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LILI SDN BHD is a manufacturer and supplier of home cabinets. It has two main Departments that is the Production Department and the Service Department.

LILI SDN BHD is a manufacturer and supplier of home cabinets. It has two main Departments that is the Production Department and the Service Department. The Production department has three (3) sub-departments: Machining, Assembly and Finishing. All three departments are labor-intensive. The Service Department has two sub-department which is Maintenance and General Services.

Cost Data

Production Departments
Service Departments
Cost Items (RM)
Fabrication
Assembly
Finishing
Maintenance
Gen.Services
Indirect Supplies
3,000
2,500
2,000
1,000
2,500
Indirect Labour
18,000
10,000
8,000
4,500
1,500
Indirect Material
5,000
3,500
1,000
1,000
1,800
Repairs
2,000
1,000
1,000
1,500
200
Total
28,000
17,000
12,000
8,000
6,000

LILI SDN BHD budgeted overhead cost for it’s three production and two service departments is as follows.

Common Overhead Cost Items
RM
Rent and Rates
128,000
Insurance for Machine
60,000
Telephone Charges
32,000
Depreciation
180,000
Production Supervisor’s Salary
240,000
Heating and Lighting
64,000
Total
704,000

The basis of allocation of the common overhead cost items is as follows:

Common Overhead Cost Items
Basis of allocation
Rent & Rates
Floor area occupied
Insurance for Machine
Machine Value
Telephone charges
Floor area occupied
Depreciation
Machine hours
Production Supervisor’s salary
Direct labor hours
Heating & lighting
Floor area occupied

Other data:

Production Departments
Service Departments

Fabrication
Assembly
Finishing
Maintenance
Gen. Services
Floor area
      (sq. meters)
30,000
18,000
6,000
6,000
4,000
Machine value
240,000
100,000
80,000
40,000
20,000
Direct labor hrs. budgeted
32,000
18,000
10,000


Labor rates per hr.
RM 3.80
RM 3.50
RM 3.40
RM 3.00
RM 3.00
Service Department: Maintenance cost apportioned
50%
25%
25%


Service Department: General Services cost apportioned
20%
30%
50%


Required:

(a) Prepare an overhead analysis sheet (cost allocation schedule) showing clearly the allocations, apportionments, and reapportionments to each cost center.

(b) Calculate the appropriate absorption rates for each production department.

The following jobs were completed for customers:


Job 102
Job 103
Direct material
RM 1,540
RM 1,080
Direct Labour
40 hours: Fabrication
32 hours: Fabrication

24 hours: Assembly
20 hours: Assembly

20 hours: Finishing
28 hours: Finishing

(c) Calculated the total cost for Job 102 & Job 103. 

(d) If the firm quotes prices to customers that reflect a required profit of 25% on selling price, calculated the quoted selling price for each job.

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