Haitek Bhd manufactures and sells a home-freezer and uses standard costing. Actual data relating to March, April,
Question:
Haitek Bhd manufactures and sells a home-freezer and uses standard costing. Actual data relating to March, April, and May 2021 are as follows:
Month | Beginning Inventory | Production | Sales |
March | 0 | 3,000 | 2,400 |
April | 600 | 2,600 | 2,600 |
May | 600 | 3,300 | 3,450 |
Other related actual data :
Manufacturing cost per unit produced ……...…... | RM550 |
Marketing cost per unit sold …………….......…... | RM200 |
Fixed Manufacturing costs per month ………...… | RM320,000 |
Fixed Operating & marketing costs per month …. | RM95,000 |
Selling price per unit…………………………...... | RM1,700 |
The budgeted level of production used to calculate the predetermined fixed manufacturing cost per unit is 3,000 units. Any under/over applied fixed manufacturing cost due to change in production volume is charged to the cost of goods sold of the month it occurs. Assume there is no other variances related to fixed manufacturing.
REQUIRED:
Prepare income statements for Haitek in March, April, and May 2021 under
- variable costing
- absorption costing
- Explain the difference in operating income for March, April, and May under variable costing and absorption costing.