PART A ANSWER ALL QUESTIONS (TOTAL:14 MARKS) 1. Explain the activity-based costing. 2. Discuss TWO (2) advantages and TWO (2) limitations of activity-based costing. (2 marks) (6 marks) 3. Discuss the THREE (3) differences between job order costing and process costing. PART B ANSWER ALL QUESTIONS. QUESTION 1 (6 marks) (TOTAL:36 MARKS) Faiq Bhd, a manufacturer of FOUR (4) models recently changed from the conventional to activity based costing. Faiq Bhd has identified the following overhead activities, costs, and activity drivers for the coming year: Activity Activity Driver Overhead cost (RM) Expected activity 7000 direct labour Labour related Purchased order Direct labour hours Number of orders 52,500 hours 6.000 2,000 orders Material receipts Number of receipts 15,675 950 receipts Relay processing Number of relays 10,500 1,000 relays General factory Machine hours 360,000 40,000 machine hours The expected activity for the year was distributed among the company's FOUR(4) products as follows. Activity cost pool A B C Labour related(DLHs) 2400 3,500 600 500 Purchased order(orders) 100 800 750 350 Material receipts(receipts) 400 342 0 208 Relay processing(relays) 170 300 360 170 General factory(MHs) 12,000 8,000 13,000 7,000 A B C RM RM RM RM Direct materials 35,000 38,000 19.500 15,000 RM RM RM RM Direct labor 22,000 21,000 15,700 7,900 Units completed 390 450 100 250 Required: i. ii. iii. Compute the activity rate for each of the activity cost pool. (4 marks) Using the ABC data, determine the cost per unit cost assigned to each product. (18 marks) Assume that prior to implementing ABC, Faiq Bhd used a conventional cost system that applied all manufacturing overhead to products based on machine-hours (40,000 hours). Determine the unit cost using the previous cost system. (6 marks) QUESTION 2 Kai Production is a theater company that uses job order costing system. The company's direct materials consists of outfits and supports while the direct labour consists the theater artist, directors and the extras. The overhead costs of the company include telephone & electricity, depreciation of equipment, salaries and wages for employees. The company applies its overhead cost based on direct labour hours. Below are the following estimations: Direct labour hours to support all theaters Fixed manufacturing overhead 200,000 RM 980,000 Variable overhead cost per direct labour hour RM 3.00 During the year, Kai produced a theater titled A Day To Remember. The following information was available with respect to this job: Direct material Direct labour cost Labour hours used RM 30,000 RM 12,000 500 hours Required: 1. Compute the predetermined overhead rate. (3 marks) ii. Determine the manufacturing cost assigned to the theater titled A Day To Remember. (5 marks) *** **. END OF QUESTION ***