Question 3 Anggur Sdn Bhd produce 3 products, and the material cost per tonne and estimated annual sales for each of the products are: Product A B C Material cost per unit RM20.00 RM18.00 RM15.00 Estimated sales 2,000 tonnes 4,000 tonnes 10,000 tonnes + + The indirect cost of operating the machinery used to produce all three products is RM300,000 per year. In the past, prices have been set by allocating the indirect costs to the 3 products EQUALLY. The resulting total costs (material costs plus allocated fixed overhead) are then marked up by 50 per cent. Required: a) Calculate the allocation of the above fixed costs per tonne for each product. b) Base on part a), calculate cost per tonne, revenue per tonne, and price per tonne using the method described for the price settings. c) Compute revenue, contribution margin and profit per tonne and in total for the company. d) Discuss the pros and cons of the price settings in this manner, and propose a better way to set the prices.

Question 3 Anggur Sdn Bhd produce 3 products, and the material cost per tonne and estimated annual sales for each of the products are: Product A B C Material cost per unit RM20.00 RM18.00 RM15.00 Estimated sales 2,000 tonnes 4,000 tonnes 10,000 tonnes + + The indirect cost of operating the machinery used to produce all three products is RM300,000 per year. In the past, prices have been set by allocating the indirect costs to the 3 products EQUALLY. The resulting total costs (material costs plus allocated fixed overhead) are then marked up by 50 per cent. Required: a) Calculate the allocation of the above fixed costs per tonne for each product. b) Base on part a), calculate cost per tonne, revenue per tonne, and price per tonne using the method described for the price settings. c) Compute revenue, contribution margin and profit per tonne and in total for the company. d) Discuss the pros and cons of the price settings in this manner, and propose a better way to set the prices.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 6PA: Morris Industries manufactures and sells three products (AA, BB, and CC). The sales price and unit...

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