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 Direct material RM2,800 RM1,200 Direct labour hours 500 hours 50 hours Machine hours 300 hours 200 hours Wage rate per hour RM2.50 RM3.20   Additional information about Job E:   Manufacturing overhead is absorbed based on machine hour for Machining department and direct labour hour for Finishing department. Administrative expenses incurred for Job E was 15% of prime cost 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 Manufacturing overhead RM35,000 RM72,000 Direct labour hours 1,650 hours 9,800 hours Machine hours 3,700 hours 6,200 hours         Required:   Calculate overhead absorption rate for both departments using:   Single rate (assuming the company uses direct labour hour as absorption basis). Departmental rate   Prepare the job cost sheet of Job E by showing the prime cost, total production cost and total cost.   Calculate the selling price of Job E.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Question

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

Direct material

RM2,800

RM1,200

Direct labour hours

500 hours

50 hours

Machine 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

Manufacturing overhead

RM35,000

RM72,000

Direct labour hours

1,650 hours

9,800 hours

Machine hours

3,700 hours

6,200 hours

 

 

 

 

Required:

 

  1. Calculate overhead absorption rate for both departments using:

 

  1. Single rate (assuming the company uses direct labour hour as absorption basis).
  2. Departmental rate

 

  1. Prepare the job cost sheet of Job E by showing the prime cost, total production cost and total cost.

 

  1. Calculate the selling price of Job E.

 

  1. Based on your answer in a. ii) above, calculate over or under absorption of overhead for each department.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Knowledge Booster
Budgeting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education