Question
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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