UNIVERSITY TEKNOLOGI MARA

ACC416
COST AND MANAGEMENT ACCOUNTING

PREPARED BY:
QUESTION 1

a) Marginal Costing approach and Absorption Costing approach

Stock movement units may 2022 june 2022

Opening stock 500 1,000
Add: Production 5,000 7,000
Less: Sales unit (4,500) (7,200)
Closing stock 1,000 800

Production cost per Absorptio

unit       Marginal n
Direct material: Remdesivir 260 260
Direct labour 1.5 hours x RM10 15 15
Variable production
overhead RM15 x 75% 11.25 11.25
Fixed production
overhead RM15 x 25% 3.75
Product cost per Unit 286.25 290
 HUGO FIP ENTERPRISE
Profit Statement Using Absorption Costing for the month of June 2022
RM RM RM
Sales Revenue 7200 x RM450 3,240,000
Less: COGS
Opening Stock 1000 x RM290 290,000
Add: COGM
DM 7000 x 260 1,820,000
DL 7000 x 1.5 x 10 105,000
Variable Production OH 7000 x 15 x 75% 78,750
Fixed production OH 7000 x 15 x 25% 26,250
2,030,000
(7200-7000) x
Less: Closing Stock (2,030,000/7000) (232,000) (2,088,000)
Gross Margin 1,152,000
Less: Variable non-production
Variable selling cost (7.5% of
sales) 243,000
(243,000)
Less: Fixed non-production
Fixed selling and distribution 14,000
Fixed administration 15,000
(29,000)
Net Profit 880,000
 HUGO FIP ENTERPRISE
Profit Statement Using Marginal Costing for the month of June 2022
RM RM RM
Sales Revenue 7200 x RM450 3,240,000
Less: COGS
Opening Stock 1000 x RM286.25 286,250
Add: COGM
DM 7000 x 260 1,820,000
DL 7000 x 1.5 x 10 105,000
Variable Production OH 7000 x 15 x 75% 78,750
2,003,750
(7200-7000) x
Less: Closing Stock (2,003,750/7000) (229,000) (2,061,000)
Gross Margin 1,179,000
Less: Variable non-production
Variable selling cost (7.5% of
sales) 243,000
(243,000)
Less: Fixed Cost
Fixed production OH 7000 x 15 x 25% 26,250
Fixed selling and distribution 14,000
Fixed administration 15,000
(55,250)
Net Profit 880,750
b) Profit Reconciliation

Profit Reconciliation Statement            

RM RM
Variable costing net operating
income 880,750
Add: Fixed manufacturing overhead costs
Deferred in
inventory
Less: Fixed manufacturing
overhead
Cost released from inventory 200 units x RM3.75 per unit (750)
Absorption Costing net operating income 880,000 0

Profit Reconciliation          
M.C Profit 880,750
A.C Profit 880,000
A.C < M. C Profit -750

FPOH/u x Inventory Difference 750

c) Sales exceed production will definitely cause variable costing net operating
profit (Marginal costing) higher than absorption costing system.