Jones Limited is planning to manufacture item ABC that will be used in the food industry. The product will be sold for RM15.00 per kilo. The company expects the following unit costs to apply to the production of item ABC: Ingredient M1: 0.25 kilos @ RM2.00 per kilo Ingredient M2: 0.75 kilos @ RM3.00 per kilo Labour: 0.20 hours @ RM4.00 per hour Variable overhead 0.20 hours @ RM6.00 per hour Fixed overheads are expected to be RM6,600 per annum and are absorbed on a unit basis and will accrue evenly over the year. Actual fixed overhead cost of RM6,600 and fixed selling expenses of RM900 were incurred for the quarter ending 31 March 2023. The planned production and sales levels for the first quarter of year ending 31 March 2023 are as follows: Production (units) Sales (units) a) 0.50 2.25 0.80 1.20 Quarter 1 1100 800 The actual production levels for the first quarter are similar to the planned production levels. The company had no stocks of raw materials or finished goods on 1 January 2023. Required: b) Prepare the statement of profit or loss for the quarter using: Marginal Costing Absorption Costing Based on the calculation in a) above, discuss which method is relevant for management decision making and the reasons for it.

Jones Limited is planning to manufacture item ABC that will be used in the food industry. The product will be sold for RM15.00 per kilo. The company expects the following unit costs to apply to the production of item ABC: Ingredient M1: 0.25 kilos @ RM2.00 per kilo Ingredient M2: 0.75 kilos @ RM3.00 per kilo Labour: 0.20 hours @ RM4.00 per hour Variable overhead 0.20 hours @ RM6.00 per hour Fixed overheads are expected to be RM6,600 per annum and are absorbed on a unit basis and will accrue evenly over the year. Actual fixed overhead cost of RM6,600 and fixed selling expenses of RM900 were incurred for the quarter ending 31 March 2023. The planned production and sales levels for the first quarter of year ending 31 March 2023 are as follows: Production (units) Sales (units) a) 0.50 2.25 0.80 1.20 Quarter 1 1100 800 The actual production levels for the first quarter are similar to the planned production levels. The company had no stocks of raw materials or finished goods on 1 January 2023. Required: b) Prepare the statement of profit or loss for the quarter using: Marginal Costing Absorption Costing Based on the calculation in a) above, discuss which method is relevant for management decision making and the reasons for it.

Name: Jones Limited is planning to manufacture item ABC that will be used i
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Description: Jones Limited is planning to manufacture item ABC that will be used in the food industry. Theproduct will be sold for RM15.00 per kilo. The company expects the following unit costs to apply tothe production of item ABC:Ingredient M1: 0.25 kilos @ RM

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 10E: Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22...

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