Question 3 CoffeeBin Sdn Bhd is a manufacturer of coffee beans. The company has two production departments: milling and roasting. It also has two service departments, the stores and the canteen. The production departments and the stores and canteen are located within a single building. The information provided below has been extracted from the company's budget for the next financial year, which ends on 31 August 2020. Costs for the year ended 30 August 2020 Factory rent RM220,000 Factory premises insurance 11,000 Sundry expenses-milling department 8,540 Sundry expenses-roasting department 4,150 Machinery insurance 3,900 Depreciation of factory plant and machinery 24,000 Direct materials 100,000 Roasting department indirect materials 10,000 Direct labour 200,000 Indirect labour 176,000 Administration salaries (see note below) 24,000 Sundry storeroom costs 13,370 Canteen indirect materials and other costs 29,640 TOTAL 824,600 Note: Administration salaries are to be apportioned equally to the milling department, the roasting department, and the storeroom. The following information is also relevant: Department Floor area (m) Indirect labour Direct labour Value of plant and machinery (RM) Milling 100.000 6 employees 24 employees 220,000 Roasting 100.000 6 employees 40 employees 50,000 Storeroom 10.000 2 employees 2 employees 10,000 Canteen 10.000 2 employees 3 employees 20,000 Canteen costs are apportioned base on total number of employees. 70% of storeroom will be apportioned to the milling department and 30% to the roasting department. The company has also budgeted for the following level of activity for the financial year: Department Milling Roasting Labour hours 2.900 4.200 Machine hours 4,700 680 Required: i) Prepare an overhead analysis sheet showing clearly allocations, apportionments and reapportionments to each cost centre. (12 marks) ACC3208 / Page 5 of 5 ii) Calculate appropriate absorption rates for each production department. (2 marks) iii) Explain THREE (3) to the product cost if the basis of apportionment are not chosen appropriately. (6 marks) Total: 20 marks Question 3 CoffeeBin Sdn Bhd is a manufacturer of coffee beans. The company has two production departments: milling and roasting. It also has two service departments, the stores and the canteen. The production departments and the stores and canteen are located within a single building. The information provided below has been extracted from the company's budget for the next financial year, which ends on 31 August 2020. Costs for the year ended 30 August 2020 Factory rent RM220,000 Factory premises insurance 11,000 Sundry expenses-milling department 8,540 Sundry expenses-roasting department 4,150 Machinery insurance 3,900 Depreciation of factory plant and machinery 24,000 Direct materials 100,000 Roasting department indirect materials 10,000 Direct labour 200,000 Indirect labour 176,000 Administration salaries (see note below) 24,000 Sundry storeroom costs 13,370 Canteen indirect materials and other costs 29,640 TOTAL 824,600 Note: Administration salaries are to be apportioned equally to the milling department, the roasting department, and the storeroom. The following information is also relevant: Department Floor area (m) Indirect labour Direct labour Value of plant and machinery (RM) Milling 100.000 6 employees 24 employees 220,000 Roasting 100.000 6 employees 40 employees 50,000 Storeroom 10.000 2 employees 2 employees 10,000 Canteen 10.000 2 employees 3 employees 20,000 Canteen costs are apportioned base on total number of employees. 70% of storeroom will be apportioned to the milling department and 30% to the roasting department. The company has also budgeted for the following level of activity for the financial year: Department Milling Roasting Labour hours 2.900 4.200 Machine hours 4,700 680 Required: i) Prepare an overhead analysis sheet showing clearly allocations, apportionments and reapportionments to each cost centre. (12 marks) ACC3208 / Page 5 of 5 ii) Calculate appropriate absorption rates for each production department. (2 marks) iii) Explain THREE (3) to the product cost if the basis of apportionment are not chosen appropriately. (6 marks) Total: 20 marks
