Abam Bakery Enterprise is a small bakery manufacturer located at Ipoh, Perak. Currently, Abam Bakery produces three types of product – brownies, cupcakes and filing donuts. There are three production departments. Departmental information on budgeted overhead and various activity measures for the coming year is as follows: Mixing Cooking Packaging Estimated overhead RM300,000 RM150,000 RM220,000 Direct labor hours 4,500 15,000 3,200 Direct labor cost RM120,000 RM180,000 RM120,000 Machine hours 8,000 2,000 5,000 Currently, overhead is applied on the basis of machine hours using a plantwide rate. However, the production supervisor, Miss Lily, has been wondering whether it might be worthwhile to use departmental overhead rates. She has analysed the overhead costs and drivers for the various departments and decided that Mixing and Packaging should base their overhead rates on machine hours and that Cooking should base its overhead rate on direct labor hours. Miss Lily has been asked to prepare bids for two job offers with the following information: Job 1 Job 2 Direct materials RM12,200 RM16,500 Direct labor cost RM4,200 RM6,800 Direct labor hours: Mixing 30 20 Cooking 150 80 Packaging 20 100 Number of machine hours: Mixing 150 100 Cooking 80 50 Packaging 170 250 The typical bid price includes a 45% markup over full manufacturing cost. Round all overhead rates to the nearest cents. Round all bid prices to the nearest ringgit. REQUIRED: Calculate a plantwide rate for Syarikat Techno based on machine hours. What is the bid price of each job using this rate? Calculate departmental overhead rates for the three producing departments. What is the bid price of each job using these rates? What If Analysis: Repeat Requirement (1) and (2), if the bid price includes a 30% markup over the full manufacturing cost.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Abam Bakery Enterprise is a small bakery manufacturer located at Ipoh, Perak. Currently, Abam Bakery produces three types of product – brownies, cupcakes and filing donuts. There are three production departments. Departmental information on budgeted
|
|
Mixing |
Cooking |
Packaging |
|
Estimated overhead |
RM300,000 |
RM150,000 |
RM220,000 |
|
Direct labor hours |
4,500 |
15,000 |
3,200 |
|
Direct labor cost |
RM120,000 |
RM180,000 |
RM120,000 |
|
Machine hours |
8,000 |
2,000 |
5,000 |
Currently, overhead is applied on the basis of machine hours using a plantwide rate. However, the production supervisor, Miss Lily, has been wondering whether it might be worthwhile to use departmental overhead rates. She has analysed the overhead costs and drivers for the various departments and decided that Mixing and Packaging should base their overhead rates on machine hours and that Cooking should base its overhead rate on direct labor hours.
Miss Lily has been asked to prepare bids for two job offers with the following information:
|
|
Job 1 |
Job 2 |
|
Direct materials |
RM12,200 |
RM16,500 |
|
Direct labor cost |
RM4,200 |
RM6,800 |
|
Direct labor hours: |
|
|
|
Mixing |
30 |
20 |
|
Cooking |
150 |
80 |
|
Packaging |
20 |
100 |
|
Number of machine hours: |
|
|
|
Mixing |
150 |
100 |
|
Cooking |
80 |
50 |
|
Packaging |
170 |
250 |
The typical bid price includes a 45% markup over full
REQUIRED:
- Calculate a plantwide rate for Syarikat Techno based on machine hours. What is the bid price of each job using this rate?
- Calculate departmental overhead rates for the three producing departments. What is the bid price of each job using these rates?
- What If Analysis:
- Repeat Requirement (1) and (2), if the bid price includes a 30% markup over the full manufacturing cost.
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 3 images
