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Q4: Tools and Parts Engineering Berhad supplies radiators to a local company assembling motor vehicles....

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Accounting

Q4: Tools and Parts Engineering Berhad supplies radiators to a local company assembling motor vehicles. The following information is provided in relation to the production of this product:

Production and sales volumes:

Production (Radiators) Sales (Radiators)

January 600 400

February 480 600

Cost data:

Selling price per Radiator RM300

Direct materials Water pump per unit RM70

Direct materials Copper per unit RM30

Direct materials Gasket per unit RM10

Direct labour per radiator RM15

Variable production overheads per unit RM4

Fixed production overheads are budgeted at RM5,000 per month and are absorbed on a unit basis. The normal level of production is budgeted at 500 units per month.

Other costs

Variable sales commission 5% of sales value

Fixed selling RM5,000 per month

Fixed administration RM3,000 per month

Notes:

  1. There was no opening inventory of the product as at 1 January.

Prepare the management accounts showing profit calculated using Absorption costing system.

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