(A) Classify each of the following cost as product cost or period cost and indicate whether the cost is a variable or fixed cost, direct cost or indirect cost Product /Period Fixed Variable Indirect Direct/ a Direct materials b Depreciation on corporate jet for sales force c Lubricants for factory machinery d Sales commissions at 5% of sales e Factory Insurance f Product brochures g Factory utilities h President's salary i Employer paid health insurance premium on direct labor personnel GAccounting staff salaries (10 marks) (B) Spectro Glass Company manufactures glass for office building in Arizona and Southern California. As a result of age and wear, a critical machine in the production process has begun to produce quality defects. Spectro Glass is considering replacing the old machine with a new machine, either brand A or brand B. The manufacturer of cach machine has provided Spectro Glass these data on the cost of operation of its machine at various levels of output: Output Machine A Estimated Total Cost RM 54,600 78,800 90,300 114,900 132,400 210,000 Machine B Estimated Total Cost (square yards) RM 4,000 7,000 9,000 14,000 16,000 24,000 70,000 100,000 115,000 137,000 146,000 192,000 Page I of 3 Required: a) Compute the variable cost and fixed cost for machine A by using High-Low method. (4 marks) b) Develop the cost equation for machine A. (2 marks) (C) The Button Box is a custom decorating and design store. The company prepares custom draperies to order for customers. The following transactions were incurred to support Job 5491, custom drapes and furniture coverings for a luxury home: a) Purchased RM4,000 of materials on accour b) Issued RM200 supplies from the materials inventory. c) Paid the materials purchased in transaction (a). d) Issued RM3,200 of materials to the production department. e) Incurred hourly labour to sew curtains of RMI.500 and supervisory labour of RM1,000. Supervisors ae assigned to as many as 10 jobs at once. D Paid RM2,000 for utilities and other miscellaneous items for the manufacturing plant. g) Overhead is applied at 200%.of direct labour cost. h) Recorded depreciation on factory equipment of RMI,000 and sales director's company car of RM500. Required: Prepare the journal entries to record the above transactions (9 marks) QUESTION 2 (25 Marks) The following cost data relate to the manufacturing activities of Leenette Enterprise during the most recent year: RM Manufacturing overbead costs incurred during the year: Property taxes Factory utilities Indirect labour Depreciation: factory Insurance: factory. Other costs incurred during the year: Purchases of raw materials Direct labour cost Inventories: 9,600 10,600 10,300 9,000 10,500 56,000 87,000 Begin raw materials Ending raw material Beginning work in process Ending work in process Begin finished goods Ending finished goods Additional Information: 28,000 29,000 16,000 14,000 42,000 54,000 3,000 Indirect materials included in the manufacturing overhead incurred The company applies manufacturing overhead job using a predetermined overhead rate based on direct-labour hours. At the beginning of the year, the estimated total manufacturing overhead cost was RM80,000 and direct labour hour is 16,000 hours. It was found that the actual direct labour hour is 11,000 hours. Indirect materials included in the manufacturing overhead incurred 3,000 The company applies manufacturing overhead job using a predetermined overhead rate based on direct-labour hours. At the beginning of the year, the estimated total manufacturing overhead cost was RM80,000 and direct labour hour is 16,000 hours. It was found that the actual direct labour hour is 11,000 hours. Required: a) Determine the predetermined overhead rate for the year (3 marks) b) Determine the manufacturing overhead applied to the job (2 marks) c) Compute the over/under applied overhead (4 marks) d) Prepare the schedule of cost of goods manufactured for the year (10 marks) e) Prepare the schedule of cost of goods sold for the year (6 marks) Page 3 of 3