TUTORIAL 5: JOB AND Batch COSTING Student will be tested in test and also in final on this topic (Job costing) Section A threstion 1 Job No.909 was completed in three departments of a factory. Costs details for this job were: Department Direct Direct Direct labour materials wages horns (RM) (RM) X 650 800 1,000 Y 940 300 400 Z 230 665 700 The production overheads are absorbed into the jobs using predetermined departmental overhead absorption rates based on the direct laboru' hours. The administrative overhead is absorbed as a percentage of production cost. The gures for the last cost period for the three departments on which the current overhead recovery rates are base were as follows: Department X Y Z Direct materials (Rh/I) 6,125 11,360 25,780 Direct wages (RM) 9,375 23,400 54,400 Direct labour horns 12,500 36,000 64,000 Production overheads (RM) 5,000 7,200 9,600 Administrative overheads (RM) 2,870 14,686 8,978 Required: Prepare a cost card showing the cost of .1 ob No.909 and to show the price charged, assuming a prot margin of 20%. Question 2 Cee Sdn. Bhd. has three production departments. It has been using a single production overhead absorption rate, expressed as a percentage of direct wages for many years. In recent years, it has invested heavily in machinery especially for Department A. The managing director has learned that departmental absorption rates would result in more accurate job costs. He seeks your opinion to calculate an overhead absorption rate for each department. The following are the budgeted and actual data for December 2019: Department Direct Wages Direct labour Machine hours Production (RM) hours overhead cost (RM) Budget: Department: A 10,000 4,000 20,000 100,000 B 40,000 20,000 5,000 28,000 C 20,000 20,000 12,000 Total 70,000 44,000 25,000 140,000 Actual: Department: A 12,000 4,100 19,000 1 10,000 B 46,000 22,000 4,800 24,000C 18,000 19,000 - 13,000 Total 76,000 45,100 23,800 147,000 Required: (a) Calculate the current production overhead absorption rate (OAR). (b) Calculate an appropriate overhead absorption rate (OAR) for each of the departments and briey explain the reason(s) for your choice of the absorption basis. (c) Dtuing December 2019, one of the jobs, Job P007 incurred the following costs and horns in the department: Direct Direct Direct Machine materials wages labom' hours hours (RM) (RM) Department: A 400 66 22 100 B 110 160 80 25 C 50 25 25 - The company uses a mark-up of 25% as gross prot. (i) Calculate the production cost and gross prot for Job P007 using the crurent absorption rate. (ii) Calculate the production cost and gross prot for Job P007 using the departmental overhead absorption rate calculated in part (b). (d) Calculate the over! (under) absorption for each of the departments for the period using the current absorption rate. (e) Calculate the overt (under) absorption for each of the departments for the period using the departments for the period using the departmental overhead absorption. Question 3 (Batch Costing) Iris Sdn. Bhd. produces and sells barbie dolls. The following costs have been incurred for an order of 600 dolls for the Batch No. 123 during March 2019: Direct materials Direct labour: : RM22,000 : 200 hours at RM4.50 per Assembly hour : 350 hours at RM6.00 per Machining hour . : 140 hours at RM4.00 per The 0110\" mg . . . information Finishing hour shows the budgeted production overheads for the year 2019 based on the budgeted activity levels: Budgeted Production production Budgeted activity departments overheads (RM) level (labour hours) Assembly 14,000 2,800 Machining 22,000 4,000 Finishing 12,000 2,500 Selling and administrative overheads are 20% of production cost. The company sets a prot margin of 20% to determine the budgeted selling price. Required: (a) Calculate the total cost of Batch No. 123, the unit cost and the selling price per unit. (13) Explain ANY THREE (3) reasons why companies calculate pre-determined overheads absorption rates. Question 4 (Services Costing) Jessie Owens Bhd. is a haulage contractor and operates three tow trucks. The following infolrnation is available: Loading costs: RM9 per tonne Fuel costs: RMO.75 per kilometre Repair costs: 45 cents per kilometre Depleciation: RM1 .50 per kilometre plus RM1 50 per month per vehicle Drivers' wages: RM900 per month per vehicle Supervision expenses: RM1,000 per month General expenses: RM650 per month During the month of June, it is expected that all the three tow trucks will be fully utilised. A total of nine trips will be made. The return journey will be empty. For trips 1 to 9 the tonnes carried are 68, 56, 80, 64, 52, 80, 58, 52, 50 respectively. The kilometres travelled one way for trips 1 to 9 are 720, 1060, 1560, 460, 880, 1920, 360, 400 and 540 respectively. Required: Calculate the total cost and average cost per tonne kilometre for the month of June