QUESTION $1(25$ Marks$)$ Maju Trading Sdn$.$ Bhd$.($MTSB$)$ uses a job$-$costing system where productions pass from the Machining Department, to the Assembly Department, and finally to finished$-$goods inventory. The Machining Department is heavily automated; whereas, the Assembly Department is labour intensive. MTSB has two service departments: Repair Department and Power Department which directly support the two production departments. MTSB has always used a plant$-$wide overhead rate using direct labor hours as the base to calculate the manufacturing overhead cost. Mr$.$ Zamri, the new management accountant however, claimed that this method is quite problematic in determining product cost. Instead, he advised the company to use departmental overhead rates and consider the costs of using service departments in calculating manufacturing overhead. The planned operating costs and expected levels of activity for each department are presented in the following schedule: Production Departments Service Departments Estimated Amount Machining Assembly Power Repair Manufacturing overhead RM$90,000$ RM$75,000$ RM$30,000$ RM$15,000$ Machine hours $8,000$ hours $900$ hours Direct labour hours $2,000$ hours $6,000$ hours Kilowatt hours $1431756-513$ Repair hours $594306430-$ The allocation bases for the departments are as follow: Machining Department Machine hours Assembly Department Direct labor hours Power Department Kilowatt hours Repair Department Repair hours One of the jobs completed during the year is Job $775.$ The actual cost and activity measures incurred by the job are as follow: Direct materials RM$8,300$ Direct labour rate RM$25\mathrm{.}00$ per hour Direct labour hours $25$ hours $(5$ hours in Machining, $20$ hours in Assembly$)$ Machine hours $53$ hours $(45$ hours in Machining, $8$ hours in Assembly$)$ Indirect materials RM$450$ Indirect labours RM$300$ Other manufacturing overheads RM$250$ Required: a$)$ Based on the cost information above: i$)$ Calculate the plant$-$wide predetermined overhead rate based on total overhead costs $($both service department and production department$),$ assuming that MTSB does not bother to allocate service department costs. $(2\mathrm{.}5$ marks$)$ ACT$3201$ CONFIDENTIAL ii$)$ From your answer in part $($a$)($i$),$ compute the cost of Job $775.(3$ marks$)$ iii$)$ Compute the overhead over$-$applied or under$-$applied for Job $775.(2$ marks$)$ b$)$ i$)$ Use the step$-$down method to allocate service department costs to the production departments. Allocate the cost of the Power Department first. $(7\mathrm{.}5$ marks$)$ ii$)$ Calculate departmental predetermined overhead rates for Machining Department and Assembly Department using your answers from part $($b$)($i$).(3$ marks$)$ iii$)$ Based on the rates in part $($b$)($ii$),$ compute the cost of Job $775.(3\mathrm{.}5$ marks$)$ iv$)$ Compute the overhead overapplied or underapplied for the Job $775.(1\mathrm{.}5$ marks$)$ c$)$ Briefly explain the rationale behind Mr$.$ Zamri$$s suggestion with regards to the methods used in manufacturing overhead allocation. $(2$ marks$)$