QUESTION 1
(25 marks)
Gemersik Bhd operates a job-order costing system and applies overhead cost to jobs on the
basis of direct materials used in production (not on the basis of raw materials purchased). Its
predetermined overhead rate was based on a cost formula that estimated RM800,000 of
manufacturing overhead for an estimated allocation base of RM500,000 direct material cost
to be used in production.
The company has provided the following data for the just completed year:
Required:
Beginning (RM)
Ending (RM)
Raw materials
20,000
80,000
Work in Process
150,000
70,000
Finished Goods
260,000
400,000
RM
Purchase of raw materials
510,000
Direct labor cost
90,000
Manufacturing overhead costs:
Indirect labor
170,000
Property taxes
48,000
Depreciation of equipment
260,000
Maintenance
95,000
Insurance
7,000
Rent: building
180,000
a) Compute the predetermined overhead rate for the year.
(3 marks)
b) Determine the actual manufacturing overhead costs.
(4 marks)
c) Compute the cost of goods manufactured for the year assuming all raw materials are
used in production as direct materials.
(6 marks)
d) Compute the unadjusted cost of goods sold for the year.
(4 marks)
ACCT 1201/June2018
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e) Calculate the over/under applied manufacturing overhead costs.
(3 marks)
f) State the options in disposing the under-applied or over-applied.
(2 marks)
g) Job 566 was started and completed during the year. Compute the price to be charged to
the customer if the job require RM8,500 in direct materials and RM2,700 in direct labor
cost and the policy of the company is to mark up at 25% on job's cost.
(3 marks)
