Reference no: EM132993174
Question - Part One - Shine Detergent (M) Sdn. Bhd. produces a special type of detergent for heavy industrial use in Malaysia. The following information was provided by the company for the Second Quarter of 2019:
Per unit: RM
Selling price 80
Production costs:
Direct materials 20.00
Direct labour 12.00
Variable factory overheads 4.00
Fixed selling costs per quarter 300,000
Fixed production costs per quarter 270,000
Actual details for the months are as follows:
April May June
Production in units 120,000 131,600 128,000
Sales in units 112,000 119,200 120,800
Additional information:
(i) The opening inventory on 1 April 2019 was 21,000 units.
(ii) All the fixed costs would be increased by 40% for the entire second quarter respectively.
(iii) Fees paid for sales brochure (variable administration cost) will increase 30% when total unit sales exceed target 110,000 units, and 40% when exceed target 115,000.
(iv) The management will reward the sales staff with 10% of sales bonus when target 115,000 units is achieved.
(v) The administration costs and sales bonus will be calculated based on percentage of total sales values for each month.
Required - Construct an income statement for each of the three months ended 30 June 2019, using marginal costing method.
Part Two - The factory has the policy of giving out RM100 coupon to each of the workers every month. The management forecasts that the coupon amount will be increasing steadily by 15% every year as the production capacity continues to moderately increase over the next 3 years.
Required - Identify and describe the type of cost behavior of the coupon in both short term and long term with simple chart(s).
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