Mid Semester Exam Notification Revision Question
Mid Semester Exam Notification Revision Question
Chapter 2
Read all pages.
Test covers: 21 questions (13 calculations) – including wages calculations and entries.
Chapter 3
Read all pages.
Test covers: 13 questions (11 calculations and entries)
Rrevision questions (to be discussed by Mr Madhavan during revision session on
Monday, 8 April 2024)
Question 1
Following are the balance of inventories on
1 Jan 2023 31 Dec 2023
Finished Goods 400,000 500,000
Work in process 250,000 300,000
Material 190,000 280,000
During the year:
Sales 1,000,000
Material purchases 600,000
Labor cost (5% indirect) 400,000
Indirect material (30% of cost of direct material used)
Equipment (70% used by factory) 1,500,000
Equipment insurance 90,000
Factory Rental 13,000
Depreciation of office building 100,000
Depreciation of office furniture 12,000
Depreciation of equipment 20,000
Other overhead 150,000
Additional Information:
• Rental is shared between office & factory on the ratio of 4:1
You are required to prepare the schedule of cost of goods manufactured & profit loss
statement for the year ended 31 Dec 2023
Question 2
THE NASI LEMAKS produces frozen nasi lemak for local consumption. The summary of
details for THE NASI LEMAKS are as follows:
Required to calculate:
a. Direct Material cost
b. Direct Labour cost
c. Manufacturing overhead
d. Prime cost
e. Conversion cost
f. Cost of goods manufactured.
g. Cost of goods sold.
h. Period cost
i. Gross profit
j. Net profit
Question 3
Kiddos involved in producing customised toys. It uses a job order costing system and the
factory overhead is allocated based on machines hours. Total factory overhead is estimated to
be RM750,000 for the current year. Kiddos estimate that its total machine hours for the year
are 50,000 hours.
The following information is for the month of June 2023:
During June, the factory worked on its existing product: Job TAP and Job SHOOT as well as
new product SLAP. Materials (including supplies) purchased during the month amounted to
RM20,000. Materials issued to TAP amounted to RM3,000, SHOOT was issued materials of
RM3,500 and SLAP was started during the month and received materials amounting
RM5,500.
During the month, the direct labor rate was RM15 per hour. Labour and machine hours
recorded for the month of June 2012:
Job Direct Labor Hours Machine Hours
TAP 200 350
SHOOT 250 420
SLAP 300 330
During June, indirect material used were RM1,100, indirect labour cost incurred were
RM3,000, insurance amounted to RM2,500 (all relates to the factory operations);
depreciation on factory machinery amounted to RM6,000 and rental amounted to RM30,000
(20% of rental is related to the administrative office).
Job TAP and SLAP were completed during June and transferred to Finished Goods. Job TAP
was sold for RM40,000 and Job SLAP was sold for RM50,000 in June.
Required:
a. Show the workings for pre-determined overhead rate
b. Prepare the necessary journal entries to record the transaction.
c. Prepare a Job Cost Sheet for Job TAP & SLAP
d. Determine whether the overhead was under or over applied. What is the record?
e. Work in Process Inventory A/C
Question 4
TERBANG FACTORY manufactures customised flight miniatures for luxury gifts.
TERBANG FACTORY uses a job order costing system and the factory overhead is allocated
based on machine hours. Total factory overhead is estimated to be RM800, 000 for the
current year. TERBANG FACTORY estimates that its total machine hours for the year are
80,000 hours.
During January, the factory worked on its existing product: MELINDO and AYER ASIA as
well as new product PRATAN. Materials (including indirect materials) purchased during the
month amounted to RM300, 000.
Direct material cost, direct hours and machine hours recorded for the month of January 2018
were:
Job Direct materials Direct Labour Machine Hours
Hours
MELINDO 35,000 120 190
AYER ASIA 30,000 150 110
PRATAN 45,000 130 125
During the month, the professional direct labour rate was RM15 per hour.
During February, following manufacturing overheads were incurred: indirect labour worth
RM800 were incurred, indirect material cost worth RM900 were used, factory maintenance
incurred amounted to RM500 incurred but yet to be paid (all relates to the factory
operations); depreciation on factory machinery amounted to RM700 and insurance of factory
workers that were prepaid RM350.
MELINDO & PRATAN and were completed during January 2018 and transferred to
Finished Goods. EMAS was sold for RM90, 000 and PRATAN was sold for RM60, 000 in
the same month itself.
Required:
a. Calculate pre determined overhead rate
b. Calculate cost of direct material used & recording
c. Total wages payable & recording
d. Applied manufacturing overhead & recording
e. Overhead variance & recording
f. Calculate cost of goods completed and recording
g. Calculate and record sales.
h. Calculate WIP balance at the end of the month
i. Calculate and record actual manufacturing overhead
Question 5
Melinda worked for 350 hours during the month of Jan 2023. Her normal working month
consists of 270 hours (Monday – Friday), of which 20% of the hours were non-productive
idle time. Out of 80 hours overtime worked, 50 hours were worked for housekeeping purpose
and remaining were worked to complete the production requirement to fulfil the customer’s
request. The human resource department has the following scheme for overtime worked: 50%
premium if overtime worked on any day.
Melinda’s normal wage rate is RM 40 per hour.
Required: calculate the total wages, the amount to be treated as manufacturing overhead,
direct labor cost and the records.
