POP QUIZ 2 APPROACHES FOR PROFIT REPORTING

A company manufactures 1,000 units of product X per year. the cost data is given below:

Direct material: RM5 per unit

Direct labor: RM4 per unit

Variable manufacturing overhead: RM3 per unit

Fixed manufacturing overhead: RM8,000 per year

Compute the variable manufacturing cost for one unit of product X

• RM18

• RM9

• RM15

• RM12

Consider the following information:

Number of unit produced: 2,000 units

Direct materials cost: RM8 per unit

Direct labor cost: RM12 per unit

Variable manufacturing overhead: RM6 per unit

Fixed manufacturing overhead: RM8,000 per unit

Variable selling and administrative cost: RM2 per unit

Fixed selling and administrative cost: RM6,000

What is the unit product cost under absorption costing system?

• RM26

• RM30

• RM28

• RM32

Under marginal costing system, the unit product cost includes:

• Direct materials, direct labor, variable overhead and fixed overhead

• Direct materials, direct labor and variable overhead

• Direct materials, direct labor and fixed overhead

• Direct materials and direct labor

the reason of difference in net operating income marginal costing and absorption costing is

• change in selling price

• change in fixed cost

• change in variable cost

• change in inventory

When inventory increases, the net profit under absorption costing is

• always equal to marginal costing

• always higher than marginal costing

• always lower than marginal costing

• always equal to break even point

when inventory decreases, the net profit under absorption costing is

• always lower than marginal costing

• always higher than marginal costing

• always equal to break even point

• always equal to marginal costing

the inventories do not change under either absorption costing or marginal costing when

• production is more than sales

• production is less than sales

• production is equal to sales

• production is equal to break even point

Consider the following information:

Net profit under marginal costing: RM50,000

Decrease in inventory during the period: 5,000 units

Fixed manufacturing overhead: RM100,000

Number of unit produced during the period: 25,000 units

Compute the net profit under absorption costing system

• RM70,000

• RM50,000

• RM150,000

• RM30,000

Opening inventories: 25,000 units

Closing inventories: 10,000 units

Sales: 150,000 units

Based on the information above, the number of unit produced during the period is

• 135,000 units

• 165,000 units

• 185,000 units

• 115,000 units

the report generated by marginal costing system of a company is mostly used by

• lenders and creditors

• internal management

• government and tax agencies

• investors and stakeholders