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QUESTION 1 Rally Baling Sdn Bhd (RBSB) makes custom made kitchen cabinet. The company uses a job- order costing system and predetermined overhead rates to

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QUESTION 1 Rally Baling Sdn Bhd (RBSB) makes custom made kitchen cabinet. The company uses a job- order costing system and predetermined overhead rates to apply manufacturing overhead cost to jobs. Currently, RBSB uses a plantwide overhead rate based on direct labor costs in estimating the company manufacturing overhead. The following estimated data have been made by RBSB at the beginning of the year 2020: Costs Direct labor hours Machine hours Direct labor costs Direct materials costs Manufacturing overhead costs Department Moulding Assembling 10,000 40,000 50,000 10,000 RM50,000 RM80,000 RM120,000 RM165,000 RM180,000 RM220,000 Finishing 8,000 10,000 RM50,000 RM70,000 RM20,000 Job No. 120 was started on 1 January 2020 and completed on 31 January 2020. This job was ordered by Wan Kemara School in Changlun, Kedah. RBSB's cost records shown the following information on the Job No. 120:- 700 Department Costs Moulding Assembling Finishing Direct labor hours 200 800 Machine hours 100 1,200 1,000 Direct labor costs RM2,000 RM12,500 RM5,000 Direct materials costs RM5,000 RM16,000 RM2,500 Manufacturing overhead costs RM4,000 RM22,000 RM12,000 Recently, you as the plant manager have heard that departmental overhead rates can offer significantly better cost assignments than a plantwide rate can offer. In implementing this new overhead rate base, the predetermined overhead rate in the Moulding Department will be based on direct labor hours; Assembling Department will be based on machine hours; and the rate in the Finishing Department will be based on direct labor costs. REQUIRED: (a) - IfRBSB uses a plantwide overhead rate: (1) - Calculate the predetermined overhead rate for the year 2020. (ii) Determine the total of manufacturing overhead cost applied to Job 120. 2 BKAM2013-MANAGEMENT ACCOUNTING (b) - IfRBSB uses departmental overhead rate: (1) - Calculate the predetermined overhead rate for each department for the year 2020.- (11) - Determine the total of manufacturing overhead cost applied to Job 120. (9) - Between the plantwide rate in part (a) (b) and the departmental rate in part (b) (i) above, which manufacturing overhead rate would you recommend to be applied for Job 1207 Justify your answer. tttttttttttttttttttt 34 BKAM 2013_MANAGEMENT ACCOUNTING QUESTION 2 MyGame Station Sdn Bhd makes gaming devices using latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine hours. The following estimates were used in preparing the predetermined overhead rate at the beginning of the year: Machine hours 22.500 Manufacturing overhead cost RM320.000 During the year 2020, a surplus of gaming devices on the market resulted in cutting back production. The company's cost records revealed the following actual cost and operating data for the year: + Machine hours 25,000 Manufacturing overhead cost RM385,000 Inventories at year-end: Raw Materials RM12.000 Work in process (includes overhead applied of RM12,000) RM40.000 Finished goods (includes overhead applied of RM40,000) RM150.000 Cost of goods sold (includes overhead applied of RM152,000) RM400.000 REQUIRED: (a) - Compute the predetermined overhead rate. (b) - Compute the underapplied or overapplied overhead. c) - Determine how much of the underapplied or overapplied overhead computed in (b) will be allocated to Work In Process (WIP), Finished Goods (FG) and Cost of Goods Sold (COGS) on the basis of the amount of overhead applied that remains in each account at the end of the year. (d) - Prepare journal entry to record the underapplied or overapplied overhead computed in (c). (e) - What If Analysis: (1) - Repeat Requirement (a) to (c), assuming the estimated machine hours is 24,000 only." (i) Repeat Requirement (a) to (b), assuming the actual manufacturing overhead cost is RM355,000 (not RM385,000). (in) How would you adjust and record for the amount of underapplied or overapplied overhead computed in (ii). 4 (iv) - Prepare journal entry to record the underapplied or overapplied overhead computed in (iii). (1) Explain why does a company apply predetermined overhead rates rather than assign actual manufacturing overhead costs to jobs. QUESTION 3 Abam Bakery Enterprise is a small bakery manufacturer located at Ipoh, Perak. Currently, Abam Bakery produces three types of product - brownies, cupcakes and filing donuts. There are three production departments. Departmental information on budgeted overhead and various activity measures for the coming year is as follows: Mixing Cooking Packaging Estimated overhead RM300,000 RM150,000 RM220,000 Direct labor hours 4,500 15,000 3,200 Direct labor cost RM120,000 RM180,000 RM 120,000 Machine hours 8,000 2,000 5,000 Currently, overhead is applied on the basis of machine hours using a plantwide rate. However, the production supervisor, Miss Lily, has been wondering whether it might be worthwhile to use departmental overhead rates. She has analysed the overhead costs and drivers for the various departments and decided that Mixing and Packaging should base their overhead rates on machine hours and that Cooking should base its overhead rate on direct labor hours. Miss Lily has been asked to prepare bids for two job offers with the following information: Job 1 Job 2 Direct materials RM12,200 RM16,500 Direct labor coste RM4,200 RM6,800 Direct labor hours: Mixing 30 20 Cooking 150 80 Packaging 20- 100% Number of machine hours: Mixing 150 100 Cooking 80 50 Packaging 170 The typical bid price includes a 45% markup over full manufacturing cost. Round all overhead rates to the nearest cents. Round all bid prices to the nearest ringgit. 250 REQUIRED:- 1) - Calculate a plantwide rate for Syarikat Techno based on machine hours. What is the bid price of each job using this rate? 2) - Calculate departmental overhead rates for the three producing departments. What is the bid price of each job using these rates? 6 3) What If Analysis: (a) - Repeat Requirement (1) and (2), if the bid price includes a 30% markup over the full manufacturing cost. L 74

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