QUESTION 2 Seroja Sdn. Bhd. manufactures customized equipment for local market. The budgeted data for the month of February 2019 were as follows: Machining Department Finishing Department Manufacturing overhead RM40,000 RM65,000 Direct labour hours 2,000 hours 10,000 hours Machine hours 4,000 hours 5,700 hours During the month, an order was received from Mr. Eric to manufacture an equipment for his personnel use. The job is known as Job E and the data pertaining to the job were as follows: Machining Department Finishing Department RM1,200 50 hours Direct material RM2,800 Direct labour hours Machine hours 500 hours 300 hours 200 hours Wage rate per hour RM2.50 RM3,20 Additional information about Job E: 1. Manufacturing overhead is absorbed based on machine hour for Machining department and direct labour hour for Finishing department. 2. Administrative expenses incurred for Job E was 15% of prime cost 3. The company set the profit margin of 25% on total cost for Job E. At the end of the month the actual data were obtained as follows: Machining Department Finishing Department RM72,000 9,800 hours 6,200 hours Manufacturing overhead RM35,000 Direct labour hours 1,650 hours Machine hours 3.700 hours Required: a. Calculate overhead absorption rate for both departments using: i) Single rate (assuming the company uses direct labour hour as absorption basis). ii) Departmental rate b. Prepare the job cost sheet of Job E by showing the prime cost, total production cost and total cost. c. Calculate the selling price of Job E.
QUESTION 2 Seroja Sdn. Bhd. manufactures customized equipment for local market. The budgeted data for the month of February 2019 were as follows: Machining Department Finishing Department Manufacturing overhead RM40,000 RM65,000 Direct labour hours 2,000 hours 10,000 hours Machine hours 4,000 hours 5,700 hours During the month, an order was received from Mr. Eric to manufacture an equipment for his personnel use. The job is known as Job E and the data pertaining to the job were as follows: Machining Department Finishing Department RM1,200 50 hours Direct material RM2,800 Direct labour hours Machine hours 500 hours 300 hours 200 hours Wage rate per hour RM2.50 RM3,20 Additional information about Job E: 1. Manufacturing overhead is absorbed based on machine hour for Machining department and direct labour hour for Finishing department. 2. Administrative expenses incurred for Job E was 15% of prime cost 3. The company set the profit margin of 25% on total cost for Job E. At the end of the month the actual data were obtained as follows: Machining Department Finishing Department RM72,000 9,800 hours 6,200 hours Manufacturing overhead RM35,000 Direct labour hours 1,650 hours Machine hours 3.700 hours Required: a. Calculate overhead absorption rate for both departments using: i) Single rate (assuming the company uses direct labour hour as absorption basis). ii) Departmental rate b. Prepare the job cost sheet of Job E by showing the prime cost, total production cost and total cost. c. Calculate the selling price of Job E.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:QUESTION 2
Seroja Sdn. Bhd. manufactures customized equipment for local market. The budgeted data
for the month of February 2019 were as follows:
Machining Department Finishing Department
Manufacturing overhead
RM40,000
RM65,000
10,000 hours
5.700 hours
Direct labour hours
2.000 hours
Machine hours
4.000 hours
During the month, an order was received from Mr. Eric to manufacture an equipment for his
personnel use. The job is known as Job E and the data pertaining to the job were as follows:
Machining Department Finishing Department
RM2,800
Direct material
RM1,200
50 hours
Direct labour hours
Machine hours
Wage rate per hour
500 hours
300 hours
200 hours
RM2.50
RM3,20
Additional information about Job E:
1. Manufacturing overhead is absorbed based on machine hour for Machining department
and direct labour hour for Finishing department.
2. Administrative expenses incurred for Job E was 15% of prime cost
3. The company set the profit margin of 25% on total cost for Job E.
At the end of the month the actual data were obtained as follows:
Machining Department Finishing Department
RM35,000
Manufacturing overhead
1,650 hours
3,700 hours
RM72,000
9,800 hours
6,200 hours
Direct labour hours
Machine hours
Required:
a. Calculate overhead absorption rate for both departments using:
i) Single rate (assuming the company uses direct labour hour as absorption basis).
ii) Departmental rate
b. Prepare the job cost sheet of Job E by showing the prime cost, total production cost and total
cost.
c. Calculate the selling price of Job E.
d. Based on your answer in a. ii) above, calculate over or under absorption of overhead for
each department.
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