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Brief Introduction

Royal Brunei Airlines is a local Brunei Darussalams airline that has been operating
since April 14th 1975 which was found in November 18 th 1974. The RB airlines is
based at Bandar Seri Begawan has currently 11 aircrafts.

They are:
1 of Airbus319
6 of Airbus320
4 of the Boeing787Dreamliner

As mentioned in the website, Royal Brunei Airline's Board and

Management unveiled a bold and aggressive strategy to develop the airline's status
as a world-class player. The plan was to make the organisation well-structured and

At the same time, the airline would invest in a fleet renewal programme that would
include both the acquisition of new aircrafts and the upgrading of its current
equipment with the latest state-of-the-art technology. The core objective was to raise
the levels of comfort and safety, two factors that are paramount to passengers.

The delivery of two new Airbus A319 aircrafts in August and September 2003 marked
the beginning of Royal Brunei's fleet renewal programme. Two more Airbus A320s
were delivered in December 2003 and January 2004. In 2010, Royal Brunei Airlines
leased six Boeing 777-200ER aircraft. In October 2013, Royal Brunei Airlines were
the first South East Asian carrier to take delivery of the Boeing 787 Dreamliner

Today, the airline operates a fleet of four Boeing 787 Dreamliners, four Airbus A320s
and two Airbus A319s.

However, in this assignment we are going to focus on the cabin services provided by
RB Airlines and investigate on how they carry out the job costing. Currently the
company has recruited at about 142 batch of crews since the first day it started its
business. There are two departments team up in carrying out the job costing which
are the Cabin Services department, Inventory Depatment and Rostering Department.
So what services does the RB Airline offer?

They offer mainly customer service given to the passengers on pre-board and on
board flying from one destination to the others using the RB airlines flights. In order
to do carry out the job costing, the company needs records that will assign the costs
to jobs. The record keeping that the company use is both manual and computerized
which uses the software programmes that have functions to assist the process
particularly in terms of labour hours.

The cost flow to the work accounts as each job is completed. A job is completed is
when 1 sector is completely done for example a flight that carries passanger from
Brunei to Manila and from Manila to Brunei on the same day. As the cabin crew
carries out their work in progress, it accumulates the material costs, labour costs and
manufacturing overhead costs until it reaches the stage of being finished good in
which in this case the flight has finished operating for the Manila flight for that
particular day.

What document or procedure do you use to collect the costs of the services
performed for each customer?

In RB airline, each job will have associated with it a job costing sheet. This job
costing sheet records costs material, labour and also manufacturing overhead. The
sheet is usually applied to the computer program by the Rostering Department team.
The Rostering department uses a special accounting software that made the tracking
much easier.

An example for manual job costing sheet is as below:

Materials Direct Labour Manufacturing Overhead
Date Reference $ Time Sheet Hours $ $/crew hour

How do they assign the cost of direct materials to each job?

The direct materials used are for example the food and drinks that are catered for the
flight such as the meals, the condiments, coffee tea packets, bottles of soft drinks
and so on. Once it is being used, the stocks will be recorded in the requisiton sheet
by the Cabin Services Leading.


Date Item
6 Coke 25
Sprite 25
Condiments 20
Coffee 30
Tea 30
Ahmad Isa Leading Cabin
Issued by Crew
Total 130

The journal entry

Date Account Debit Credit
6 Work in Progress Inventory 130
Raw Materials Inventory 130
130 130

How do they assign the cost of direct labour to each job?

In order to record direct labour, a flying hours in the roster schedule are used. The
rostering department will record the flying hours spent on each flight separately so
the flying hours detail when entered to an accounting software will allocate the costs
to the job. The roster shows the crew name, the rate of pay, the job number and the
total to be charged to the job.

Crew Ahmad Isa Rate/hour 7
Job Cabin Crew Leading
Date 26/04/2016
Start 18:00 Finish 0:30
Flying Hours Amount
total 6 Total 42

The Journal entry

Date Account Debit Credit
26/04/2016 Work in Progress Inventory 42
Wages payable 42
42 42

The asset of work in progress has increased and also the liability of wages payable
has increased.

How do they assign the cost overhead to individual jobs?

For most companies that carries out job costing need to determine the allocation
base. In other words, what will determine the allocation. Generally, the choice is
between the direct labour hours or the machine ours. For airlines, they usually use
direct labour hours.

For example:

Overhead for the month are estimated: 3000.00

Direct labour hours are estimated : 120.00
Allocation rate: 3000/120 = $25 per direct labour hour

Date Account Debit Credit

26/04/2016 Work in Progress Inventory 150
Manufacturing overhead 150
150 150

The asset of work in progress has increased.

The flying hours was 6 hours
The overhead applied is 25 x 6 = 150

There the job costing sheet is now filled

Direct Materials Direct Labour Overhead
Date Reference $ Time Sheet Hours $ $/crew hour
26/04/2016 BWN-MNL Flight 130 100 6 42 150
Totals 130 42 150

The RB Airline also records depreciation of equipment, utilities, amenitires,

administrative costs and other costs that contributes to manufacturing overhead.

The figures are for example:

Depreciation 100
Amenities 200
Admin Costs 300
Other Costs 180

Journal entry
Date Account Debit Credit
26/04/2016 Manufacturing Overhead 150
Depreciation 100
Amenities 200
Admin Costs 300
Other Costs 180


The overhead rates are the estimates of costs. As they are not actual costs, the
actual costs may differ. Therefore at the end of every period, adjustments must be

Manufacturing overheads
Debit Credit
Actual Overhead Overhead applied to
Incurred jobs

If the actual overhead is equal to applied overhead, there should not be any
adjustments made.

When the actual overhead is greater than the applied overhead, we need to apply
more overhead.

More overhead must be applied to balance and close the manufacturing overhead
account. IF the amount is small the amount can go to the cost of good sold.

For example, supposed actual overhead is $460 and applied overhead is $450. An
additional $10 must be applied as credit to manufacturing overhead.

Journal Entry
Date Account Debit Credit
26/04/2016 Cost of goods sold 10
Manufacturing overhead 10
If the applied overhead is greater than the actual, the adjustment involves a debit in
the manufacturing overhead and a credit to the cost of good sold.

Journal Entry
Date Account Debit Credit
26/04/2016 Manufacturing overhead 10
Cost of goods sold 10

If the applied overhead is far less than the actual overhead, the additional overhead
to be applied should be shared between the 3.
Work in Progress Inventory
Finished Goods Inventory
Cost of Goods Sold

For example if the amount to be applied is $600 and the balance in the accounts are:
Work In Progress 4000
Finished Goods 1000
Cost Of Goods Sold 5000

Apportion the additional overhead

Amount per dollar= 600/10000 = $0.06 to be applied

Work in Progress= 4000 x 0.06 = 240

Finished Goods = 1000 x 0.06 = 60
Cost Of Goods Sold = 5000 x 0.06 = 300

So, Journal Entry woule be..

Date Account Debit Credit

26/04/2016 Work in Progress 240
Finished Goods 60
Cost OF Goods Sold 300
Manufacturing 600