EIE'J'L'I': \\ nsert Page Layout References BAC'IGZII 13 1WD FQ .ducr [Compatibirrly Mode] - MICmsufl Wold Malllngs Renew VIEW Form PDF QUESTION 2 Estimated mamrfacturing overhead costs of Malaya Cmporation for September 2019 are as follows: Cost Pack Overhead cask (RM) Power 40,000 Materials handling 90,000 Setups 80,000 Quality inspections 40,000 Total 250 (TOO The present cost accounting system allocates overhead costs to nal products based on machine hours. Estimated machine hours for September 2019 are 50,000. Aer losing several bids recently, Nir. Male; the president, asked the controller to implement an activitybased costing system because he was told that activitybased costing provides mare accurate product cost estimates. The controller collected the following data: Activities Cost drivers Available capacity Electric power Kilowatt hours 20,000 lrwh Materials handling Material moves 5,000 moves 5 et up Machine set ups 1,000 set ups Quality inspection Number of inspections 2,000 inspections The company recently received arequest for a bid to supply 1,000 units of its product M5. The following estimates were prepared for the production of 1,000 units of M5. [tern Amount (RM) Direct material costs 20,000 Direct 1% cost 18,000 Machine hours 1,800 Direct 1m hours 2,000 Kilowatt hours of electricity 2,000 Number of material moves 4-0 Number of machine set ups 5 Number of quality inspections 20 BAC1624 T3 1920 FQ . docx [Compatibility Mode] - Microsoft Word X File Home Insert Page Layout References Mailings Review View Foxit PDF . 1 . . . | . . . . . I . . . 3 . . . . . 1 . . . 4 . . . 1 . . . 5 . . . 1 . . . 6 /4 . . 1 . . . 7 . . more accurate product cost esumates. The commoner conected me tonowing data . Activities Cost drivers Available capacity Electric power Kilowatt hours 20,000 kwl Materials handling Material moves 5,000 moves Set up Machine set ups 1,000 set ups Quality inspection Number of inspections 2,000 inspections The company recently received a request for a bid to supply 1,000 units of its product M5. The following estimates were prepared for the production of 1,000 units of M5. Item Amount (RM) Direct material costs 20,000 Direct labour cost 18.000 Machine hours 1,800 Direct labour hours 2,000 Kilowatt hours of electricity 2,000 Number of material moves 40 Number of machine set ups 5 Number of quality inspections 20 Required: i. Calculate the estimated cost per unit of M5 under the present cost accounting system. ii. Calculate the estimated cost per unit of MS if activity-based costing is used. iii Which of the two costing systems is preferable in pricing decisions? Justify your answer. iv . Explain TWO limitations of using activity-based costing as overhead cost allocation. 3/5 O HH age: 3 of 6 | Words: 1,178 English (U.S.) 1 100% +
