Question

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)

Answer 1

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