(a)

Whatsfun Sdn. Bhd. has three production departments, namely, Machine 1, Machine 2 and Assembly departments. The followings are the budgeted production overhead for the year:

Indirect labour:

- Machine 1 department

- Machine 2 department

- Assembly department

Indirect material:

- Machine 1 department

- Machine 2 department

- Assembly department

Factory rent

Insurance for machineries Depreciation for machineries Electricity

Canteen

Staff welfare

Total production overhead

RM

23,500 15,800 41,200

10,300 6,800 18,700

RM

80,500

35,800 150,000 112,000 128,000

69,600 25,300 18,800

620,000

For simplicity purpose, Whatsfun Sdn. Bhd. uses plant-wide blanket rate of direct labour hours to allocate its production overhead. The direct labour hours are budgeted to be 400,000 hours for the year. A 10% of total production cost is estimated for selling and administration costs. The selling price for a job is determined by adding a mark-up of 40% on the total cost.

Whatsfun Sdn. Bhd. has just received a request from a customer for a quotation of 2 new jobs - Fun Play 18 and Cool Play 13 with the estimated prime costs of RM7,500 and RM11,000 respectively.

The followings are estimated production activities of both jobs:

Fun Play 18

Machine 1 department Machine 2 department Assembly department

Cool Play 13

Machine 1 department Machine 2 department Assembly department

Machine Hours 250 hours 100 hours

-

Machine Hours 400 hours 250 hours

-

Direct Labour Hours 200 hours

80 hours 600 hours

Direct Labour Hours 150 hours

100 hours

200 hours

___________________________________________________________________________ This final assessment paper consists of 3 questions on 8 printed pages.

5

UBAM1013 FINANCIAL INFORMATION FOR MANAGEMENT

Q1. (a) (Continued)

Required:

(i) Calculate the overhead absorption rate if plant-wide blanket rate of direct labour hours is applied. (2 marks)

(ii) Determine the quotations for both Fun Play 18 and Cool Play 13 using the plant-wide blanket absorption rate. (5 marks)