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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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