
RM5-RM3

15,000 units

Break even (RM) =

Total fixed cost

C/S Ratio

RM30,000 =
RM2/RM5

RM75,000

Profit(RM) =
RM20,000 =
X
=

SP-TOC-TFC
(X *RM5) -[(X *RM3) + RM30,000]
25,000 units
or

Profit + Fixed cost

2

20,000 + 30,000
2

25,000 units of stove

Question 4

Product X
Sales Revenue
Less: Marginal Cost
Direct Material
Direct Wages
Variable o/h

100 units

150 units

2050
1050
300
300

Contribution
TFC
Profit / Loss
Contribution per unit

200 units

3075
1575
450
450

4100
2100
600
600

1650
400
800
(400.00)

2475
600
800
(200.00)

3300
800
800
0

RM400/100
RM4/=

RM600/150
RM4/=

RM800/200
RM4/=

* Should produce more than 200 units of Product X in order to gain profit
Product Y
Sales Revenue
Less: Marginal Cost
Direct Material
Direct Wages
Variable o/h
Contribution
TFC
Profit / Loss

200 units

150 units

2900
1700
400
400

100 units

2175
1275
300
300

1450
850
200
200

2500
400
800
(400.00)

1875
300
300
(500.00)

1250
200
800
(600.00)

RM300/150
RM2/=

RM200/100
RM2/=

* Should produce more than 400 units of product Y in order gain profilt
Contribution per unit

RM400/200
RM2/=

Question 5
Workings
RM224,000 RM280 = 800 unit
800
x 75%
60%
Manufacturing o/h per unit =

40,000 = 40
1,000

Selling & Distribution o/h per unit =

20,000 = 20
1,000

Sales

RM280

Less: Marginal Cost

- Direct Material
- Direct Labour
-Manufacturing o/h
- S & D o/h
- Contribution

RM65
RM30
RM40
RM20
RM125

Total fixed Cost = RM80,000 + RM21,000 = RM101,000

a i) BEP (units) = 101,000
125
= 808 stoves
ii)

BEP (RM) =

101,000
0.45

c/s ratio =
=

= RM224,444
b)

75%
1,000

60%
800

Total sales(RM280)

280,000

224,000

Less: Marginal cost

Direct Material
Direct Labour
Manufacturing o/h
Selling & distribution

65,000.00
30,000.00
40,000.00
20,000.00

52,000.00
24,000.00
32,000.00
16,000.00

Sales unit

Less: Fixed cost

Manufacturing o/h
Selling & distribution o/h

80,000.00 80,000.00
21,000.00 21,000.00
24,000.00 (1,000.00)

125
280
0.45

c i) Sales unit
Total sales (RM260 x 1,100)

1,100
(RM)
286,000

Less: Marginal cost

- Direct Material (1,100 x 65)
- Direct Labour (1,100 x 30)
- Manufacturing o/h (1,100 x 40)
-Selling & distri o/h (1,100 x 20)

71500.00
33000.00
44000.00
22000.00

Less: Fixed Cost

- Manufacturing o/h
- Selling & Distribution

ii)

BEP (unit) = 101000

(125-20)
=101,000
105
=962 units

iii)

Profit + FC = 16,660 + 101,000

=117,600
=117,600
105
=1,120 units

80000.00
21000.00
14500.00

Question 6
a)

Production budget
------> Closing Stock + Sales - Opening Stock
Production Budget

Closing Stock
Add: Sales
Less: Opening Stock

Product X
unit

Product Y
unit

1,000
12,000
13,000
800
12,200

1,500
15,000
16,500
1,000
15,500

Product X = 12,200 units

Product Y = 15,500 units

b)

Raw Material Purchasing cost Budget

Product

X
Y

Production
Quantity
12,200
15,500
17,700

Material usage qty

Add: Closing stock
of raw material

Material 1
kg/unit
5.0
1.5

kg
61000
23250

Material 2
kg/unit
0.5
2.0

kg
6,100
31,000

4,000
88,250

6,400
43,500

Less: Opening stock

of raw material

3,250

3,500

Total material required

to be bought

85,000

40,000

Material purchase (kg)

RM5/kg

RM3/kg

Cost

425,000

120,000

* Total material purchase cost for April 2010

= RM425,000 + RM120,000
= RM545,000

c)

Labour Cost Budget

Product

Production
Quantity

X
Y

12,200
15,500
17,700

qty

5.0
3

61,000
46,500
107,500

3
4

qty
36,600
62,000
98,600

RM2.50

RM1.75

Rate/Labour hour

RM268,750

RM172,550

= RM268,750 + RM172,550
= RM441,300

Production Overhead Budget

Product

O/h per unit

Prod. Qty

Price

RM4.00

12,200

RM48,400

RM3.50

15,500

RM54,250

RM103,050

e)

Material 2
labour

Total Labour hour

* Total labour cost for the month

d)

Material 1
labour

RM103,050

Sales Budget
Product

Sales Quantity

Selling price/unit

Budgeted sales price

12,000

RM70.50

RM846,000

15,000

RM45.00

RM675,000
RM1,521,000

f)

