Question 3 Pro-shield Sdn Bhd, makes two types of masks-the Bluegood and the Superblack. An absorption costing income statement for the most recent period is shown: RM Sales 2,100,000.00 Cost of goods sold (1,600,000.00) Gross profit 500,000.00 Selling and administrative expenses (550,000.00) Net operating loss (50,000.00) Pro-shield produced and sold 70,000 units of Bluegood at a price of RM20 per unit and 17,500 units of Superblack at a price of RM40 per unit. The company's traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the company's two product lines is shown below: Direct materials Direct labor Bluegood (RM) 436,300.00 200,000 Superblack (RM) 251,700.00 Total (RM) 688,000 104,000 304,000 Manufacturing overhead Cost of goods sold 608,000 1,600,000 The company has created an activity-based costing system to evaluate the profitability of its products. Pro-shield 's ABC implementation team concluded that RM50,000 and RM100,000 of the company's advertising expenses could be directly traced to Bluegood and Superblack, respectively. The remainder of the selling and administrative expenses was organization- sustaining in nature. The ABC team also distributed the company's manufacturing overhead to four activities as shown: Activity Cost Pool (and Activity Measure) Activity Manufacturing Overhead Machining (machine-hours) RM 213,500 90,000 Bluegood Superblack 62,500 Total 152,500 Setups (setup hours) 157,500 75 300 375 Product-sustaining (number of products) 120,000 1 1 2 Other (organization-sustaining costs) 117,000 NA NA NA Total manufacturing overhead cost Required: RM608,000 a) Compute the product margins for the Bluegood and Superblack under the company's traditional costing system. (7 marks) b) Compute the product margins for Bluegood and Superblack under the activity-based costing system. (6 marks) c) Based on your answers in (a) and (b) discuss why the traditional and activity-based cost assignments differ. (7 marks) Total: 20 marks Question 4 The following are manufacturing overhead costs for GrabPanda Designs Sdn Bhd. The company has in total four departments: two production departments and two service departments. Production overheads for the year ending 31 December 2021 are expected to be as follows: Overhead Rent and rates Lighting and Heating Depreciation of Machinery Insurance of Machinery Supervisors salary Insurance - Premises The following information is also available: RM 15,200 12,160 14,000 3,500 15,200 7,600 Production Depts. Service Depts. Blending Packaging Stores Maintenance Total Floor Area 400 300 100 150 Number of production 9 7 950 16 workers Value of Machinery (RM 15 10 4 6 35 '000) Each production worker is expected to work 38 hours per week for 48 weeks during 2021. You are required to: Prepare an overhead apportionment schedule for the year ended 31st December 2021, clearly indicating the basis of apportionment for each overhead. (12 marks) b) Re-apportion the service departments overheads as follows: Stores Maintenance Blending 60% 50% Packaging 40% 50% (4 marks) (d) Calculate overhead absorption rates for the Blending and Packaging Departments for the year ending 31st December 2021 based on respective labour hours per department. (4 marks)