Question

QUESTION 2 Juara Bhd operates a job-order costing system and app of direct labor cost. Its predetermined o estimated RM189,000 manufacturing overh RM126,000 direct labor cost. The company has provide ates a job-order costing system and applies overhead cost to jobs on the basis of cost. Its predetermined overhead rate was based on a cost formula that ,000 manufacturing overhead cost for an estimated allocation base of et labor cost. The company has provided the following data for the year: RM 199,500 120,000 Purchase of raw materials (all direct) Direct labor cost Actual manufacturing overhead costs: Insurance, factory Depreciation of equipment Indirect labor Property Taxes Maintenance Building rental 10,500 27,000 63,000 13,500 16,500 54,000 Beginning (RM) Ending (RM) Inventories: Raw materials Work in process Finished goods 31,500 66,000 24,000 60,000 90,000 102,000 Required: a) Compute the predetermined overhead rate for the year. (3 marks) (CLO2:PLO2:C3) b) Compute the amount of under applied or over applied overhead for the year. (6 marks) (CLO2:PLO2:03) c) Prepare a schedule of cost of goods manufactured for the year. Assume all raw materials are used in production as direct materials. (7 marks) (CLO2:PLO2:04) d) Compute the unadjusted cost of goods sold for year. (3 marks) (CLO2.PL02:04)

Answer 1

A	Predetermind Overhead Rate for the Year
	= Manufacturing Overhead / Labour Hour
	'=189000/126000
	=1.5
B	Calculation of Under Applied or Over Applied Overhead
	Overhead Absorption Rate		= Actual Manufacturing Overhead / Labour Hour
			'=184500/120000
			=1.5375
	OverHead Under Absorb because Actual Absorption rate is high
	= Actual Rate - Predetermined Rate
	= 1.5375-1.50
	=0.0375
C	COST OF GOODS MANUFACTURED
	Opening Balance		31,500.00
	Purchase		1,99,500.00
			2,31,000.00
	Closing		24,000.00
	Consumption/Transfer to WIP		2,07,000.00
	Labour Cost		1,20,000.00
	Prime Cost		3,27,000.00
	Manufacturing OverHead		1,84,500.00
	Insurance Factory	10,500.00
	Depreciation on equipment	27,000.00
	Indirect Labour	63,000.00
	Property Tax	13,500.00
	Maintenance	16,500.00
	Building Rent	54,000.00
			5,11,500.00
	Opening WIP		66,000.00
	Closing WIP		60,000.00
	Cost of Goods Manufactured		5,17,500.00
D	Calculation of Unadjusted Cost of Goods Sold
	Opening Stock of Finished Goods		1,02,000.00
	Cost of Goods Manufactured during period		5,17,500.00
			6,19,500.00
	Closing Stock of Finished Goods		90,000.00
	Unadjusted Cost of Goods Sold/Cost of Sales		5,29,500.00
E	JOB DBF II
	Price to be Charged for Job
	Material	4,800.00
	Labour	6,300.00
	Overhead (6300 x 1.5375)	9,686.25
		20,786.25
	Margin 40% of cost	8,314.50
	Sales Price	29,100.75
	Overhaed rate applicable as per actual.
	Overhead rate calculated above