QUESTION 4 ACIJAN 2018/ACC416 HighFurn Sdn Bhd manufactures wood and rattan furniture. The company has three production departments, namely Designing & Cutting. Assembly and Finishing and two service departments; Stores and Maintenance. The estimated overhead costs for the year ended 2017 were as follows: Depreciation on machine and equipment Insurance on building Insurance on machine and equipment Utilities Power Supervisors' salaries Indirect materials: Design & Cutting Assembly Finishing Stores Maintenance Indirect labour: Design & Cutting Assembly Finishing Stores Maintenance Total RM 180,000 250,000 210,000 220,000 300,000 380,000 20,000 25,000 18,000 10,000 15,000 22,000 30,000 25,000 12,000 10,000 1,727,000 At the beginning of the year, the company's management made the following forecasts: Designing Assembly Finishing Stores Maintenance Machine hours & Cutting 25,000 20,000 Area (sq. feet) 3,000 2,500 5,000 2,500 1,500 500 Book value of machine and equipment (RM) 200,000 180,000 80,000 60,000 80,000 No. of material requisition 60 40 20 - 10 No. of employees 25 35 25 5 10 Kilowatt hour (kWh) 1,000 800 900 200 100 Direct labour hours 60,000 80,000 70,000 Labour rate per hour (RM) 8 7 6.50 % of service from: Stores 30% 30% 35% 5% Maintenance 40% 30% 25% 5% 90 CONFIDENTIAL 6 AC/JAN 2018/ACC416 The overhead absorption basis for the production department is as follows: Departments Designing & cutting Basis Machine hours Assembly Finishing Direct labour costs (RM) Direct labour hours In November 2017, the company had received a special order (Job HFR850) from SJY Home Stores Sdn Bhd to make 500 rattan chairs. The job started on 3 November and completed on 8 December 2017. Designing & Assembly Finishing cutting Machine hours 1,200 500 350 Direct labour hours 50 180 100 Direct materials (RM) 27,500 12,400 5,500 Required: a. Prepare the Overhead Analysis Sheet for the company. Re-apportion the overhead costs of service departments to the production department using direct method. All calculations are to be rounded up to the nearest RM. (13 marks) b. i. Compute the pre-determined overhead rate for production departments. (3 marks) ii. At the end of the year, the company's record showed that the actual machine hours incurred by the Designing & Cutting Department was 25,500 and the actual direct labour hours incurred by the Assembly Department and the Finishing Department were 75,000 and 67,000 hours respectively. Compute the over or under absorption of overhead by each department. (3 marks) C. Compute the product cost per unit for job HFR850. (7 marks) d. Explain three (3) reasons of apportioning overhead costs. (3 marks) (Total: 29 marks