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filling cabinet

Qally Sdn Bhd manufactures a fire-resistant commercial filing cabinet and sells to office furniture distributors. The company expected to manufacture 20,000 units of filing cabinet next year. Every file cabinet has to go through cutting, soldering and painting processes. Table 1 shows direct cost for each unit of filing cabinet. Table 2 show details data for each process/cost centre. Table 3 show details data for cach activity and estimated overhead costs. Table 1: Direct cost for filing cabinet Direct machine Direct labour Hour per unit Cost per hour Hour per unit Cost per hour 2.0 hour RM40 1.0 hours RM20 Direct matenal cost per unit RM55 Table 2. Detail data for each process/cost centre Cost pool/source activity) Cost driver Cutting Soldering Purchasing material purchase requisition 145 257 Utilities (fuel and energy power (watt) 885,000 1,050,000 Selling & Administration number of workers 125 437 Security floor area (m) 37,500 22,500 Painting 398 165.000 423 15,000 Table 3. Data on activities and overhead costs Cost pool/source (activity) Cost driver Purchasing material Utilities (fuel and energy Selling & Administration Security purchase requisition power (watt) number of workers floor area (m?) Total activity for all processes 800 purchases 2,100,000 watt 985 workers 75,000 m Total overhead costs (RM) 360,000 240,000 750,000 $25,000 Analyse the available information, determine the total cost to manufacture 20.000 units cabinet file based on machine hour using a traditional overhead method (4 marks) b) Calculate total overhead cost for cach process/cost centre using basis of apportionment of cost driver (5 marks) c) If the company is to use Activity Based Costing method (ABC), calculate the cost driver rate for each activity (4 marks) d) Determine the total cost for 20,000 units product using Activity Based Costing (ABC) method (3 marks) (11) Compare the percentage difference of total cost per unit for traditional and ABC method for the product. (2 marks) (iii) Analyse the results in (din) and comment on the reason for the differences in the results from traditional and Activity Based Costing methods (2 marks) Your answer Qally Sdn. Bhd. manufactures a fire-resistant commercial filing cabinet and sells to oflice furniture distributors. The company expected to manufacture 20,000 units of filing cabinet next year. Every file cabinet has to go through cutting, soldering and painting proceses. Table 1 shows direct cost for each unit of filing cabinet. Table 2 show details data for each process/cost centre. Table 3 show details data for each activity and estimated overhead costs. Table 1. Direct cost for filing cabinet Direct machine Direct labour Hour per unit Cost per hour Hour per unit Cost per hour 2.0 hour RM40 1.0 hours RM20 Direct matenal cost per unit RM55 Table 2 Detail data for each process/cost centre Cost pool/source (activity) Cost driver Cutting Soldering Purchasing material purchase requisition 145 257 Uulitics (fuel and energy power (watt) 885,000 1.050.000 Selling & Administration number of workers 125 437 Security floor area (m) 37,500 22,500 Painting 398 165.000 423 15,000 Table 3. Data on activities and overhead costs Cost pool/source (activity) Cost driver Purchasing material Utilities (fuel and energy Selling & Administration Secunty purchase requisition power (watt) number of workers floor area (m) Total activity for all processes 800 purchases 2,100,000 watt 985 workers 75.000 m2 Total overhead costs (RM) 360,000 240,000 750,000 525.000