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ASSIGMENT 3

SEMESTER 1 SESSION 2013-14

ACCOUNTING FOR DECISION MAKING (ZCZA6103 SET 4)

QUESTION 1

Baldu Biru Company produces souvenir items for corporate customers. The company uses ajob-order costing system and uses traditional costing system in determining its manufacturing

overhead cost. Manufacturing overhead is applied to jobs using a predetermined overhead rate

based on direct labor-hours.

Last year manufacturing overhead was estimated at RM!!"!!!" and direct labor-hours was

estimated at #!"!!! hours for the whole year.

$n %une #&th" #!'" Baldu Biru Company completed %ob # which contained !! units of

stationery holders for (tama Company" its valued customer. The order too) one month tocomplete. *irect materials costs on the job totaled RM+"!!! and direct labor costs totaledRM'"!!! at the rate of RM! per hour.

.

Requ!e"#

a.Briefly e,plain why Baldu Biru Company uses job order costing" not process costing.

b.repare the job cost sheet for %ob #" and determine the cost per unit.

QUESTION 2

Buddy Corporation" which began operations on %anuary of the current year" reported the

following information

Buddy uses a normal cost system and applies manufacturing overhead to jobs on the basis of

direct labor cost. / 0!1 mar)up is added to the cost of completed production when finishedgoods are sold. $n *ecember '" job no. + was the only job that remained in production. That

8/14/2019 Assignment 3Assign3 1314stud 2

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job had direct-material and direct-labor charges of RM0"&!! and RM'0"!!!" respectively.

Requ!e"#

a. *etermine the company2s predetermined overhead rate.

b. *etermine the amount of under- or overapplied overhead.c. Compute the amount of direct materials used in production.

d. Calculate the balance the company would report as ending wor)-in-process inventory.

QUESTION 3

Magenta" 3nc." which uses a job-costing system" is a labor-intensive firm" with many s)illed

craftspeople on the payroll. %ob no. 4+5 was the only job in process on %anuary " having costs of

RM##"&!! as of that date. *irect materials used and direct labor incurred during %anuary were

%ob no. 45 was the only job in production as of %anuary '.

Requ!e"#

a. 6hould Magenta use direct labor or machine hours as a cost driver. 7hy8

b. /ssume that the company decided to use direct labor as its cost driver. 3f the budgetedamounts of direct labor and manufacturing overhead are anticipated to be RM#!!"!!! and

RM'!!"!!!" respectively" what is the firm2s predetermined overhead rate8

c. Compute the cost of wor)-in-process inventory as of %anuary '.d. Compute the cost of jobs completed during %anuary.

e. 6uppose that the company sold all of its completed jobs" adding a 9!1 mar)up to cost. :ow

much would the firm report as sales revenue8

#