QUESTION 2 (20 MARKS)

A. Service costing is a costing method used to compute the costs of services rendered. Provide the most suitable basis to calculate the cost for the following services:

i) Audit (1 mark)

ii) Hotel (1 mark)

iii) Hospital (1 mark)

B. Cleanexstar provides a cleaning service for small offices. Cleanexstar calculates a predetermined overheads rate based on total direct labour hours. The budgeted overhead cost for Cleanexstar is RM520,000. The following related information is provided for direct labour hours.

You are required to calculate:

i) Total direct labour hours (3 marks)

ii) Predetermined overhead rate (2 marks)

iii) The actual direct labour hours for Client A are 144 hours. Calculate the overheads absorbed into Client A. (2 marks)

C. Latexim company manufactured clothes. Latexim uses a process costing system. The following information on Assembly Process is extracted from Latexims record;

2,000 Estimated hour per worker Number of worker 25 Input materials 3,200 kilogram (kg) Labour and overhead incurred Expected normal loss RM18 per kg RM12,000 7% of input Assuming that the losses can be sold as scrap for RM1.50 per kg. You are required compute: i) Scrap value of normal loss in RM. (3 marks) ii) Expected output in kg. (2 marks) iii) Calculate cost per kg