Komuga Sdn Bhd specializes in producing Burned Japanese Cotton Cheesecake. The following information relates to the variable production cost of making a unit of the cake:

	RM
Direct material	35
Direct labour	30
Variable production overhead	10

Additional information:

1. Fixed production overhead is absorbed based on number of cakes produced. It is estimated that 70,000 units of cakes will be produced in a year and budgeted fixed production overhead is RM 210,000 per annum.
2. Fixed administration overhead is RM 58,000 per year and variable selling overhead is RM 8.50 per unit cake sold.
3. Each unit of cake could be sold at selling price of RM 105.
4. The number of unsold cakes at the end of May 2019 is 230 units. During June 2019, the number of cakes produced and sold were 6,000 units and 6,000 units respectively.
5. The actual fixed production overhead and fixed administration overhead are assumed same as budgeted.

Required:

a. Prepare the income statement for the month of June 2019 using Marginal Costing Method and Absorption Costing Method. ( please answer using word or excel)

b. Explain any THREE (3) the advantages of using Marginal Costing Approach compared to Absorption Costing Method in preparing income statement. 

Answer rating: 100% (QA)

a Income Statement for the month of June 2019 Marginal Costing Method Particulars RM Sales 6000 units sold RM 105 630000 Variable Manufacturing Costs Direct Material 6000 units produced RM 35 210000 D... View the full answer