On 1 January 2021, Johnny and Mason Company received an order from Cottonrake Bakery to produce...

 

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On 1 January 2021, Johnny and Mason Company received an order from Cottonrake Bakery to produce special coffee machine. In order to complete this order, the company need to hire a special machine at a cost of RM1,800 per month. Job No. 0325 was assigned to the order. Materials costs for the job, obtained from material requisition forms are as follows: Material AT Material AZ 600 units at RM1.20/unit Department A Department B 700 units at RM1.30/unit Direct labour costs obtained from time tickets are as follows: 180 hours at RM7.00/hour 210 hours at RM6.50/hour Machine hours recorded for the month are as follows: Department A Department B Overhead is applied based on machine hours. Below is the budgeted production overhead cost for quarter year which are based on direct labor hours for Department A and machine hours for Department B. 180 hours. 270 hours Department Department A Budgeted Production Department B Overhead RM150,000 Basis of Production Overhead 100,000 hours RM98,700 In order to cover selling and administration expenses and to provide a reasonable profit, the profit margin is set at 20% of the selling price. Selling and administrative expenses are based on 10% production cost. Required: (a) Determine the Overhead Absorption Rate (OAR) for the jobs. 42,000 hours (b) Prepare a Job Cost Sheet for Job No. 0322 showing of prime cost, production cost and total cost. (c) Determine the profit and selling price of the special coffee machine. On 1 January 2021, Johnny and Mason Company received an order from Cottonrake Bakery to produce special coffee machine. In order to complete this order, the company need to hire a special machine at a cost of RM1,800 per month. Job No. 0325 was assigned to the order. Materials costs for the job, obtained from material requisition forms are as follows: Material AT Material AZ 600 units at RM1.20/unit Department A Department B 700 units at RM1.30/unit Direct labour costs obtained from time tickets are as follows: 180 hours at RM7.00/hour 210 hours at RM6.50/hour Machine hours recorded for the month are as follows: Department A Department B Overhead is applied based on machine hours. Below is the budgeted production overhead cost for quarter year which are based on direct labor hours for Department A and machine hours for Department B. 180 hours. 270 hours Department Department A Budgeted Production Department B Overhead RM150,000 Basis of Production Overhead 100,000 hours RM98,700 In order to cover selling and administration expenses and to provide a reasonable profit, the profit margin is set at 20% of the selling price. Selling and administrative expenses are based on 10% production cost. Required: (a) Determine the Overhead Absorption Rate (OAR) for the jobs. 42,000 hours (b) Prepare a Job Cost Sheet for Job No. 0322 showing of prime cost, production cost and total cost. (c) Determine the profit and selling price of the special coffee machine.

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a Determine the Overhead Absorption Rate OAR for the jobs Department A OAR OARA Budgeted Production Overhead for Department A Basis of Production Over... View the full answer