LILI SDN BHD is a manufacturer and supplier of home cabinets. It has two main Departments that is the Production Department and the Service Department. The Production department has three (3) sub-departments: Machining, Assembly and Finishing. All three departments are labor-intensive. The Service Department has two sub-department which is Maintenance and General Services. Cost Data Production Departments Service Departments Cost Items (RM) Fabrication Assembly Finishing Maintenance Gen.Services Indirect Supplies 3,000 2,500 2,000 1,000 2,500 Indirect Labour 18,000 10,000 8,000 4,500 1,500 Indirect Material 5,000 3,500 1,000 1,000 1,800 Repairs 2,000 1,000 1,000 1,500 200 Total 28,000 17,000 12,000 8,000 6,000 LILI SDN BHD budgeted overhead cost for it’s three production and two service departments is as follows. Common Overhead Cost Items RM Rent and Rates 128,000 Insurance for Machine 60,000 Telephone Charges 32,000 Depreciation 180,000 Production Supervisor’s Salary 240,000 Heating and Lighting 64,000 Total 704,000 The basis of allocation of the common overhead cost items is as follows: Common Overhead Cost Items Basis of allocation Rent & Rates Floor area occupied Insurance for Machine Machine Value Telephone charges Floor area occupied Depreciation Machine hours Production Supervisor’s salary Direct labor hours Heating & lighting Floor area occupied

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

See similar textbooks

Related questions

Concept explainers

Question

LILI SDN BHD is a manufacturer and supplier of home cabinets. It has two main Departments that is the Production Department and the Service Department. The Production department has three (3) sub-departments: Machining, Assembly and Finishing. All three departments are labor-intensive. The Service Department has two sub-department which is Maintenance and General Services.

Cost Data

Production Departments	Service Departments
Cost Items (RM)	Fabrication	Assembly	Finishing	Maintenance	Gen.Services
Indirect Supplies	3,000	2,500	2,000	1,000	2,500
Indirect Labour	18,000	10,000	8,000	4,500	1,500
Indirect Material	5,000	3,500	1,000	1,000	1,800
Repairs	2,000	1,000	1,000	1,500	200
Total	28,000	17,000	12,000	8,000	6,000

LILI SDN BHD budgeted overhead cost for it’s three production and two service departments is as follows.

Common Overhead Cost Items	RM
Rent and Rates	128,000
Insurance for Machine	60,000
Telephone Charges	32,000
Depreciation	180,000
Production Supervisor’s Salary	240,000
Heating and Lighting	64,000
Total	704,000

The basis of allocation of the common overhead cost items is as follows:

Common Overhead Cost Items	Basis of allocation
Rent & Rates	Floor area occupied
Insurance for Machine	Machine Value
Telephone charges	Floor area occupied
Depreciation	Machine hours
Production Supervisor’s salary	Direct labor hours
Heating & lighting	Floor area occupied

Other data:

Production Departments	Service Departments
	Fabrication	Assembly	Finishing	Maintenance	Gen. Services
Floor area (sq. \meters)	30,000	18,000	6,000	6,000	4,000
Machine value	240,000	100,000	80,000	40,000	20,000
Direct labor hrs. budgeted	32,000	18,000	10,000
Labor rates per hr.	RM 3.80	RM 3.50	RM 3.40	RM 3.00	RM 3.00
Service Department: Maintenance cost apportioned	50%	25%	25%
Service Department: General Services cost apportioned	20%	30%	50%

Required:

(a) Prepare an overhead analysis sheet (cost allocation schedule) showing clearly the allocations, apportionments, and reapportionments to each cost center.

(b) Calculate the appropriate absorption rates for each production department.

The following jobs were completed for customers:

	Job 102	Job 103
Direct material	RM 1,540	RM 1,080
Direct Labour	40 hours: Fabrication	32 hours: Fabrication
	24 hours: Assembly	20 hours: Assembly
	20 hours: Finishing	28 hours: Finishing

(d) If the firm quotes prices to customers that reflect a required profit of 25% on selling price, calculated the quoted selling price for each job.

Expert Solution

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.

Similar questions