Company: Chili Mas Food Sdn Bhd

-Type of costing: Process Costing

-Manufactures chili sauce (in bottles - 2.4kg per bottle)

-Manufacture 18,000 bottles per month

-Uses normal costing.

-Allocation base = Direct labour hours

PROCESS:

Soaking & Grinding Mixing & Cooking Bottling & Labelling

COSTS:

DIRECT MATERIALS (18,000 bottles)

MATERIALS

PRICE PER UNIT

MATERIALS USED

TOTAL PRICE

Chilli

RM 14.00/kg

750kg

RM 10,500

Starch

RM 4.20/kg

3000kg

RM 12,600

Sugar

RM 3.20/kg

7500kg

RM 24,000

Salt

RM 1.00/kg

900kg

RM 900

DIRECT LABOUR (PER MONTH)

NO OF LABOUR

WORKING HOURS (per day of each worker)

MONTHLY SALARY (of each worker)

8

8 hours

RM 1800

TOTAL MANUFACTURING OVERHEAD (ESTIMATED) - RM 31,200

-Manufacturing Overhead includes: indirect material, rental, depreciation of machines, utilities & so on.

Direct Material & Direct Labour assigned to each department.

1.Soaking & Grinding Department

Direct material = chilli

Direct labour = 2 labours

2.Mixing & Cooking Department

Direct materials = Starch, sugar, salt

Direct labour = 3 labours

3.Bottling & Labelling

Direct labour = 3 labours

Documents Used: Job Cost Sheet & Material Requisition Form

1.Explain the cost accumulation based on the information (15Marks)

2.Give four SUGGESTION AND JUSTIFICATIONS FOR IMPROVEMENT OF COSTING SYSTEM (15 Marks)