Question

In: Accounting

B. The following information was taken from the accounting records of Happy Hour Sdn Bhd (HHSB)...

B. The following information was taken from the accounting records of Happy Hour Sdn Bhd (HHSB) for the year 2019: Items RM Advertising expenses 100,000 Utilities expense 36,000 Direct labour cost 150,000 Depreciation expense 145,000 Purchases of raw materials 800,000 Sales 2,450,000 Insurance expense 40,000 Indirect materials 15,000 Administrative expenses 199,000 Indirect labour 170,000 Maintenance and repair 94,000 Sales commissions 12,000 Rental expense 77,000 Additional information: 1. Insurance, utilities and depreciation expenses consist of 70% for factory and 30% for office. 2. Only half of the maintenance and repair cost belongs to the factory. 3. Rental expense includes RM37,000 of office rental. 4. Production in 2019 was 50,000 units. 5. Inventory balances at the beginning and ending of the year 2019 were: 1 January (RM) 31 December (RM) Raw materials 65,000 78,000 Work in process 150,000 112,000 Finished goods 235,000 215,000 REQUIRED: (a) Prepare a schedule of cost of goods manufactured for the year ended 31 December 2019. (b) Construct the equation for total manufacturing cost based on your answer in (a). Assume that manufacturing overhead costs are fixed, and the other manufacturing costs are variables.

Solutions

Expert Solution

(a)

Happy Hour Sdn Bhd (HHSB)
Schedule of Cost of Goods Manufactured
For the Year Ended 31 December 2019
Beginning raw materials 65000
Add: Raw material purchases 800000
Raw materials available for use 865000
Less: Ending raw materials 78000
Raw materials used 787000
Less: Indirect materials 15000
Direct materials used 772000
Direct labor 150000
Manufacturing overheads:
Utilities expense (70% x 36000) 25200
Depreciation (70% x 145000) 101500
Insurance (70% x 40000) 28000
Indirect labor 170000
Maintenance and repair (50% x 94000) 47000
Rental expense (77000 - 37000) 40000 411700
Total current manufacturing costs 1333700
Add: Beginning work in process 150000
Total cost of work in process 1483700
Less: Ending work in process 112000
Cost of goods manufactured RM 1371700

(b) Variable manufacturing cost per unit = (772000 + 150000)/50000 units = 922000/50000 = RM18.44 per unit

Total manufacturing cost = RM411700 + RM18.44x

ekkarill92 answered 1 year ago
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