ANSWERS

QUESTION 1
(a)
Predetermined OH rate = 𝑅𝑀250,000
𝑅𝑀200,000
X100%

=
125%

(b) Applied MOH for each job

111 222 333
= RM35,000 x 125% = RM65,000 x 125% = RM80,000 x 125%
= RM43,750 = RM81,250 = RM100,000

(c) Total cost for each jobs

111 222 333 Total
(RM) (RM) (RM) (RM)
Direct material 145,000 320,000 55,000 520,000
Direct labour 35,000 65,000 80,000 180,000
Applied MOH 43,750 81,250 100,000 225,000
Total cost 223,750 466,250 235,000 925,000

(d) Related journal entries

Date Particulars Dr. Cr.
(RM) (RM)
Work in Process Inventory 520,000
Raw Materials Inventory 520,000
Work in Process Inventory 180,000
Salaries Payable 180,000
Work in Process Inventory 225,000
Manufacturing Overhead 225,000
Manufacturing Overhead 233,000
Expenses payable/Accounts payable/Cash 233,000
Finished Goods Inventory 690,000
Work in Process Inventory 690,000
Cost of Goods Sold 690,000
Finished Goods Inventory 690,000
Accounts Receivable 1,210,000
Sales 1,210,000

(e) Journal entry for under-applied

Date Particulars Dr. Cr.
(RM) (RM)
Cost of Goods Sold 8,000
Manufacturing Overhead 8,000
(225,000 – 233,000)
QUESTION 2
(a)
Pokok Industries Sdn Bhd
Production Cost Report – Processing Department
For the Month Ended 30 April 2021
Physical
Units
QUANTITIES :
Units to account for:
Beginning WIP 8,000
Started 28,000 EQUIVALENT UNITS

Total Units 36,000 Direct Conversion

Units accounted for: Materials Costs
Completed 33,000 33,000 33,000
Ending WIP 3,000 *3,000 **1,500
Total Units 36,000 36,000 34,500

COSTS : Direct Conversion Total

Costs to account for: Materials Costs
(RM) (RM) (RM)
Beginning WIP 11,300 ***16,800 28,100
Cost added during period 33,700 ****128,100 161,800
Total Costs 45,000 144,900 189,900
÷ Equivalent Units ÷36,000 ÷34,500 -
Cost per Equivalent Unit RM 1.25 RM4.20 RM5.45
COST RECONCILIATION SCHEDULE
Costs accounted for: (RM)
Completed and transferred out (33,000 units x RM5.45) 179,850

Ending Work-in-process: (RM)

Direct Materials (3,300 units x RM1.25) 3,750
Conversion Costs (1,500 units x RM4.20) 6,300
Total 10,050
Total Costs 189,900

*3,000 x 100% ***RM 10,800 + RM 6,000

**3,000 x 50% ***RM 70,000 + RM 58,100
(b) Journal entries to record current cost and cost transferred-out.
Date Particulars Dr. Cr.
April 30 Work in Process Inventory: Processing Department 189,900
Raw Materials Inventory 33,700
Salaries Payable 70,000
Manufacturing Overhead 58,100
(To record current costs of Processing Department)

Work in Process Inventory: Packaging Department 179,850

Work in Process Inventory: Processing Department√ 179,850
(To record cost transferred-out from Processing Department)

QUESTION 3
(a)
(i) Absorption Costing:

Direct material cost RM10

Direct labour cost RM8
Variable Overhead cost RM400000
100,000 RM4
Fixed Overhead cost RM800000
100,000 RM8
Total product cost per unit RM30

Al-sejati Sdn. Bhd.

Statement of Comprehensive Income – Absorption Costing
For the year ended 31 December 2021
Sales (RM 60 x 17,000) 1,020,000
Less Cost of goods sold :
Beginning Inventory (RM 30 x 3,000) 90,000
+ Cost of goods manufactured (RM30 x 18,000) 540,000
Cost of Goods available for sales 630,000
–Ending Inventory (RM 30 x 4,000) (120,000)
Cost of goods sold 510,000
Under-applied Manufacturing Overhead 3,000
Adjusted Cost of goods sold (513,000)
Gross profit 507,000
Less Operating expenses:
Fixed selling and administrative 185,000
Variable selling and administrative (RM 8 x 17,000) 136,000 (321,000)
Net profit 186,000
Working:
Absorption costing
Actual variable Overhead (18,000 x 4) RM 72,000
- Variable applied Overhead (18,000 x 4) RM 72,000
Under-applied Variable overhead RM 0

Actual fixed Overhead RM 147,000

- Fixed applied Overhead (18,000 x 8) RM 144,000
Under-applied Fixed overhead RM 3,000

Overall: MOH underapplied RM3,000

(iii) Marginal Costing :

Direct material cost RM10
Direct labour cost RM8
Variable Overhead cost RM4
Total product cost per unit RM 22

(iv)

Al-sejati Sdn. Bhd.

Statement of Comprehensive Income – Marginal Costing
For the year ended 31 December 2021
Sales (RM 60 x 17,000) 1,020,000
Less Variable cost
Variable cost:
Beginning inventory (RM 22 x 3,000) 66,000
+ Cost of goods manufactured(RM 22 x 18,000) 396,000
Cost of goos available for sales 462,000
– Ending Inventory (RM 22 x 4,000) ( 88,000)
Variable cost of goods sold 374,000
+ Variable selling and administrative (RM 8 x 17,000) 136,000
Total Variable cost (510,000)
Contribution margin 510,000
- Fixed cost:
Fixed selling and administrative 185,000
Fixed overhead 147,000 (332,000)
Net profit 178,000
(b)
i) Direct Material

AQ X AP AQ X SP SQ X SP
45,000 x 1.40 (20,000 x 2) x 1.40
67500 =63,000 =56,000

Price variance Quantity variance

4500 (UF) 7,000 (UF)

ii) Direct Labour

AH X AR AH X SR SH X SR
120,000 x 2 (20,000 x 4) X 2
300,000 =240,000 =160,000

Labour price variance Efficiency variance

60,000(UF) 80,000(UF)

QUESTION 4
(a)
(i)
Reject Accept Net income
Increase / Decrease
RM RM
Sales (6,000 x 1.60) 9,600 9,600
(Less) Variable costs
Direct materials 3,540 3,540
(17,550/45,000 + 0.20) x 6,000)
Direct labour (9,450/ 45,000 x 6,000) 1,260 1,260
Variable Manufacturing Overhead 1,800 1,800
(13,500/45,000 x 6,000)
Packed and distributed 900 900
(150 x 6)
Contribution margin 2,100 2,100

Sales unit = 126,000/2.80 = 45,000

(ii) Acceptance of this order will increase company profit RM2,100.

(b)
Make Buy Net Income
Increase/ (Decrease)
RM RM RM
Direct materials 124,000 124,000
(3.10 x 40000)
Direct labour 108,000 108,000
(2.70 x 40000)
Variable manufacturing 24,000 24,000
overhead
(0.60 x 40000)
Fixed manufacturing 100000 86,000 14,000
overhead or or
(0.35 x 40,000) 14,000 -
Buy from outside 288,000 (288,000)
(7.20 x 40000)
Opportunity costs 25,000
Total costs 381,000 374,000 7,000
or or
295,000 288,000

Megah Jaya Sdn Bhd should buy the component from outside to save RM7,000.