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QUESTION 2 Normal manufacturing overhead costs of Melissa Sdn. Bhd. for September 2021 are as follows: Cost Pools Normal costs (RM) Power 40,000 Materials handling
QUESTION 2 Normal manufacturing overhead costs of Melissa Sdn. Bhd. for September 2021 are as follows: Cost Pools Normal costs (RM) Power 40,000 Materials handling 90.00) Set ups 80,000 Quality inspections 40,000 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 Available capacity Costs (RM) Electric power Kilowatt hours 20,000 kwh 40,000 Materials handling Material moves 5,000 moves 90,000 Set up Machine set ups 1,000 set ups 80,000 Quality inspection Number of inspections 2,000 inspections 40,000 Continued... The company recently received a request for a bid to supply 1,000 units of its product Ms. The following estimates were prepared for the production of 1,000 units of M5. Item Amount Direct material costs RM20,000 Direct labour cost RM18,000 Machine hours 1,800 Direct labour hours 2,000 Kilowatt hours of electricity 2.000 Number of material moves 40 Number of machine set ups 5 Number of quality inspections 20 Required: Calculate the estimated cost per unit of MS under the present cost accounting system. (8 marks) Calculate the estimated cost per unit of MS if activity-based costing is used. (12 marks) TOTAL: 20 MARKS
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