QUESTION3(30MARKS)

Lightning Bhd. produces electronic components on an order basis. The company operates twoservice departments and two production departments. Budgeted manufacturing support costs andnormalactivitylevelsforeachdepartmentaregiven asfollows:

Cost	Machining RM	Assembly RM	Personnel RM	Maintenance RM	Total RM
Indirectwages	8,000	10,500	9,000	13,500
Indirectmaterials	4,500	3,500	-	-
Allocatedmiscellaneous supportcosts	11,700	12,500	3,600	7,000
Depreciation					40,000
Power					10,000
Rentandrates					30,000
Utility					21,000

Otherdata:	Machining RM	Assembly RM	Personnel RM	Maintenance RM
Directlabourhours	1,500	8,500
Floorarea(sq.metres)	500	300	100	100
Horsepowermachinery	60%	40%
Machinehours	10,000	5,000
Maintenance hours	250	150	10
Netbookvalueof fixedassets(RM)	110,000	50,000
Number ofemployees	20	30	5	5

Supportcostsofthepersonneldepartmentareapportionedonthebasisofemployeesandthoseof the maintenance department on the basis of maintenance hours. Pre-determined departmentaloverheadabsorptionratesareusedtoassign coststoproducts.

The company is preparing to bid on Order 115 that requires 2 machine hours per unit in themachiningdepartmentand3directlabourhoursperunitintheassemblydepartment.Theexpected direct material cost per unit is RM25 and direct labour cost per unit is RM10 per unit.Order 115has1,500units.

Attheendoftheyear,actualoverheadsandactivitylevelsforeachproductiondepartmentwerecalculatedasfollows:

• Machiningdepartment:

RM91,500with14,500machinehoursand1,550direct labourhours.

• Assemblydepartment:

RM59,600with 4,750machinehoursand9,200directlabour hours.

REQUIRED:

1. Prepareanoverheadanalysissheettodeterminethetotaloverheadsallocatedandapportioned to the cost centres. The reapportionment of service department costs is to beperformedusing thedirectmethod(roundup allyouranswerstothe nearestRM).
2. Compute the pre-determined overhead absorption rates for the two production departmentsbasedonthefollowing(roundup youranswerstotwo decimalpoints):

Machining : Machine hoursAssembly: Directlabourhours

1. CalculatethetotalcostforOrder115.