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Machine hours
Direct labor hours
Direct materials cost
Direct labor cost
Manufacturing overhead cost
Job 123 was started on 1 November 2006 and completed on 12 December 2006.
The companys cost records show the following information on the job:
Department
Preparation
Fabrication
350
70
80
130
RM940
RM1,200
RM710
RM980
Machine hours
Direct labor hours
Direct materials cost
Direct labor cost
REQUIRED:
(a)
Compute the predetermined overhead rate used during the year in the
Preparation Department and Fabrication Department.
(b)
(c)
(d)
What would be the total cost recorded for job 123? If the job contained 25
units, what would be the unit product cost?
At the end of the year, the records of WoodPro Technology Sdn Bhd
revealed the following actual cost and operating data for all jobs worked
on during the year:
Department
Preparation
Fabrication
73,000
24,000
30,000
68,000
RM165,000
RM420,000
RM390,000
RM740,000
Machine hours
Direct labor hours
Direct materials cost
Manufacturing overhead cost
Direct labor
Manufacturing overhead
Cutting
RM300,000
RM540,000
Department
Machining
Assembly
RM200,000 RM400,000
RM800,000 RM100,000
Total Plant
RM900,000
RM1,440,000
Jobs require varying amounts of work in the three departments. The RR2 job, for
example, would have required manufacturing costs in the three departments as
follows:
Direct materials
Direct labor
Manufacturing overhead
Department
Machining
Assembly
RM900
RM5,600
RM1,700
RM13,000
?
?
Cutting
RM12,000
RM6,500
?
Total Plant
RM18,500
RM21,200
?
(b)
(c)
(d)
(e)
At the end of the year, the company assembled the following actual cost
data relating to all jobs worked on during the year:
Direct materials
Direct labor
Manufacturing overhead
Cutting
RM760,000
RM320,000
RM560,000
Department
Machining
Assembly
RM90,000
RM410,000
RM210,000 RM340,000
RM830,000
RM92,000
Total Plant
RM1,260,000
RM870,000
RM1,482,000
Exercise 4
Ezy Furnish Sdn Bhd makes furniture using latest automated technology. The
company uses a job-order costing system and applies manufacturing overhead
cost to products on the basis of machine hours. The following estimates were
used in preparing the predetermined overhead rate at the beginning of the year:
Machine hours
Manufacturing overhead cost
75,000
RM900,000
During the year, a glut of furniture on the market resulted in cutting back
production and a buildup of furniture in the companys warehouse. The
companys cost records revealed the following actual cost and operating data for
the year:
60,000
Machine hours.....................................................................................
Manufacturing overhead cost.............................................................. RM850,000
Inventories at year end:
RM30,000
Raw materials......................................................................................
Work in process (includes overhead applied of RM36,000)............ RM100,000
Finished goods (includes overhead applied of RM180,000)........... RM500,000
Cost of goods sold (includes overhead applied of RM504,000)...... RM1,400,000
REQUIRED:
(a)
(b)
(c)
(d)
(e)
How much higher or lower will net operating income be if the underapplied
or overapplied overhead is allocated rather than closed directly to Cost of
Goods Sold?