(a) Advise the table of overseer whether Children department needs to be closed down. Working one particular - Loss in contribution from kids department

Sales-Variable Costs = RM500, 000-RM250, 000

=RM250, 000

Functioning 2 – Specific Fixed Costs for Children department

Fixed Costs / 2 sama dengan Specific Fixed Costs

sama dengan RM300, 1000 / a couple of =RM150, 500

RM'000 Loss of Contribution from Children division (W1) (250) Savings in specific fixed costs from kids department (W2) 150 Pregressive Loss if perhaps closed straight down Children section (100) By closing the youngsters department, the effects would be a RM100, 000 fall in a revenue. Footcare Sdn. Bhd ought to continue function with budget cuts such as development costs or perhaps labour price to cover the loss rather than shut down down the section as close down the office cause more loss. Footcare Sdn. Bhd. also can consider to increase the selling price with the product for the children department concerning reduce the reduction. If the business choose to shut down the division, the company might lose additional RM50, 500 opportunity costs. Therefore it is not really advisable to close down the Kids departments, as it would be a RM100, 000 along with the profit.

(b) If the Children department can be closed down, the space readily available could be rented out. Estimate the bare minimum rental acceptable. Minimum rental acceptable pertaining to the space of Children department is usually RM100, 500. Because Footcare Sdn. Bhd. need to work with RM100, 000 to cover the opportunity costs loss from final down the Kids department.

(c) Explain TWO (2) qualitative component which has to be considered just before a final decision is made within the closure of youngsters department. we. Customer Effect – Footcare Sdn. Bhd. need to consider whether the client can find substitute choice to replace the product if the Children division is closed down. The organization should also consider customer effect on the closure of Children office. If generally there any indication seen the customer desire the Children department continue to function and if the client is unable to find substantive merchandise to replace the product then the business should consider to carry on operate the youngsters department and reduce the production costs and raise the product's selling price to cover the loss has made. 2. Employees Response – Footcare Sdn. Bhd should consider the right way to settle automobile in the Kids department. If to end them or perhaps assign these to another section. Footcare Sdn. Bhd should also consider if cutting time rate or perhaps labour performed hour to lessen the costs to hide the loss so that the Children office can be continue operate.

(d) Discuss THREE (3) attributes of relevant priced at in decision making. i. Relevant costs are future costs. A decision is about future. Costs that have been sustained in the past will be totally unimportant. Such costs are previous costs or perhaps sunk expense, which include dedicated. ii. Option cost. Is definitely the value from the benefit sacrificed when one particular course of action can be chosen, instead of an alternative. In addition, it known as the earnings forgone by using scare resource for one particular opportunity. iii. Pregressive cost. Often known as marginal cost, is the expense associated with raising production by simply one device. Because several costs will be fixed and also other variable, the incremental costs will not same as overall typical costs per unit.

Question 2

(a)Briefly describe the target costing procedure that Chipmunk Sdn. Bhd should embark on. (3 marks) Chipmunk Sdn. Bhd. should certainly undertake target costing as being a response to the challenge of handling and reducing costs in the product life cycle. Target charging processes include three steps which can be market-driven being, product-level focus on costing, and component-level goal costing. The procedure here will need to Chipmunk Sdn....

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