ANSWER
a. Electricity cost incurred by manufacturing department is an
indirect productioncost. It is classified as semi-variable cost in
term of cost behaviour.
b. Depreciation for office equipment is a/an indirect non-
production cost. If a straight-line
method is adopted, it is classified as fixed cost in term of cost
behaviour.
c. Royalty paid for units sold of a product is a/an direct expenses.
It is
variable cost in term of cost behaviour
a) PRIME COST
RM RM
Direct materials
Raw materials 16,000
(+) Carriage inwards on raw materials 350
(-) Returned damaged raw materials to supplier (1,000) 15,350
Direct labour
Production staff salaries 20,000
35,350
B,PERIOD COST
RM
Advertising 500
Electricity (30% x 4,000) 1,200
Salesman commission 4,400
Depreciation of non-current assets (40% x 3,300) 1,320
7,420
, QUESTION 2
I. Material Requisition Note
II. Purchase Requisition Note
III.Goods Received Note
b. i.JIT purchasing system is a demand driven
approach where materials are purchased only when it is
required.
ii. 2 features of JIT purchasing system:
• Avoid inventory from exceeding demand.
‚ Have zero breakdowns in the production process
A.
Demand = 80,000 packs per year Maximum usage = 7,500
packs per monthMinimum usage = 3,000 packs per month
Purchase price = RM25 per pack Minimum ROP = 0.5
month
Maximum ROP = 1 month
Co = 45 + 55 = RM100 per orderCc = 1% x 25 = RM0.25 per pack
2DCo 2 × 80,000 × 100
EOQ = = = 8,000 packs
a. √ √
Cc 0.25
b. Reorder level = Max. usage x Max. ROP
= 7,500 x 1
= 7,500 packs
c. Maximum stock level = ROL – (Min. usage x Min. ROP) + EOQ
= 7,500 – (3,000 x 0.5) + 8,000
= 14,000 packs
d. Minimum stock level = ROL – (Average usage x Average ROP)
= 7,500 – [(7,500 + 3,000)/2 x (1 + 0.5)/2]
= 7,500 – (5,250 x 0.75)
= 3,563 packs
a. Electricity cost incurred by manufacturing department is an
indirect productioncost. It is classified as semi-variable cost in
term of cost behaviour.
b. Depreciation for office equipment is a/an indirect non-
production cost. If a straight-line
method is adopted, it is classified as fixed cost in term of cost
behaviour.
c. Royalty paid for units sold of a product is a/an direct expenses.
It is
variable cost in term of cost behaviour
a) PRIME COST
RM RM
Direct materials
Raw materials 16,000
(+) Carriage inwards on raw materials 350
(-) Returned damaged raw materials to supplier (1,000) 15,350
Direct labour
Production staff salaries 20,000
35,350
B,PERIOD COST
RM
Advertising 500
Electricity (30% x 4,000) 1,200
Salesman commission 4,400
Depreciation of non-current assets (40% x 3,300) 1,320
7,420
, QUESTION 2
I. Material Requisition Note
II. Purchase Requisition Note
III.Goods Received Note
b. i.JIT purchasing system is a demand driven
approach where materials are purchased only when it is
required.
ii. 2 features of JIT purchasing system:
• Avoid inventory from exceeding demand.
‚ Have zero breakdowns in the production process
A.
Demand = 80,000 packs per year Maximum usage = 7,500
packs per monthMinimum usage = 3,000 packs per month
Purchase price = RM25 per pack Minimum ROP = 0.5
month
Maximum ROP = 1 month
Co = 45 + 55 = RM100 per orderCc = 1% x 25 = RM0.25 per pack
2DCo 2 × 80,000 × 100
EOQ = = = 8,000 packs
a. √ √
Cc 0.25
b. Reorder level = Max. usage x Max. ROP
= 7,500 x 1
= 7,500 packs
c. Maximum stock level = ROL – (Min. usage x Min. ROP) + EOQ
= 7,500 – (3,000 x 0.5) + 8,000
= 14,000 packs
d. Minimum stock level = ROL – (Average usage x Average ROP)
= 7,500 – [(7,500 + 3,000)/2 x (1 + 0.5)/2]
= 7,500 – (5,250 x 0.75)
= 3,563 packs
