Instruction: Answer All the questionsQuestion 1Doom Bhd manufactures and sells a single product. Cost data for the product are givenbelow:Variable costs per unit:Direct materialsRM 7Direct labourRM 10Variable manufacturing overheadRM 5Variable selling and administrative overheadRM 3Total variable cost per unitRM 25Fixed costs per month:Fixed manufacturing overheadRM315,000Fixed selling and administrative overheadRM245,000RM560,000The product sells for RM60 per unit. Production and sales data for July and August, that is,the first two months of operations, follow:Units producedUnits soldJuly17,50015,000August17,50020,000The company’s Accounting Department has prepared an absorption costing income statementfor July and August as presented below:JulyAugustSalesRM 900,000RM 1,200,000(-) Cost of goods sold(RM 600,000)(RM 800,000)Gross marginRM 300,000RM 400,000(-) Selling and administrative expenses(RM290,000)(RM 305,000)Net operating incomeRM10,000RM 95,000As a cost accountant, you would like to suggest that the company use variable costing in orderto help the decision-making process. Due to that, you are required to prepare a report to indicatethe differences of the two reporting income statements. Your report should consist of theincome statement for variable costing and computation the unit product cost under absorptionand variable costing.(50 marks)
