Question 3 Kerisi Sdn Bhd manufactures tents and sleeping bags in two separate production departments. The manufacturing processes involve two departments: Cutting and Sewing Departments. The company uses predetermined overhead to calculate manufacturing overhead. The Cutting Department is machine oriented while the Sewing Department is labour oriented. The following is the information for the year ended 31 December 2021. Cutting Department Sewing Department Estimated machine hours 105,000 29,000 Estimated direct labour hours 90,000 27,000 Estimated manufacturing overhead RM 651,000 RM 540,000 Actual manufacturing overhead RM 600,000 RM 560,000 Actual machine hours 100,000 27,000 Actual direct labour hour 96,300 26,600 Required: (a)Calculate the predetermined overhead rate for each department. . (b)Calculate over/under applied manufacturing overhead for each department.
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.
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