Copt Berhad is a bracelets jeweller headquartered in Melaka. The company uses job-order costing system and applies manufacturing overhead cost to jobs on the basis of direct labour hours (DLH).

At the beginning of January, Copt Berhad had no work-in process inventory or finished goods inventory. Balance in the raw materials inventory accounts for RM50,000 of direct materials at the beginning of January 2019. Jobs QIS, NADIA and DINA were created in January. The company estimates a total of 560 DLH to be worked for the orders at a manufacturing overhead cost of RM196,000. The following transactions were recorded during the month:

Date Transactions RM

Jan. 1 Raw materials (assuming no indirect materials) purchased for use in production 350,000

5 Raw materials requisitioned for use in production: 275,000

20% of the materials were classified as indirect materials

5 Rental cost on building per annum: 40,000

80% related to factory operations

20% related to sales office

25 Salary and wages incurred:

Direct labor (600 hours) 245,000

Indirect labor 60,000

Selling & administrative salaries 23,000

26 Utility incurred: 65,000

70% related to factory operations

30% related to selling & administrative activities

31 Depreciation recorded for the year: 7,000

50% related to factory equipment

50% related to sales office equipment

31 Manufacturing overhead costs was applied to jobs.

A summary of source documents reveals the following information:

Job Material Requisition Slips Labor Time Tickets

QIS RM70,000 RM80,000 for 190 hours

NADIA 100,000 120,000 for 280 hours

DINA 50,000 45,000 for 130 hours

General Use 55,000 60,000

Jobs QIS and DINA was completed and sold for RM364,400 and RM508,800 respectively at the end of the month, and Job NADIA was incomplete.

Required:

a) Prepare journal entries to record the transactions for January 2019.

Exclude journal entries for source documents and the completion and sales of Jobs NADIA and DINA in your answers. (10 marks)

b) Prepare Cost of Goods Manufactured Schedule for January 2019. (5 marks)

c) Journalise the adjusting entry to assign the under- or overapplied manufacturing overhead, assuming the balance is allocated entirely to Cost of Goods Sold. (3 marks)

d) Assuming Copt Berhad received an order for a batch of limited edition bracelets for an upcoming expo. The batch order is for 1,000 similar units of bracelets.

Discuss the suitability (applicability) of the current job order costing system in costing the batch order. (2 marks)