Question 2
In the coming year, Power Company expects to sell 70,000 units of product X at RM13 each. Power Controller provided the following for the coming year.
Units of production |
110,000 |
Direct material per unit |
RM4.50 |
Direct labour per unit |
RM3.00 |
Variable overhead per unit |
RM1.50 |
Variable selling expenses per unit |
RM1.10 |
Total fixed overhead |
RM132,000 |
Total fixed selling expenses |
RM30,000 |
Total fixed administrative expenses |
RM15,000 |
Required:
(a) Calculate the cost of one unit of product X under absorption costing.
(b) Calculate the cost of one unit of product X under variable costing.
(c) Calculate Power’s net year operating income under absorption costing.
(d) Calculate Power’s next year operating income under variable costing.
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