Question

QUESTION 4 OSMAN Amal Jaya Enterprise (AJE) is a manufacturing firm company applies overhead to jobs using a predetermined hours. At the beginning of the year, the company estimated machine-hours and incur RM266,000 in manufacturing over totaled RM1,283,000 Shows - W avad tuleb at would wo the s ales for the The company's inventory balances for the year were as follow Beginning balance (RM) Raw Materials Work in Process Finished Goods Ending Balan 21.000 40,000 26,000 Balance (RM) 24.000 22.000 41.000 W. The raw male 4281.000 are directe During the year, the raw materials were purchased for RM300,000. The requisitioned for use in production for RM297,000, of which RM281.000 and RM16,000 are indirect materials. The following employee costs were in labor, RM389,000, indirect laber, RM62,000; and administrative salaries. Mindedir aries, RM1760 o were incredig is related to cry The selling costs of RM160,000 and factory utility costs of RM19,000 were in the year. Depreciation for the year was RM143,000 of which RM137,000 is related operations and RM6,000 is related to selling, general, and administrative Manufacturing overhead was applied to jobs. The actual level of activity for the 34,000 machine-bours. Required: a) Compute the i predetermined overhead rate for the manufacturing overhead. il manufacturing overbead applied (CLO2.PL020) b) How much was the overhead underapplied or overapplied? (4 marka (CLO2:PL02.0) c) Prepare a Schedule of Cost of Goods Manufactured for AJE. (5 marts) (CLO2:PLO2C) d) Prepare the Schedule of Cost of Goods Sold for AJE The company closes w underapplied and overapplied overhead to Cost of Goods Sold. (6 marks) (CLO2.PLO2.C) ACCT 1201/Sept/Oct2019 Page 5 of 6

Answer 1

Compute predetermined overhead rate as follows: Manufacturing overhead cost Overheadrate= Machine hours _RM266,000 38.000 RM 7per machine hours (ii) Compute manufacturing overhead applied as follows: Manufacturing overhead applied= Actual activity of machine hours Overheadrate = 34,000 hours RM7 = RM 238.000 b)

Compute overhead underapplied or overapplied: Amount (RM) Actual manufacturing overheads incurred Indirect materials Indirect labors Factory depreciation Factory utility costs Total actual overhead incurred Less: Manufacturing overheads applied 16.000 62,000 137,000 19,000 234.000 -238.000 Overapplied overhead -4,000 Prepare a schedule of cost of goods manufactured for AJE as follows:

AJE
Schedule of cost of goods manufactured
		Amount (RM)
Beginning raw materials	21,000
Add: Raw material purchase	300,000
Raw material available for use	321,000
Less: Ending raw material	-24,000
Cost of raw material issued		297,000
Less: Indirect material		-16,000
Direct material used		281,000
Direct labor		389,000
Manufacturing overhead applied		238,000
Total manufacturing cost, current		908,000
Add: WIP beginning		40,000
Total cost of WIP		948,000
Less: Ending WIP		-22,000
Cost of goods manufactured		926,000

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(d)

Prepare a schedule of Cost of goods sold for AJE:

AJE
Schedule of COGS
		Amount (RM)
Cost of goods manufactured	926,000
Add: Finished goods, Beginning	26,000
Cost of goods available for sale		952,000
Less: Finished goods, Ending		-41,000
Unadjusted COGS		911,000
Less: Overapplied manufacturing overhead		-4,000
Adjusted COGS		907,000