Production Cost Budget for the month

Particular

Product X

Product Y

Direct material cost

Direct wage cost
Prime cost

323,300
216,550
539,850

209,250
224,750
434,000

Add: Production o/h

48,800
588,650
12,200 units

54,250
488,250
15,500 units

Total production cost/unit

Add:Other overhead 20 x production
100 cost

48.25
9.65

31.5
6.3

Total cost/unit
Add: Profit 15 x total cost
100

57.9
8.68

37.8
5.67

Budgeted selling price

66.58

43.47

Nearest RM5.00

66.58

43.47

Nearest RM5 - Total cost

Profit per unit

RM70.50 - RM57.90

RM12.60

RM45.00 - RM37.80

RM7.20

Budgeted production

g)

Budgeted Profit statement for the month

Product

Profit = Budgeted selling price - Budgeted total cost

Product

Bu profit/unit

Sales qty

Total profit

RM12.60

12,000

RM151,200

RM7.20

15,000

RM108,000
RM259,200

Question 7
1) Sales budget

Production Budget
Particular

Tosh
unit

Bosh
unit

Production
Less: Closing stock

6,000
600

4,250
650

Add: opening stock

800

600

Sales unit

6,200

4,200

Selling price/unit

RM36

RM32

Sales total

RM223,200 RM134,400

Budgeted sales = RM223,200 + RM134,400

= RM357,600
2) Plant Utilization Budget
Plant capacity - calculation
Machining

Assembly

Tosh
45 x 100%
60

Bosh
24 x 100%
60

75%

= 40%

0.75

= 0.40

30 x 100%
60

18 x 100%
60

50%

= 30%

0.50

= 0.30

Machining Usage
Particular
Total production

Tosh
6,000

Bosh
4250

Total

Machine hour

0.75

0.4

Total usage

4,500

1,700

6,200

Particular
Total production

Tosh
6,000

Bosh
4250

Total

Assembly hour

0.5

0.3

3,000

1,275

Assembly Usage

Total usage

4,275

Utilization = Total usage

Remaining time
= 10,475
6,200 + 5,500
= 90%
3) Production Budget
Tosh

Bosh

Machining 6,200 0.75 = 8,267 (6,000)

1,700 0.4 = 4,250

5,500 0.5 = 11,000 (6,000)

2,500 0.3 = 8,333

Assembly

Remaining time =

6,200 (6,000 x 0.75) = 1,700 ----------> Machining

5,500 (6,000 x 0.5) = 2,500 ----------> Assembly

Production Budget
Particular
Closing stock
Add: Sales
Less: Opening stock

Tosh

Bosh
600
6,200
6,800
800
6,000

650
4,200
4,850
600
4,250

4) Raw Material Purchse Cost Budget

Particular

Product
Quantity

Tosh
Bosh

6,000
4,250
10,250

Bish

3.00
2.50

Material usage qty

Add: Closing stock of
raw material
Less: Opening stock of
raw material
Purchases

18,000
10,625
28,625

Mish

1.80
3.00

10,800
12,750
23,550

Tish

2.50
1.80

15,000
7,650
22,650

10,000

6,450

5,000

(8625)

(7000)

(2650)

30,000

23,000

25,000

Cost/kg

RM1.50

RM2.75

RM3.00

Material Puchase Cost

45,000

63,250

75,000

* Total material purchase cost for March 2008 = RM45,000+ RM63,250 + RM75,000
R
= M183,250
5) Labour Cost Budget
Particular
Production
Time req 5 hours
Lsbour cost RM1.80

Tosh

Bosh
6,000
30,000 4 hours
54,000 RM1.80

4,250
17,000
30,600

* Total labour cost for March 2008 = RM54,000 + RM30,600

= RM84,600

6) Factory overhead Cost Budget

Formula = Total factory overhead
Demand
=RM23,250
6,200
=RM3.75 absorbtion rate
Particular
Machining total usage
o/h absorbtion rate
Rate

Tosh
4,500
RM3.75

Bosh
1,700
RM3.75

RM16,875

RM6,375

7) Opening and Closing stock of raw material budget

Particular

Bish
working

Opening stock
Closing stock

total

1.50 x 8625

Mish
working
total

Tish
working
total

12,937.50 2.75 x 700 19,250.00 3.00 x 2650 7,950.00 40,137.50

1.50 x 10,000 15,000.00 2.75 x 6450 23,550.00 3.00 x 5000 22,650.00 47,737.50

8) Opening and Closing stock of finish good budget

Particular
Unit cost
- Material
- Labour
- Overhead

Total
RM

Tosh

Bosh

Total

per unit

hour

RM

hour

RM

RM1.80
RM3.75

5 hour
0.75

16.95
9.00
2.81
28.76

4 hour
0.40

17.40
7.20
1.50
26.10

Opening stock
Closing stock

28.76 x 800
28.76 x 600

23,008.00 26.10 x 600 15,660.00 38,668.00

17,256.00 26.10 x 650 16,965.00 34,221.00

9) Cost of good sold

Particular

Total (RM)

Direct labour

(Quest 5)

84,600.00

Direct Material

(Quest 4)

183,250.00

Add: opening stock

(Quest 8)

38,668.00

Less: closing stock

(Quest 8)

-34,221.00

Add: overhead stock

23,250.00
295,547.00