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XYZ Sdn Bhd is mainly involved in the production of grass cutter machine. There are two production departments involved in producing the grass cutter; Machining

XYZ Sdn Bhd is mainly involved in the production of grass cutter machine. There are two

production departments involved in producing the grass cutter; Machining and Assembly and

supported by two servicing departments; Finishing and Maintenance. The Machining

department is machine oriented while Assembly department is labour oriented.

For the year ended 31 August 2020, the company incurred the following costs:

Total

Machining

Assembly Finishing

Maintenance

Indirect materials

141,000

36,000

40,000

15,000

50,000

Indirect labour

196,500

40,500

108,000

-

48,000

Power for machines 40,000

25,000

15,000

-

-

Factory depreciation 180,000

Rates & assessment

15,000

Factory utilities

60,000

Plant & Machinery

depreciation

130,000

Factory property

insurance

10,000

Below are the production data gathered from the production and service departments:

Total

Machining Assembly Finishing Maintenance

Floor space

6,500

3,000

2,500

500

500

(sq. meter)

Book value

190,000

120,000

55,000

5,000

10,000

of machinery

(RM)

No. of

190

30

150

0

10

employees

Machine

60,000

50,000

10,000

-

-

hours

Direct labour

34,000

10,000

24,000

-

-

hours

a) Calculate overhead absorption rate (OAR) for each production department using the

appropriate basis.

(7.5 marks)

b) Prepare an Overhead Analysis Sheet for the year ended 31 August 2020. Show your

calculation to the nearest RM.(17.5marks)

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