Question
Duri Sdn Bhd produces two wooden products known as Jati 1 and Jati 2. Each product started in the Machining department and completed in the
Duri Sdn Bhd produces two wooden products known as Jati 1 and Jati 2. Each product started in the Machining department and completed in the Finishing department. There are also two service departments, canteen and maintenance in the factory. During the period just ended, actual overhead costs were as follows:
| Total(RM) | Machining | Finishing | Canteen | Maintenance |
Allocated overhead(RM) | 105,000 | 48,750 | 30,000 | 11,250 | 15,000 |
Depreciation on equipment(RM) | 31,875 |
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Rent, rates and electricity(RM) | 16,350 |
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Additional information:
a) Background of departments
| Total(RM) | Machining | Finishing | Canteen | Maintenance |
Cost of equipment(RM) | 159,375 | 75,000 | 46,875 | 11,250 | 26,250 |
Floor area(Sq metres) | 8,100 | 2,700 | 1,800 | 1,350 | 2,250 |
Number of employees | 50 | 20 | 20 | 5 | 5 |
Machine hours(MH) | 36,900 | 36,900 | - | - | - |
Direct labour cost(RM) | 40,000 | 4,000 | 36,000 | - | - |
b) The service departments overhead cost are re- apportioned as follows:
Canteen - Number of employees
Maintenance - 80% for Machining Dept, 20% for Finishing Dept
You are required to:
1) Prepare overhead analysis sheet and calculate the overhead rates assuming Machining Department uses machine hours and Finishing department uses percentage of direct labour costs.
2) The following list and date relates to the making of a unit of product Jati 1 .
Jati 1 | |
Direct material cost(RM) | 200 |
Direct labour cost: | |
Machining Department(RM) | 100 |
Finishing Department (RM) | 80 |
Machine hour (MH) | 5 |
Calculate production cost for Jati 1.
3) Given the actual overhead for Machining department and Finishing Department as RM105,300 and RM109,000 respectively, calculate the over or under absorption of overhead for the two department if the actual machine hours is 40,000 and the actual direct labour cost for Finishing Department is RM70,000 .
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