DWAKTU Sdn.Bhd. (DWAKTU) manufactures trendy, high quality and moderately priced ladies watches. As DWAKTU's financial manager, you are asked to recommend a method of inventory costing. The CFO will use your recommendation to prepare DWAKTU financial statement. The following data is for the year ended 31 December 2021. Inventory 1 January 2021 Inventory 31 December 2021 2021 sales Selling price Variable manufacturing cost Variable marketing cost per unit sold Fixed manufacturing costs Fixed marketing and admin costs 8,500 units 3,450 units 34,540 units RM240 per unit RM100 per unit RM20 per unit RM1,415,520 RM1,080,000 Assume standard cost per unit is the same for units in beginning and units produced for the year.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Required:
a) Compute the cost per unit under absorption and variable costing method.
b) Prepare the Statement of Profit or Loss under variable and absorption costing for the
year ended 31 December 2021.
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