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Jingga Bhd manufactures dashboard panels for cars. Each product undergoes production processes in Machining, Assembly and Finishing departments. Apart from that, the company has two
Jingga Bhd manufactures dashboard panels for cars. Each product undergoes production processes in Machining, Assembly and Finishing departments. Apart from that, the company has two service departments: Maintenance and Store. The budgeted overhead costs for the year 2022 for the company is as follows: Other information related to the departments is: The direct labour in all departments is paid at standard rate of RM10 per hour. The cost of the service departments should be re-apportioned using the repeated distribution method. Production overheads are absorbed using the following basis: Machining department - machine hours Assembly department - direct labour hours Finishing department - percentage of direct wages Required: a. Prepare an overhead analysis sheet for the year 2022 and clearly indicates their apportionment basis. (Round up your answers to the nearest RM). (20 marks) b. i. Calculate the overhead absorption rate (OAR) for each production department. (State your answers to two decimal places). (3 marks) ii. Calculate over or under absorption of overheads for each production department. The information on the actual overhead costs and activities for December 2022 are as follows: (3 marks) c. State true (T) or false (F) for each of the following statements. i. Apportionment of overheads refers to the distribution of overheads from the service departments to production departments or cost centres using a fair basis. ii. Over absorption of overheads causes understatement of profit. iii. A blanket overhead absorption rate based on machine hours is suitable when similar amount of machine hours is used in each production department. iv. Cost of advertising and product samples are categorised as production overheads. (4 marks) (Total: 30 marks)
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