Question

In: Accounting

Question 2 Giant Bike Sdn Bhd (GBSB) produces many different models of bicycles. Assume that the...

Question 2

Giant Bike Sdn Bhd (GBSB) produces many different models of bicycles. Assume that the market has responded enthusisistically to a new model, the Jaguar. As a result, the company has established a separate manufacturing facility to produce these bicycles. The company produces 1,000 bicycles per month. Giant’s monthly manufacturing costs and other data are as follows:

1. Rent on manufacturing equipment RM2,000 per month
2. Insurance on manufacturing building RM750 per month
3. Raw materials (frame, tires etc) RM80 per bicycle
4. Utility costs for manufacturing facility RM1,000 per month
5. Supplies for administrative office RM800 per month
6. Wages for assembly line workers in manufacturing facility RM30 per bicycle
7. Depreciation on office equipment RM650 per month
8. Miscellaneous manufacturing materials (lubricants, solders etc) RM1.20 per bicycle
9. Property taxes on manufacturing building RM2,400 per year
10. Manufacturing supervisor’s salary RM3,000 per month
11. Advertising for bicycles RM30,000 per year
12. Sales commissions RM10 per bicycle
13. Depreciation on manufacturing building RM1,500 per month

Required:
a) Classify the manufacturing costs above (item 1 to 13) as Production cost (direct materials / direct labour / other manufacturing overhead) or Period cost.                           (6.5 marks)

b) Complete total manufacturing costs for the month.                                           (8.5 marks)
(Total: 15 Marks)




Solutions

Expert Solution

a) S.No. Name of Cost Amount Product Cost/Period Cost type of Product Cost
1 Rent on manufacturing equipment          2,000 Product Cost other manufacturing overhead
2 Insurance on manufacturing building             750 Product Cost other manufacturing overhead
3 Raw materials (frame, tires etc)       80,000 Product Cost Direct Material
4 Utility costs for manufacturing facility          1,000 Product Cost other manufacturing overhead
5 Supplies for administrative office             800 Period Cost
6 Wages for assembly line workers in manufacturing facility       30,000 Product Cost Direct Labor
7 Depreciation on office equipment             650 Period Cost
8 Miscellaneous manufacturing materials          1,200 Product Cost other manufacturing overhead
9 Property taxes on manufacturing building             200 Product Cost other manufacturing overhead
10 Manufacturing supervisor’s salary          3,000 Product Cost other manufacturing overhead
11 Advertising for bicycle          2,500 Period Cost
12 Sales commissions       10,000 Period Cost
13 Depreciation on manufacturing building          1,500 Product Cost other manufacturing overhead
b) Calculate Total manufacturing cost
Direct Material       80,000
Direct Labour       30,000
Other manufacturing Overhead          9,650
Total manufacturing cost     119,650

