Question

QUESTION 4 A OS MARS that uses Job-order con using a predetermined overhead rate Amal Jaya Enterprise (AJE) is a manufacturing firm company applies overhead to jobs using a predete hours. At the beginning of the year, the company estimated machine-hours and incur RM200,000 in manufacturing overb totaled RM1,283,000 Wooder A rate wed that I would work for overhead coal Sales for the in on The The company's inventory balances for the year were as follows: Beginning balance (RM) Ending Balane ng Balance (RM) Raw Materials Work in Process Finished Goods 21,000 40,000 26,000 24,000 22.000 41,000 During the year, the raw materials were purchased for RM300,000. Th requisitioned for use in production for RM297,000, of which RM281,000 and RM16,000 are indirect materials. The following employee costs were labor, RM389,000; indirect labor, RM62,000; and administrative salaries. R 000. The raw materials M281.000 are direct wel ts were incurred direct Maries, RM176,000 The selling costs of RM160,000 and factory utility costs of RM19,000 wereld the year. Depreciation for the year was RM143,000 of which RM137,000 is rel 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-hours. 10 000 were incurred during 37.000 is related to factory ministrative activities Required: a) Compute the: i predetermined overhead rate for the manufacturing overhead. ii. manufacturing overhead applied b) How much was the overhead underapplied or overapplied? (CLO2:PL02.C)) c) Prepare a Schedule of Cost of Goods Manufactured for AJE. (4 marks) (CLO2:PL.02.C) d) Prepare the Schedule of Cost of Goods Sold for AJE. The company closes underapplied and overapplied overhead to Cost of Goods Sold. (5 marks) (CLO2:PLO2:C3) ACCT (BRE (6 marks) (CLO2.PL.02.CI)

Answer 1

a)

i. Predetermined overhead rate = RM266000/38000 = RM7 per machine hour

ii. Manufacturing overhead applied = 34000 x RM7 = RM238000

b)

Actual manufacturing overheads incurred:
Indirect materials	16000
Indirect labor	62000
Factory utility costs	19000
Factory depreciation	137000
Total actual overheads incurred		234000
Less: Manufacturing overheads applied		238000
Overapplied overhead		4000

c)

AMAL JAYA ENTERPRISE (AJE)
Schedule of Cost of Goods Manufactured
Beginning raw materials	21000
Add: Raw material purchases	300000
Raw materials available for use	321000
Less: Ending raw materials	24000
Cost of raw materials issued	297000
Less: Indirect materials	16000
Direct materials used		281000
Direct labor		389000
Manufacturing overhead applied		238000
Total current manufacturing costs		908000
Add: Beginning work in process		40000
Total cost of work in process		948000
Less: Ending work in process		22000
Cost of goods manufactured		926000

d)

AMAL JAYA ENTERPRISE (AJE)
Schedule of Cost of Goods Sold
Cost of goods manufactured	926000
Add: Beginning finished goods	26000
Cost of goods available for sale	952000
Less: Ending finished goods	41000
Unadjusted Cost of goods sold	911000
Less: Overapplied manufacturing overheads	4000
Adjusted Cost of goods sold	907000