Tutorial

Exercise 1

Ahmad owns a bakery and incurs the following costs every month:

• Raw materials (flour, sugar, eggs): RM3,000
• Rent for the shop: RM2,000
• Wages for employees involved in production: RM1,500
• Advertisement expense for social media campaigns: RM500

Based on the above, classify the given costs into:

Product costs

Raw materials (flour, sugar, eggs): RM3,000

Wages for employees involved in production: RM1,500

Period costs

Rent for the shop: RM2,000
Advertisement expense for social media campaigns: RM500

Fixed costs

Rent for the shop: RM2,000

Variable costs

Raw materials (flour, sugar, eggs): RM3,000

Wages for employees involved in production: RM1,500

Advertisement expense for social media campaigns: RM500

Exercise 2

A manager must choose between two suppliers.

Supplier A offers 

raw materials at RM50 per unit, 

Supplier B offers them at 

RM45 per unit with a minimum order of 1,000 units. 

Calculate the total cost for each supplier and recommend the more cost-effective option for an order of 1,000 units.

Supplier A: 1,000 × RM50 = RM50,000
Supplier B: 1,000 × RM45 = RM45,000 

Recommendation: Choose Supplier B, as the total cost is RM45,000.

Exercise 3

A company must decide whether to shut down a department due to high overhead costs. 

What type of cost information would be relevant in making this decision? Provide examples.

Staff salaries 
Overhead allocations 

Equipment maintenance specific to the department