BKAM2013 Management Accounting I
Question 1
Super Equipment Sdn Bhd is a job-order costing manufacturer that uses a
plantwide overhead rate based on direct labor hours. Estimations for the year
include RM420,000 in overhead, 30,000 direct labor hours and RM120,000 in
labor cost. Super worked on five jobs in March 2020. Data are as follows:
Job A Job B Job C Job D Job E
Balance, March 1 RM23,11 RM18,240 RM9,510 RM0 RM0
0
Direct materials RM13,00 RM17,210 RM22,90 RM15,240 RM8,210
0 0
Direct labor cost RM8,075 RM11,500 RM16,25 RM9,750 RM4,860
0
Direct labor hours 1,615 2,300 3,250 1,950 972
By March 31, 2020 Jobs A and C were completed and sold. The rest of the jobs
remained in process.
REQUIRED:
1) Calculate the plantwide overhead rate.
2) Calculate the Work in Process on March 31.
3) Calculate the cost of goods sold for March.
4) Assume Super marks up cost by 40%. What is the selling price of Jobs A
and C?
5) What IF Analysis (treat each case independently):
a) If Super changes the allocation base to direct labor costs (instead of
direct labor hours) for the plantwide rate, recompute items (1) – (3).
b) If Super revises the mark up percentage to 35%, recompute the
selling price as in item (4).
Question 2
Som Sdn Bhd produces antique dishes at a plant located in Changlun, Kedah.
Many of the products are made only when the company received order from
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BKAM2013 Management Accounting I
customers. The company uses a job-order costing system. On 1 July 2020,
inventory account balances were as follows:
Raw Materials............................. RM10,000
Work in Process.......................... RM4,000
Finished Goods........................... RM8,000
Total............................................ RM22,000
The company applies overhead cost to jobs on the basis of machine hours. For
the fiscal year starting 1 July 2020, it was estimated that the plant would operate
45,000 machine hours and incur RM99,000 in manufacturing overhead cost.
During the year, the following transactions were completed:
1. Raw materials purchased on account, RM160,000.
2. Raw materials requisitioned for use in production, RM140,000 (materials
costing RM120,000 were chargeable directly to jobs; the remaining
materials were indirect).
3. Costs for employee services were incurred as follows:
Direct labor................................. RM90,000
Indirect labor............................... RM60,000
Sales commissions..................... RM20,000
Administrative salaries................ RM50,000
4. Prepaid insurance expired during the year, RM18,000 (RM13,000 of this
amount related to factory operations, and the remainder related to selling
and administrative activities).
5. Utility costs incurred in the factory, RM10,000.
6. Advertising costs incurred, RM15,000.
7. Depreciation recorded on equipment, RM25,000. (RM20,000 of this
amount was on equipment used in factory operations; the remaining
RM5,000 was on equipment used in selling and administrative activities).
8. Manufacturing overhead cost was applied to production, RM __?__ . (The
company recorded 50,000 machine hours of operating time during the
year).
9. Goods that had cost RM310,000 to manufacture according to their job
cost sheets were transferred into finished goods warehouse.
10. Sales (all on account) to customers during the year totaled RM498,000.
These goods had cost RM308,000 to manufacture according to their job
cost sheets.
REQUIRED:
1) Prepare journal entries to record the transactions for the year.
2) Prepare T-accounts for inventories, Manufacturing Overhead and Cost of
Goods Sold. Post relevant data from your journal entries to these T-
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BKAM2013 Management Accounting I
accounts (don’t forget to enter the opening balances in your inventory
accounts). Compute an ending balance in each account.
3) Is Manufacturing Overhead underapplied or overapplied for the year?
Prepare a journal entry to close any balance in the Manufacturing
Overhead account to Cost of Goods Sold.
4) Prepare an income statement for the year ended 30 June 2006. (Do not
prepare a schedule of cost of goods manufactured; all of the information
needed for the income statement is available in the journal entries and T-
accounts you have prepared).
5) What IF Analysis:
Repeat requirement in (3), assuming the underapplied/overapplied
overhead is distributed among the Work In Process, Finished Good And
Cost Of Goods Sold Accounts. Prepare related journal entry.
Question 3
Selected ledger accounts for Kahiba Sdn Bhd are given below for the just
completed year of 2019:
Raw Materials Manufacturing Overhead
Bal. 1/1 30,000 Credits ? Debits 385,000 Credits ?
Debits 420,000
------------------------------ ------------------------
Bal. 31/12 60,000
Work in Process Factory Wages Payable
Bal. 1/1 70,000 Credits 810,000 Debits 179,000 Bal. 1/1 10,000
D. materials 320,000 Credits 175,000
D. labor 110,000 ----------------------- -------------------------------
Overhead 400,000 Bal. 31/12 6,000
------------------------------ ------------------------
Bal. 31/12 ?
Finished Goods Cost of Goods Sold
Bal. 1/1 40,000 Credits ? Debits ?
Debits ?
------------------------------ ------------------------
Bal. 31/12 130,000
REQUIRED:
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BKAM2013 Management Accounting I
(a) What was the cost of raw materials put into production during the year?
(b) How much of materials in (a) above consisted of indirect materials?
(c) How much of factory labor cost for the year consisted of indirect labor?
(d) What was the cost of goods manufactured for the year?
(e) What was the cost of goods sold for the year (before considering
underapplied or overapplied overhead)?
(f) If overhead is applied to production on the basis of direct materials cost,
what predetermined overhead rate was used during the year?
(g) Was manufacturing overhead underapplied or overapplied? By how
much?
(h) Compute the ending balance in the Work in Process inventory account.
Assume that this balance consists entirely of goods started during the
year. If RM32,000 of this balance is direct materials cost, how much of it is
direct labor cost? Manufacturing overhead cost?
