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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 

 

 

 

 

Rent, rates and electricity(RM)

              16,350 

 

 

 

 

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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