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Calculation

The document provides cost information for Sino Iban Bhd for January and February 2017. It includes sales revenue, direct materials cost, indirect materials cost, direct labour cost, indirect labour cost, rent, depreciation, inspection costs, electricity cost, and supervisors' salaries. It also shows the profit/loss for each month. The tutorial question asks to (a) explain three differences between a fixed and flexible budget, and (b) prepare a budget for March 2017 assuming sales of 50,000 units using the same format provided. The response for (a) outlines that a fixed budget remains static regardless of changes while a flexible budget adjusts for changes, a fixed budget operates at one activity level while a

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Theva Letchumanan
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96 views8 pages

Calculation

The document provides cost information for Sino Iban Bhd for January and February 2017. It includes sales revenue, direct materials cost, indirect materials cost, direct labour cost, indirect labour cost, rent, depreciation, inspection costs, electricity cost, and supervisors' salaries. It also shows the profit/loss for each month. The tutorial question asks to (a) explain three differences between a fixed and flexible budget, and (b) prepare a budget for March 2017 assuming sales of 50,000 units using the same format provided. The response for (a) outlines that a fixed budget remains static regardless of changes while a flexible budget adjusts for changes, a fixed budget operates at one activity level while a

Uploaded by

Theva Letchumanan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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TUTORIAL QUESTION 1

Faculty of Business

BBCA2053

MANAGEMENT
ACCOUNTING

SEMESTER 201909
Course : Management Accounting
Lecturer : Lim Ann Wei

Total marks : 15 MARKS (WORTH 15%)

Instructions to candidates:

Write your student number and IC number on your answer paper

Name : THEVA A/L LETCHUMANAN

Student ID : 201711040016

NRIC/Passport No : 971112-10-6523

Program : BBA CT9


The following cost information of Sino Iban Bhd for the months ended 31st
January and 28th Feb 2017 are as follows:

January February
Sales (units) 40,000 45,000
RM RM
Sales revenue 2,000,000 2,250,000
Less Total Cost
Direct materials 400,000
450,000
Indirect materials 120,000 120,000
Direct labour 480,000 540,000
Indirect labour 25,000 25,000
Rent 15,000 15,000
Depreciation 12,000 12,000
Inspection costs 9,000 9,000
Electricity 80,000 90,000
Supervisors’ salaries __13,000 __14,000
1,154,000 1,275,000
Profit/Loss 846,000 1,050,000

(a) Explain THREE (3) differences between fixed and flexible budget.

(3 marks)

(b) Prepare a budget in the same format for the month ended 31 st March 2016
assuming that the factory will manufacture and sell 50,000 units during the
month.
(7 marks)
(a) Explain THREE (3) differences between fixed and flexible budget.

A fixed budget is a kind of budget where the income and the expenditure
are pre-determined. Irrespective of any fluctuation or change, this
budget would remain static. Flexible budget, on the other hand, is a
budget that is flexible as per the needs of the hour. For example, if the
company sees that it can sell off more of its products by expending more
in advertisement costs, a flexible budget would help execute that. The
budget, which remains constant, regardless of the actual output levels is
known as Fixed Budget. The flexible budget is a budget which can be
easily adjusted according to the output levels.
Fixed Budget is static in nature while Flexible Budget is dynamic. Fixed
Budget operates in only one activity level, but Flexible Budget can be
operated on multiple levels of output. Fixed Budget is based on the
assumption, whereas Flexible Budget is realistic. Flexible Budget proves
more accurate to evaluate the performance, capacity and efficiency of
the activity level compared to Fixed Budget.
(b) Prepare a budget in the same format for the month ended 31st March 2016
assuming that the factory will manufacture and sell 50,000 units during the
month.
Step 1
Find the fixed cost in the statement.

January February
Sales (units) 40,000 45,000
RM RM
Sales revenue 2,000,000 2,250,000
Less Total Cost
Direct materials 400,000
450,000
FC Indirect materials 120,000 120,000
Direct labour 480,000 540,000
FC Indirect labour 25,000 25,000
FC Rent 15,000 15,000
FC Depreciation 12,000 12,000
FC Inspection costs 9,000 9,000
Electricity 80,000 90,000
Supervisors’ salaries __13,000 __14,000
1,154,000 1,275,000
Profit/Loss 846,000 1,050,000

Step 2

Find the variable cost and semi variable cost by the calculation.
Salesrevenue
1)
Sales (units)
2000000
a)  50
40000
2250000
b)  50
45000

Directmaterials
2)
Sales (units)
400000
a)  10
40000
450000
b)  10
45000

DirectLabour
3)
Sales (units)
480000
a)  12
40000
540000
b)  12
45000

Electricit y
4)
Sales (units)
80000
a) 2
40000
90000
b) 2
45000

SupervisorSalary
5)
Sales (units)
13000
a)  0.33
40000
14000
b)  0.31
45000

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