ZZ Consulting uses a job order costing system and has two manufacturing departments namely Moulding and Fabrication. The company provided the following estimates at the beginning of the ear:

Moulding Fabrication

Machine-hour 20,000 30,000

Direct labour hour 40,000 50,000

Fixed manufacturing overhead cost RM 700,000 RM 210,000

Variable manufacturing overhead cost RM 3.00 RM 1.00

During the year, the company had no beginning or ending inventories and it started, completed

and sold only two jobs which are Job 2020 and Job 2021. It provided the following

information related to these two jobs:

Moulding Fabrication

Job A 2020

Direct material cost RM 375,000 RM 325,000

Direct labour cost RM 200,000 RM 160,000

Machine hours 14,000 6,000

Direct labour hours 12,000 8,000

Job B 2021

Direct material cost RM 300,000 RM 250,000

Direct labour cost RM 175,000 RM 225,000

Machine hours 6,000 24,000

Direct labour hours 5,000 18,000

6

ZZ consulting had no under applied or over applied manufacturing overhead during the year. The company uses a plant wide predetermined overhead rate based on machine hours.

Required:

i. Compute the plant wide predetermined overhead rate. (4 marks)

ii. Compute the total manufacturing cost assigned to Job 2020 and Job 2021. (6 marks)

iii. If ZZ Consulting establishes bid prices that are 220% of total manufacturing cost, what bid

prices would it have established for Job 2020 and Job 2021? (6 marks)

iv. What is ZZ Consulting cost of goods sold for the year? (4 marks)

v. If ZZ Consulting hired you as a consultant to critique its costing and pricing methodology,

what would you say? (5 marks)