| ACC116: Introduction To Cost Accounting |
QUESTION 1
Rose Leather Berhad produces a variety of leather products. Given below are the many types of costs incurred for the first quarter of 2021.
| Types of costs | |||
| 1 | Direct material costs | 8 | Rental of special equipment |
| 2 | Salary of production workers | 9 | Factory Power and electricity cost |
| 3 | Salary of supervisors | 10 | Designer fee |
| 4 | Advertisement expenses | 11 | Administration cost |
| 5 | Depreciation of sewing machines & equipment | 12 | Depreciation of office equipment |
| 6 | Salesman commission | 13 | Maintenance cost of machine |
| 7 | Factory building insurance | 14 | Insurance of office building |
Required:
For each overhead costs below, state any four (4) examples from the above table.
1. Production overhead cost
2. Non-production overhead costs
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QUESTION 2
State the appropriate basis for the following activities:
| Activities | Appropriate Basis | |
| a | Basis for apportionment of electricity costs | |
| b | Basis for apportionment of insurance of building cost | |
| c | Basis for reapportionment of overhead costs at the Store Room department | |
| d | Basis for reapportionment of overhead costs at the Maintenance department | |
| e | Basis for apportionment of building rental cost | |
| f | Basis for apportionment of Supervisors salaries cost | |
| g | Basis for reapportionment of overhead costs at the Canteen department | |
| h | Basis for reapportionment of overhead costs at Quality Control Department |
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QUESTION 3
Aiden Enterprise has two production departments, Mixing Department and Packaging Department.
| Mixing
Department |
Packaging
Department |
|
| Budgeted Production Overhead costs | RM 250,000 | RM 360,000 |
| Actual production Overhead costs | RM 320,000 | RM 300,000 |
| Budgeted machine hours | 47,250 hours | 1,000 hours |
| Actual machine hours | 45,000 hours | 1,500 hours |
| Budgeted Labour hours | 4,500 hours | 15,000 hours |
| Actual labour hours | 5,000 hours | 13,800 hours |
| Budgeted direct wages cost | RM159,000 | RM200,000 |
| Actual direct wages cost | RM120,000 | RM 250,000 |
| Budgeted direct material cost | RM88,000 | RM15,000 |
| Actual direct material cost | RM80,000 | RM18,000 |
| Budgeted units of production | 10,000 units | |
Required:
1. Assuming that Mixing Department uses more machine for production. Calculate the overhead absorption rate (OAR) for Mixing Department using the most appropriate
2. Assuming that Packaging Department are uses labour intensively for Calculate the overhead absorption rate (OAR) for Packaging Department using the most appropriate basis.
3. Calculate the SINGLE / BLANKET overhead absorption rate using the percentage of prime cost
4. Based on your answer in (a), determine the over or under absorption of the overhead cost for Mixing
