(a) Below is the annual overhead cost for Lim Limited, which has three production and two...

 

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(a) Below is the annual overhead cost for Lim Limited, which has three production and two service centres. The centres are as below. Productions Machine A Machine B Assembly The overhead cost and its basis of allocation for the financial year 2021 are: RM'000 Allocation basis Indirect Labour Machine A Machine B Assembly Procurement Support Indirect Material Machine A Machine B Assembly Procurement Support Others Utilities Rental Depreciation Salary General & Admin. Services Procurement Support Sq. meter 800 800 700 400 300 600 600 500 200 100 120 240 24 300 100 Direct Direct Area The areas allocation for other overhead costs are as follows. Machine A Machine B Assembly 400 300 800 Procurement 700 Support 100 Required: Prepare the schedule of overhead cost allocation, based on the traditional costing for Lim Limited, for the year ended 31 December 2021. (22.5 marks) (b) Explain the inventory valuation method that is not recognised by International Financial Reporting Standard. Justify your answer. (2.5 marks) (a) Below is the annual overhead cost for Lim Limited, which has three production and two service centres. The centres are as below. Productions Machine A Machine B Assembly The overhead cost and its basis of allocation for the financial year 2021 are: RM'000 Allocation basis Indirect Labour Machine A Machine B Assembly Procurement Support Indirect Material Machine A Machine B Assembly Procurement Support Others Utilities Rental Depreciation Salary General & Admin. Services Procurement Support Sq. meter 800 800 700 400 300 600 600 500 200 100 120 240 24 300 100 Direct Direct Area The areas allocation for other overhead costs are as follows. Machine A Machine B Assembly 400 300 800 Procurement 700 Support 100 Required: Prepare the schedule of overhead cost allocation, based on the traditional costing for Lim Limited, for the year ended 31 December 2021. (22.5 marks) (b) Explain the inventory valuation method that is not recognised by International Financial Reporting Standard. Justify your answer. (2.5 marks)

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