Omega Sdn. Bhd, has the following information on cost and current production available: materials per unit 100
Question:
Omega Sdn. Bhd, has the following information on cost and current production available:
materials per unit 100
labor per unit 60
direct expenses per unit 20
administration expemse 80,000
selling and distribution expenses 100,000 depreciation 10,000
insurance 5,000
Additional information:
i. 50% of administrative expenses are fixed and the remaining are variable costs
ii. 60% of selling and distribution expenses are fixed and the remaining are variable costs
iii. Current production makes up 50% of the whole activities are 1,000 units
i. Draw up a flexible budget for production at 75% and 100% capacity on the basis of the data for [9 marks] the 50% activity mentioned above.
ii. The typical budgetary control system does not encourage goal congruence, containsbudgetary slack, ignores the aspiration levels of participants and attempts to control operations by feedback when feedforward is likely to be more effective; in summary, the typical budgetary control system is expected to have dysfunctional effects. Briefly explain each of the terms in bold italics. [6 marks]
Cost Management Accounting and Control
ISBN: 978-0324559675
6th Edition
Authors: Don R. Hansen, Maryanne M. Mowen, Liming Guan