Question

QUESTION 1 (25 marks) Gemersik Bhd operates a job-order costing system and applies overhead cost to jobs on the basis of direct materials used in production (not on the basis of raw materials purchased). Its predetermined overhead rate was based on a cost formula that estimated RM800,000 of manufacturing overhead for an estimated allocation base of RM500,000 direct material cost to be used in production The company has provided the following data for the just completed year Raw materials Work in Process Finished Goods Beginning (RM) 20.000 150.000 260.000 Ending (RM) 80,000 70,000 400,000 RM 510.000 90.000 Purchase of raw materials Direct labor cost Manufacturing overhead costs Indirect labor Property taxes Depreciation of equipment Maintenance Insurance Rent: building 170.000 48.000 260.000 95.000 7.000 180,000 Required: a) Compute the predetermined overhead rate for the year. marks) b) Determine the actual manufacturing overhead costs. (4 marks) c) Compute the cost of goods manufactured for the year assuming all raw materials are used in production as direct materials. (6 marks) d) Compute the unadjusted cost of goods sold for the year. (4 marks) ACCT 7201 June 2018 Page 2 of 7 e) Calculate the over/under applied manufacturing overhead costs. (3 marks) 1) Siate the options in disposing the under-applied or over-applied. (2 marks) 8) Job 566 was started and completed during the year. Compute the price to be charged to the customer if the job require RMB,500 in direct materials and RM2,700 in direct labor cost and the policy of the company is to mark up at 25% on job's cost. (3 marks)

Answer 1

(a) Predetermined overhead rate = 800000/500000 = 160% of Direct Material or 1.6 per RM of Direct material cost

(b)

Manufacturing Overhead costs
Indirect Labor	170000
Property Taxes	48000
Depreciation	260000
Maintenance	95000
Insurance	7000
Rent Building	180000
Total Manufacturing Overhead costs	760000

(c)

Cost of Goods Manufactured Schedule
Direct Materials
Raw Material Beginning Inventory	20000
Raw Material Purchases	510000
Total Raw Material available for use	530000
Less : Raw Material Inventory	80000
Direct Material Used in production		450000
Direct Labor		90000
Manufacturing Overhead applied		720000	=450000*1.6
Total Manufacturing Costs		1260000
Beginning Work in process inventory		150000
		1410000
Less: Ending Work in Process inventory		70000
Cost of goods manufactured		1340000

(d)

Cost of Goods Sold
Beginning Finished Goods Inventory	260000
Add : Cost of Goods manufactured	1340000
Cost of Goods Available for sale	1600000
Less : Ending Finished Goods Inventory	400000
Unadjusted Cost of Goods Sold	1200000

(e) Under Applied overhead = Actual Overhead - Overhead applied
= 760000 - 720000 = 40000

As per HOMEWORKLIB RULES, we are suppose to answer 4 parts, i have answered 5, so kindly post others separately