Marvelous Chocolates produce and sell various ranges of chocolate bars such as Hazzy Chocolat, Fruitz Chocolat, Dark Nut Chocolat. Marvelous Chocolat has provided its accounting records and operational data for the year ended 31 December 2021. The managerial accountant is preparing the budgeting and costing statement for the financial year 2022.

Marvelous Chocolates has provided its accounting records and operating data for the year ended 31 December 2021 as follows:

The production department is assigned to achieve the production of 20,000units of Hazzy Chocolat, 35,000 units of Fruitz Chocolat and 15,000units of Dark Nut Chocolat. The selling price is RM12 for Hazzy Chocolat, RM15 for Fruitz Chocolat and RM18 for Dark Nut Chocolat. Their budgeted sales to be achieved in the year 2022 are the same as the total production units.

Total direct material cost per unit is RM5 for Hazzy Chocolat, RM7 for Fruitz Chocolat and RM9 for Dark Nut Chocolat.

Marvelous Chocolates includes budgeted direct labour hours of 10,000hours, 12,000hours and 15,000hours respectively for Hazzy Chocolat, Fruitz Chocolat and Dark Nut Chocolat.

Direct labour cost per unit is RM5 per hour.

The production of all ranges of chocolate bars also adopts machine hours as the cost driver. The machine hours for each product is 5,000hours for Hazzy Chocolat, 4,000hours for Fruitz Chocolat and 3,000hours for Dark Nut Chocolat.

The total budgeted manufacturing overhead is RM87,500 consisting of RM20,000 for depreciation on factory; RM30,000 for depreciation on machinery; RM10,000 for utilities; RM15,000 for supervision and RM12,500 for maintenance on machinery.

The selling, general and administrative expenses include promotion and advertisement for RM13,600 and administrative for RM20,000.

For the next financial year 2022, Marvelous Chocolates has set its plan and business activities to include the introduction of new product which is Whitty Caramel Chocolat and enter into a new market segment together with the other three (3) products above. The following information will affect the consideration:

The planned annual production and sales will be the same at 25,000units. Selling price is RM10. Direct material and direct labour cost will be the same as Hazzy Chocolat. Budgeted direct labour hours for Whitty Caramel Chocolat is 20,000. Utilities and Supervision cost will increase by 30%. All other costs & expenses remain the same. The budgeted manufacturing overhead fully adopts direct labour hours as the cost driver.

Additional data

The production for all range of chocolate bars include four (4) level of activities such as Fermentation (40%), Grinding (20%), Moulding (30%) and Packaging (10%). Prepare the relevant costing statement to include all level of activities and show the gross profit for each product and budgeted operating profit/(loss) in total for the financial year ending 31 December 2022.

Question:

Summarise the additional data to reflect the introduction of Whitty Caramel Chocolat as stated above and calculate the pre-determined overhead rate (POHR). Please show the calculation of the new total budgeted direct labour hours and new total budgeted manufacturing overhead.

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