ECO FOOD (M) Sdn. Bhd. produces a special type of French sausage for its customers in...

  

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ECO FOOD (M) Sdn. Bhd. produces a special type of French sausage for its customers in Malaysia. The following information is provided by the company for the second quarter of 2019: Per unit: Selling price Production costs: Direct materials Direct labour Variable factory overheads Fixed selling costs Fixed production costs Actual details for the months are as follows: Production in units Sales in units Additional information: (i) April 45,000 42,000 RM 45 13.00 8.20 4.80 360,000 330,000 May 55,800 57,600 June 53,000 50,800 The opening inventory on 1 April 2019 was 12,500 units. Starting second quarter onwards, the quarterly fixed costs of company increased by 20%, and sales staff entitles sales commission of 15% when total sales exceeds target RM1,500,000 and 35% when total sales exceeds target RM2,500,000. Required: Prepare an income statement for each of the three months ended 30 June 2019, using marginal (19 marks) costing method. Part Two The salary paid to factory supervisors will be increasing steadily by 15% every year as the production capacity continues to moderately increase over the next 5 years. Required: Identify and describe the type of cost behavior of the factory overhead in both short term and long term with simple chart(s). (6 marks) (Total: 25 marks) ECO FOOD (M) Sdn. Bhd. produces a special type of French sausage for its customers in Malaysia. The following information is provided by the company for the second quarter of 2019: Per unit: Selling price Production costs: Direct materials Direct labour Variable factory overheads Fixed selling costs Fixed production costs Actual details for the months are as follows: Production in units Sales in units Additional information: (i) April 45,000 42,000 RM 45 13.00 8.20 4.80 360,000 330,000 May 55,800 57,600 June 53,000 50,800 The opening inventory on 1 April 2019 was 12,500 units. Starting second quarter onwards, the quarterly fixed costs of company increased by 20%, and sales staff entitles sales commission of 15% when total sales exceeds target RM1,500,000 and 35% when total sales exceeds target RM2,500,000. Required: Prepare an income statement for each of the three months ended 30 June 2019, using marginal (19 marks) costing method. Part Two The salary paid to factory supervisors will be increasing steadily by 15% every year as the production capacity continues to moderately increase over the next 5 years. Required: Identify and describe the type of cost behavior of the factory overhead in both short term and long term with simple chart(s). (6 marks) (Total: 25 marks)

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Part two Salary to factory supervisors is increasing steadly by 15 every year So in short term the c... View the full answer