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QUESTION 1 Syarikat Litup Suci Sdn Bhd (LSSB) operates a face mask manufacturing business for clinical use. However, since the Covid 19 pandemic, the company has had to double production to meet the h
Syarikat Litup Suci Sdn Bhd (LSSB) operates a face mask manufacturing business for clinical use. However, since the Covid 19 pandemic, the company has had to double production to meet the high demand for face masks for the local and international markets. The following is information on LSSB manufacturing operations for the year ended 31 December 2020:
31 Dec 2019 31 Dec 2020
Direct raw materials 20,000 24,000
Work in progress 12,000 8,000
Finished goods 80,000 90,000
Purchase of materials directly 420,000
Direct labor 240,000
Utility spending 60,000
Expenditure depreciated 40,000
Insurance costs 80,000
Marketing and sales expenses 30,000
Administrative expenses 85,000
Management expenses 120,000
Sales revenue 3,600,000
LSSB has a distribution of expenses for the manufacturing and administrative divisions such as
Items Administrative Manufacturing
Utility spending 75% 25%
Depreciation spending 70% 30%
Insurance expenses 80% 20%
Management expenses 30% 70%
(a) Prepare Statement of Cost of Goods at the Factory for the period ended 31 December 2020.
(b) Prepare Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2020.
Syarikat Imbas Suhu Anda Sdn Bhd (ISASB) is a local temperature scanner production company that operates using full local labor. Currently, ISASB only produces hand-held temperature scanner (LISA). Information related to LISA products for December 2020 is as follows:
The selling price per LISA unit is RM30.00
Cost per unit: RM
Raw materials 8.25
Direct labor 4.50
Overhead factory 2.25
Fixed cost: RM
Administrative expenses 45,000
Marketing expenses 15,000
Total fixed cost 60,000
(a) What is the total sales in (i) units and (ii) the amount (in RM) required to achieve the capital return point.
(b) If direct labor costs are expected to increase by 20% without any change to other costs, what is the total sales in (i) units and (ii) the amount (in RM) required to achieve a capital return point?
(c) If the unit price of LISA is increased to RM35.00 without any change to the existing cost, calculate the contribution margin at this new selling price.
(d) If the selling price is set at RM35.00 per unit, without any change to the existing cost, what is the total sale (in RM) that needs to be achieved to get a profit of RM120,000?
BMF Solutions Sdn Bhd (BMFSSB) is a manufacturer of rebranded laptops, focusing its sales targets on the low and middle income groups. It produces several types of models for different consumer segments namely school students, institutions of higher learning (IPT) and employees.
In a situation that is still uncertain due to the Covid 19 pandemic, most HEIs conduct online lectures. Accordingly, the demand for laptops is expected to increase for the year 2021. BMFSSB offers a special Lasak X1 model for IPT students at a price of RM650 per unit with a warranty period of one year.
BMFSSB has the following item purchase and inventory management policies:
1. The cost of goods sold is generally 60% of the selling price.
2. The final inventory for each month is targeted at 40% of the estimated cost of goods sold for the following month.
3. A total of 60% of the total purchase will be paid in that month while the balance will be paid in the following month.
As of 31st January 2021, the final inventory balance of Lasak X1 is RM39,000 and the total purchase
throughout January was RM117,000.
BMFSSB targets sales for February, March, April and May respectively
300 units, 600 units, 500 units and 450 units.
(a) Prepare purchase budget for February, March and April 2021.
(b) Prepare payment schedule for purchases for February, March and April 2021.
Syarikat Lena Sakan Sdn Bhd (LSSB) is a leading sheet manufacturer in the north of the country. Each sheet of ‘Queen’ size sheets uses a fabric of 3.5 meters. The time required to complete the sheet is 2 hours.
The standard costs for producing ‘Queen’ size sheets are as follows:
- Direct material price: RM8.00 per meter
- Direct labor rate: RM5.50 per hour
For the January 2021 production, LSSB has produced 1,500 sheets of ‘Queen’ size sheets with the actual cost as follows:
- Direct material price: RM9.00 per meter
- Actual quantity used: 3.7 meters
- Direct labor rate: RM4.00 per hour
- Real time: 2.5 hours per piece.
Identify the variance experienced by LSSB for the production of 1,500 units of ‘Queen’ size sheets
for January 2021 as follows:
(a) Calculate the direct material price variance.
(b) Calculate the quantity variance of the material directly.
(c) Calculate the variance of direct labor wage rate.
(d) Calculate the variance of direct labor efficiency.
(e) State TWO (2) reasons for the occurrence of satisfactory direct labor rate variance.