Question

Question 2

Superman Company, which has only one product, has provided the following data concerning its most recent month of operations:
                                                                                                                                                        
Selling price RM140
Units in beginning inventory 500
Units produced 12,000
Units sold 11,800

Variable costs per unit:
Direct materials RM35
Direct labor RM22
Variable manufacturing overhead RM18
Variable selling and administrative RM15

Fixed costs:
Fixed manufacturing overhead RM80,000
Fixed selling and administrative RM175,000

The company produces the same number of units every month, although the sales in units vary from month to month. The company’s variable costs per unit and total fixed costs have been constant from month to month.


Required:

a) Calculate the cost of one unit of product under absorption costing.                    

b) Calculate the cost of one unit of product under variable costing.                        

c) Calculate Superman’s next year operating income under absorption costing.    

d) Calculate Superman’s next year operating income under variable costing.        
(Total: 20 Marks)

Answer 1