Impian Sdn Bhd manufactures products using three productions Cost Centres: Machining, Assembly and Finishing, and two...

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Impian Sdn Bhd manufactures products using three productions Cost Centres: Machining, Assembly and Finishing, and two Service Centres: Plant Maintenance (PM) and Administrative Support (AS). The budgeted production overhead costs for a period have been budgeted as follows. Indirect materials Indirect labor Machine depreciation Building related costs Machine maintenance and insurance Management Floor Area (m²) Cost of machinery ('000) Machine hours Number of employees Direct labour hours General Factory Machining Additional information: 67,200 26,500 Plant Maintenance 16,640 Administrative support 1. Other budgeted information for the period relating to the factory: Machining RM 19,390 16,660 40,340 600 326 4,270 10 2,610 Cost Centre Assembly Finishing PM RM RM 3,220 8,160 18,720 13,370 13,750 1,260 RM 11,360 25,940 5,240 Cost Centre Finishing Assembly 750 43 30 7,900 300 135 12 4,130 PM Machining Assembly Finishing 20% 50% 20% 30% 30% 30% 200 12 PM 8 10% AS 2. The costs at the service cost centre are budgeted to provide services to other cost centres as follows: 250 14 AS 10% 5 AS RM 5,350 14,190 1,470 3. The company uses the information set out above to calculate a predetermined production overhead absorption rate for each production cost centre. Required: (c) Explain the causes of over absorption of overheads in the period. (a) Apportion overheads, as necessary to enable predetermined absorption rates established by using simultaneous equations method. (b) Calculate the appropriate production overhead absorption rates for the period. (to 2 decimal places of RM) 2/2 Impian Sdn Bhd manufactures products using three productions Cost Centres: Machining, Assembly and Finishing, and two Service Centres: Plant Maintenance (PM) and Administrative Support (AS). The budgeted production overhead costs for a period have been budgeted as follows. Indirect materials Indirect labor Machine depreciation Building related costs Machine maintenance and insurance Management Floor Area (m²) Cost of machinery ('000) Machine hours Number of employees Direct labour hours General Factory Machining Additional information: 67,200 26,500 Plant Maintenance 16,640 Administrative support 1. Other budgeted information for the period relating to the factory: Machining RM 19,390 16,660 40,340 600 326 4,270 10 2,610 Cost Centre Assembly Finishing PM RM RM 3,220 8,160 18,720 13,370 13,750 1,260 RM 11,360 25,940 5,240 Cost Centre Finishing Assembly 750 43 30 7,900 300 135 12 4,130 PM Machining Assembly Finishing 20% 50% 20% 30% 30% 30% 200 12 PM 8 10% AS 2. The costs at the service cost centre are budgeted to provide services to other cost centres as follows: 250 14 AS 10% 5 AS RM 5,350 14,190 1,470 3. The company uses the information set out above to calculate a predetermined production overhead absorption rate for each production cost centre. Required: (c) Explain the causes of over absorption of overheads in the period. (a) Apportion overheads, as necessary to enable predetermined absorption rates established by using simultaneous equations method. (b) Calculate the appropriate production overhead absorption rates for the period. (to 2 decimal places of RM) 2/2

Answer rating: 100% (QA)

To solve this problem we can follow these steps a Apportion overheads using the simultaneous equations method Let M Overhead rate for Machining A Over... View the full answer