Question
Amber Stone Company applies overhead on the basis of direct labour costs. The company estimates annual overhead costs will be RM1,520,000 and annual direct labour
Amber Stone Company applies overhead on the basis of direct labour costs. The company estimates annual overhead costs will be RM1,520,000 and annual direct labour costs will be RM1,900,000. During the month of March, the company works on two jobs: Amber161 and Amber171. The summary data related to these two jobs are as follows.
Manufacturing Costs Incurred
Purchased RM108,000 of raw materials on account.
Factory labour of RM152,000 and RM8,000 for employer payroll taxes.
Manufacturing overhead of indirect materials and indirect labour for RM119,600.
Assignment of Costs
Direct materials: Job Amber161 RM54,000 and Amber171 RM42,000
Indirect materials: RM6,000
Direct labour: Job Amber161 RM104,000 and Job Amber171 RM52,000
Indirect labour: RM4,000
During the month, the company completed Job Amber161 and sold it on account for RM300,000. Job Amber171 was only partially completed.
Required:
a)Compute the predetermined overhead rate.
b)Journalize the March transactions.
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