Dando Sdn. Bhd Accounting

Assignment II

Question 1

Dando Sdn. Bhd. is a manufacturing company specializing in making a product called Dandy from a special material called DX. For the year starting 1 July 2014, the following budget information (in units) for the first 6 months is available:

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The Balance at the start of the year are as follows:

RM

Office Equipment’s                                                 45,500

Provision for depreciation – Office Equipment’s                 18,220

Motor Vehicles                                                         55,000

Provision for depreciation – Motor Vehicles                         44,000

Cash at Bank                                                         15,800

Trade debtors                                                         46,800

Trade creditors                                                         61,800

Sundry creditors                                                                545

Other current assets                                                         348

The following additional information is given:

Each unit of Dandy requires 2 kg of DX at a cost of RM1.50 per kg and consumes 1 direct hour. The hourly rate for each direct labor hour is RM5. The stock of DX at 1 July 2014 is at 4,600kg.It is budgeted that the closing stock of DX to be 10% of production usage in the same month. The selling price of each unit of Dandy is expected to be RM15. The receipts from sales of Dandy are 75% in the month of sales and the balance in the following month. Material purchases are paid 60% in the month of purchase and the balance in the following month. The labor charges are paid in the same month as incurred. A new piece of office machinery is purchased on 1 September for RM15,000. Depreciation of Office Equipment and Motor Vehicle are at 10% and 20% straight line respectively. Depreciation is charged from the date of purchase to the end of the year.

During the year a repair cost of RM550 for Office Equipment was paid in October. The monthly fixed overhead costs amounted to RM18,000 per month and is paid in the same month as incurred. The company uses a marginal costing system to value its products for internal budgeting purposes. It is assumed that all trade debtors and all trade payable balances at 1 July 2014 will be received or paid in July.

The closing stock of Dandy at the end of December 2014 is expected to be 5% lower than the opening stock at the beginning of December 2014.