Question 2 Omicron-Shield Sdn Bhd has two departments, Blending and Finishing. The company uses a job- order cost system and computes a predetermined overhead rate in each department. The Blending Department bases its rate on machine-hours, and the Finishing Department bases its rate on direct labour hours. At the beginning of the year, the company made the following estimates: Required: Direct labour hours Machine hours Department Blending Finishing 6,000 30,000 48,000 5,000 Manufacturing overhead cost RM360,000 RM486,000 Direct labour cost RM50,000 RM270,000 (a) Compute the predetermined overhead rate to be used in each department. (6 marks) (a) Assume that the overhead rates you computed in (a) above are in effect. The job cost sheet for Job 7717, which was started and completed during the year, showed the following actual data: Department Blending Finishing Direct labour hours 20 Machine hours 80 Manufacturing overhead cost RM552 4 RM417 Direct labour cost RM70 RM150 Compute the total overhead cost applied to Job 7717. (5 marks) (b) Compute the under or over-applied overhead for Job 7717 and explain the impact on the net operating income if the under or over-applied is closed to cost of goods sold. ACC3208 /Page 3 of 5 (5 marks) (c) Would you expect substantially different amounts of overhead cost to be charged to some jobs if the company used a plantwide overhead rate based on direct labor cost instead of using departmental rates? Explain. No computations are necessary. (4 marks) Total: 20 marks