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Ch06 Job, Batch and Service Costing

This document provides solutions to review questions about job, batch, and service costing. It includes examples of calculating predetermined overhead rates and absorbed overhead. It also provides journal entries for raw material, labor, and overhead accounts. Finally, it discusses differences between service and product costing and provides an example of calculating vehicle operating costs.

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Andrew Chong
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51 views

Ch06 Job, Batch and Service Costing

This document provides solutions to review questions about job, batch, and service costing. It includes examples of calculating predetermined overhead rates and absorbed overhead. It also provides journal entries for raw material, labor, and overhead accounts. Finally, it discusses differences between service and product costing and provides an example of calculating vehicle operating costs.

Uploaded by

Andrew Chong
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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SOLUTIONS MANUAL

CHAPTER

6 Job, Batch and


Service Costing

Answers to Review Questions


1 (a) Predetermined overhead rate:
(b) Overheads absorbed into job number 101:
RM9000,000
= RM2.50 × 600 labour hours = RM1,500
360,000
2 (a) Total overheads applied to job number 101:
RM2.50 × 60,000 labour hours = RM150,000
(b) Overheads absorbed = RM150,000
Actual overheads incurred = RM175,000
Under absorbed overheads = RM25,000
(c) Cost of sales after adjusting for under absorbed overheads:
RM325,000 + RM25,000 = RM350,000

3 Job number 141 Job number 142


RM RM
Opening balance 22,400 –
Direct materials 4,000 7,500
Direct labour 2,100 3,500
2,100 3,500
Overheads absorbed × 15 = 2,625 × 15 = 4,375
12 12
Total cost 31,125 15,375

4 (a) Journal entries:


(i) Raw materials RM35,000
Accounts payable RM35,000

(ii) Work-in-progress RM1,000


Raw materials RM1,000

(iii) Work-in-progress RM1,950


Wages payable RM1,950
Solutions Manual
2

(iv) Work-in-progress RM1,500


Overheads control (overheads absorbed) RM1,500

(v) Overheads control RM1,250


Other payables RM1,250
Cost of goods sold (under absorbed) RM250
Overheads control RM250

(vi) Finished goods RM4,450


Work-in-progress RM4,450

(vii) Cost of goods sold RM4,450


Finished goods RM4,450
Accounts receivable RM5,562.5
Sales revenue RM5,562.5

(b) Ledger accounts:


Raw materials
Accounts payable RM35,000 Work-in-progress RM1,000

Accounts payable
Raw materials RM35,000

Work-in-progress
Raw materials RM1,000
Wages payable RM1,950
Production overheads RM1,500

Production overheads
Other payables RM1,250 Work-in-progress RM1,500
Cost of goods sold RM250

Wages payable
Work-in-progress RM1,950

Other payables
Production overheads RM1,250

Finished goods
Work-in-progress RM4,450 Cost of goods sold RM4,450

Cost of goods sold


Finished goods RM4,450 Sales RM4,700
Production overheads RM250

Sales
Cost of goods sold RM4,700 Accounts receivable RM5,562.50
Job, Batch and Service Costing
3

(c) Schedule of cost of manufacture


RM
Direct materials 1,000
Direct labour 1,950
Production overheads absorbed 1,500
Less: Overheads under absorbed (250)
Total cost of manufacture 4,200

(d) Statement of profit and loss


RM
Sales 5,562.50
Less: Cost of goods sold 4,700.00
Profit 862.50

5 The main ways in which costing of services differs from the costing of manufactured products
are:
(a) Generally in service costing, the cost of direct materials used will be relatively lower as
compared to labour, direct expenses and overhead costs;
(b) Indirect costs represents a higher proportion of total costs compared with product costing;
(c) The output in service costing is intangible and therefore it is difficult to establish a measurable
cost unit; and
(d) Services cannot be stored.

6 Vehicle operating cost per kilometre:


Cost per vehicle per annum
RM
Depreciation (W1) 10,500
Road fund licence and insurance 2,290
Tyres (W2) 3,360
Servicing (W3) 3,250
Fuel (W4) 20,000
Driver 18,000
Total 57,400

Workings:
(a) Depreciation per annum: = RM10,500 per annum

80,000
(b) × 8 × RM210 = RM3,360 per vehicle per annum
40,000
80,000
(c) × RM650 = RM3,250
16,000
80,000
(d) × RM0.80 = RM20,000
3.2

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