Related Solutions

Question 2 Giant Bike Sdn Bhd (GBSB) produces many different models of bicycles. Assume that the...
Question 2 Giant Bike Sdn Bhd (GBSB) produces many different models of bicycles. Assume that the market has responded enthusisistically to a new model, the Jaguar. As a result, the company has established a separate manufacturing facility to produce these bicycles. The company produces 1,000 bicycles per month. Giant’s monthly manufacturing costs and other data are as follows: 1. Rent on manufacturing equipment RM2,000 per month 2. Insurance on manufacturing building RM750 per month 3. Raw materials (frame, tires etc)...
Question 2 Giant Bike Sdn Bhd (GBSB) produces many different models of bicycles. Assume that the...
Question 2 Giant Bike Sdn Bhd (GBSB) produces many different models of bicycles. Assume that the market has responded enthusisistically to a new model, the Jaguar. As a result, the company has established a separate manufacturing facility to produce these bicycles. The company produces 1,000 bicycles per month. Giant’s monthly manufacturing costs and other data are as follows: 1. Rent on manufacturing equipment RM2,000 per month 2. Insurance on manufacturing building RM750 per month 3. Raw materials (frame, tires etc)...
Question 1 James Bond Sdn Bhd produces a type of toy which is sold for RM110...
Question 1 James Bond Sdn Bhd produces a type of toy which is sold for RM110 per unit. The normal annual production and sales for the toys are 1,600 units, although the company has the capacity to produce up to 2,000 units. The following data consist of costs incurred during the year ended 2016: RM Material (100% variable) 40,000 Labour (60% variable) 40,000 Variable selling expenses 12,800 Fixed selling expenses 25,000 Fixed administrative expenses 20,000 The management accountant of the...
Question 1 James Bond Sdn Bhd produces a type of toy which is sold for RM110...
Question 1 James Bond Sdn Bhd produces a type of toy which is sold for RM110 per unit. The normal annual production and sales for the toys are 1,600 units, although the company has the capacity to produce up to 2,000 units. The following data consist of costs incurred during the year ended 2016: RM Material (100% variable) 40,000 Labour (60% variable) 40,000 Variable selling expenses 12,800 Fixed selling expenses 25,000 Fixed administrative expenses 20,000 The management accountant of the...
Question 2 Balances of accounts for GoodLuck Sdn Bhd on 1 June 2019 are as follows:...
Question 2 Balances of accounts for GoodLuck Sdn Bhd on 1 June 2019 are as follows: RM Cash in hand 36,800 Cash at bank 100,000 Inventory 24,500 Mortgage on premises 800,000 Van 125,000 Lucky Sdn Bhd 72,000 Buildling 900,000 Rainbow Berhad 61,670 Sunshine Supplies 24,700 Happy Trading 95,270 Capital 400,000 The following transactions took place in the month of June: Date Transactions 1 The business decided to add additional cash to the bank accounts amounted to RM300,000. 3 Purchased goods...
QUESTION 2 Liyala Sdn Bhd is a successful family-run business. The board of directors is led...
QUESTION 2 Liyala Sdn Bhd is a successful family-run business. The board of directors is led by the founder of the company, Liyala who is both chairman and CEO. The other board members, a finance director and two non-executive directors, are also Liyala’s brother and daughter. The members of Liyala family own all the share capital of the company.The company does not have a company secretary, and its auditors are a local firm of accountants in the town where Liyala...
QUESTION 2 Novus Sdn. Bhd is an interior design company. Its directors are Nobi, Dori, Ita...
QUESTION 2 Novus Sdn. Bhd is an interior design company. Its directors are Nobi, Dori, Ita and Moon. Nobi is the managing director of the company. Together the directors hold 30% of the company shares. Recently the directors of Novus Sdn. Bhd. discover that Lotus Bhd. is making a bid to take over Novus Sdn. Bhd. by purchasing majority shares in the company. It is rumoured that Lotus Bhd. plans to remove Novus Sdn. Bhd.’s directors once it gains control...
Sinar Mutiara Sdn Bhd produces a variety of watches. One of the components used in making...
Sinar Mutiara Sdn Bhd produces a variety of watches. One of the components used in making the watch is XM leather which obtains from Korean supplier at the cost of RM50 per unit. The monthly usage of XM Leather is 200 units. The company decided to limit the number of orders to two times per annum to minimise its total cost. The following data is made available: • Delivery cost is RM125 per order. • Administration cost is RM20 per...
FunKids Sdn Bhd produces a type of toy which is sold for RM120 per unit. The...
FunKids Sdn Bhd produces a type of toy which is sold for RM120 per unit. The normal annual production and sales for the toys are 2,800 units, although the company has the capacity to produce up to 3,000 units. The following data consist of costs incurred during the year ended 2019: RM Material (100% variable) 70,000 Labour (70% variable) 80,000 Selling expenses (40% variable) 58,000 Fixed administrative expenses 50,000 The management accountant of the company is proposing the following alternatives...
Rose Sdn. Bhd. (RSB) produces two products, which are Standard and Advanced. The followings are the...
Rose Sdn. Bhd. (RSB) produces two products, which are Standard and Advanced. The followings are the budgeted units to be produced by RSB for 2019: Standard (units) Advanced (units) Total Units July April 7,000 12,000 19,000 August May 8,000 13,000 21,000 September June 9,000 14,000 23,000 October July 10,000 15,000 25,000 It takes 3 pounds of direct materials to produce the Standard product and 4 pounds of direct materials to produce the Advanced product. It is the company's policy to...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT