QUESTION 1

Syntoq Co. manufactures numerous types of sports shoe. Due to high demand for the product and capacity constraints, the company has decided to manufacture and at the same time purchase finished product and resell the product. The company’s trial balance as at 31 October 2014 is shown below:

 

Syntoq Co. Trial Balance as at 31 October 2014
	RM	RM
Cash in hand	19,050
Accounts receivable	13,800
Inventories (1 October 2014): Direct materials Work in process Finished goods	4,950 6,600 3,000
Plant and machineries (net)	99,000
Delivery van (net)	76,500
Accounts payable		13,200
Capital		186,000
Sales revenue		261,750
Sales return	1,950
Sales discount	2,940
Purchase of direct materials	115,710
Purchase of finished goods	23,550
Purchase return – finished goods		1,650
Salaries expenses: Direct labor Indirect labor Administration	21,600 14,700 16,650
Factory rental expense	8,100
Insurance expense	15,000
Depreciation expenses	7,500
Utility expenses	4,000
Repair and maintenance expenses	8,000
	462,600	462,600

 

Additional information:

 

1. Inventories as at 31 October 2014:

Direct materials	RM7,800
Work in process	RM5,850
Finished goods	RM10,200

 

2. Insurance expense includes RM4,500 insurance for administration.

3. Depreciation expenses includes RM1,500 for delivery van and RM6,000 for plant and machinery.

4. Half of utility expenses are related to factory and another half for general office.

5. 60% of repair and maintenance expenses are distributed to factory.

 

REQUIRED:

 

(a) Prepare the Statement of Cost of Goods Manufactured for Syntoq Co. for the month of October 2014.

 

(b) Calculate the gross profit for the company for October 2014.

 

(c) Explain the difference between “period cost” and “product cost”. Provide TWO (2) examples for each type of cost.