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**PLS SHOW WORKINGS** **HANDWRITTEN ONLY** QUESTION 2 Normal manufacturing overhead costs of Melissa Sdn. Bhd. for September 2021 are as follows: Cost Pools Power Materials

**PLS SHOW WORKINGS**

**HANDWRITTEN ONLY**

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QUESTION 2 Normal manufacturing overhead costs of Melissa Sdn. Bhd. for September 2021 are as follows: Cost Pools Power Materials handling Normal costs (RM) 40,000 90,000 80,000 40,000 Set ups Quality inspections Total 250,000 The present cost accounting system allocates overhead costs to final products based on machine hours. Estimated machine hours for September 2021 are 50,000. After losing several bids recently, Ms. Melissa, the president, asked the controller to implement an activity-based costing system because he was informed that activity-based costing provides more accurate product cost estimates. The controller collected the following data: Activities Cost drivers Electric power Kilowatt hours Materials handling Material moves Set up Machine set ups Quality inspection Number of inspections Available capacity Costs (RM) 20,000 kwh 40,000 5,000 moves 90,000 1,000 set ups 80,000 2,000 inspections 40,000 Continued... 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 Direct material costs Direct labour cost Machine hours Direct labour hours Kilowatt hours of electricity Number of material moves Number of machine set ups Number of quality inspections Amount RM20,000 RM18,000 1,800 2,000 2,000 40 5 20 Required: Calculate the estimated cost per unit of M5 under the present cost accounting system. (8 marks) Calculate the estimated cost per unit of M5 if activity-based costing is used. (12 marks) [TOTAL: 20 MARKS]

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