Question 6
Hungry Factory has the following policy for its labours:
Wage rate per normal hours RM50
Overtime premium of 75% for weekdays
During the month of February 2018, a total labour of 600 hours was worked. labour has a
total contracted hour of 450 hours of which 50 hours were non-productive idle time.
The remaining total 150 hours were overtime worked during the month of February. The
details of the overtime worked are as follows:
A total of 60 hours was worked during the month to complete and deliver the order
to the customer on time.
The remaining 90 hours were worked on other factory production and factory
support activities.
Required: calculate the total wages, the amount to be treated as manufacturing overhead,
direct labor cost and the records.
Question 7
A factory produces 25,000 units with a total cost of $300,000 and total fixed cost of
RM100,000.
a. What is the variable cost incurred?
b. If 30,000 units were produced, (i) what is the total fixed cost, (ii) total variable cost &
(iii) total cost
Question 7
A factory produces 40,000 units with a total cost of $500,000 and total fixed cost of
RM200,000.
a. What is the variable cost incurred?
b. If 45,000 units were produced, (i) what is the total fixed cost, (ii) total variable cost &
(iii) total cost
Part 2: Additional Revision Question (Textbook). – to be discussed by UFM Lecturers.
These questions are to-be attempted and you can perform a self-check with suggested
solution below. Should you have any problem in understanding or answering them,
please refer to tutor during tutorial session.
Chapter 2: Practice these questions too: 2.25, 2.26, 2.29, 2.38 & 2.40
Chapter 3: Practice these questions too: 3.27, 3.28, 3.29, 3.32, 3.34, 3.35, 3.43, 3.49,
3.53
Suggested solution (textbook)
Solutions:
EXERCISE 2-25 (10 MINUTES)
1. Hours worked....................................................................................................... 40
Wage rate.............................................................................................................. $ 18
Total compensation.............................................................................................. $720
2. Classification:
3. Classification:
4. Net income:
Sales $1,495,000
revenue……………………………………..
Less: Cost of goods 926,400
sold……………………….
Gross $ 568,600
margin……………………………………...
Selling and administrative expenses:
Salaries…………………………………… $133,000
…...
Building depreciation ($80,000 x 25%)…... 20,000
Other……………………………………… 195,000 348,000
……
Income before $ 220,600
taxes……………………………..
Income tax expense ($220,600 x 30%)……….. 66,180
Net $ 154,420
income………………………………………...
5. The company sold 11,500 units during the year ($1,495,000 ÷ $130). Since 160 of
the units came from finished-goods inventory (1,350 – 1,190), the company would
have manufactured 11,340 units (11,500 – 160).
2. Net income:
Sales revenue (20,000 units x $185)………… $3,700,000
Cost of goods sold (20,000 units x $130)….. 2,600,000
Gross $1,100,000
margin…………………………………….
Selling and administrative expenses……….. 860,000
Income before $ 240,000
taxes……………………………
Income tax expense ($240,000 x 30%)……… 72,000
Net $ 168,000
income……………………………………….
3. (a) No change. Direct labor is a variable cost, and the cost per unit will remain
constant.
(b) No change. Despite the decrease in the number of units produced, this is a
fixed cost, which remains the same in total.
(c) No change. Selling and administrative costs move more closely with changes
in sales than with units produced. Additionally, this is a fixed cost.
(d) Increase. The average unit cost of production will change because of the per-
unit fixed manufacturing overhead. A reduced production volume will be
divided into the fixed dollar amount, which increases the cost per unit.
EXERCISE 3-27 (20 MINUTES)
Since the company accumulates overapplied or underapplied overhead until the end of
the year, no adjustment is made to cost of goods sold until December 31.
NOTE: Actual selling and administrative expense, although given in the exercise, is
irrelevant to the solution.
JOB-COST RECORD
Direct Material
Date Requisition Number Quantity Unit Price Cost
4/1 101 400 $.80 $320
4/5 108 500 .30 150
Direct Labor
Date Time Card Number Hours Rate Cost
4/1 – 4/8 Various time cards 500 $12 $6,000
Manufacturing Overhead
Date Activity Base Quantity Application Rate Cost
4/15 Direct-labor hours 500 $2 $1,000
Cost Summary
Cost Item Amount
Total Direct Material $ 470
Total Direct Labor 6,000
Total Manufacturing Overhead 1,000
Total Cost $7,470
Unit Cost $ 7.47
Shipping Summary
Units Remaining
Date Units Shipped In Inventory Cost Balance
4/30 700 300 $2,241*
1. Raw material:
2. Direct labor:
$360,000
Direct labor =
1.6
NOTE: Actual selling and administrative expense, although given in the exercise, is
irrelevant to the solution.
$997,500
1. Predetermined overhead rate = = $13. 30 per hour
75,000 hours
2. To compute actual manufacturing overhead:
Depreciation $ 231,000
Property taxes 21,000
Indirect labor 82,000
Supervisory salaries 200,000
Utilities 59,000
Insurance 30,000
Rental of space 300,000
Indirect material:
Beginning inventory, January 1........................................................ $ 48,000
Add: Purchases...................................................................................
94,000
Indirect material available for use....................................................$142,000
Deduct: Ending inventory, December 31......................................... 63,000
Indirect material used........................................................................ 79,000
Actual manufacturing overhead.............................................................. $1,002,000
actual applied
Overapplied = manufacturing – manufacturing
overhead overhead overhead
To apply manufacturing overhead to work in process ($20,400 = 1,700 ´ $12 per hour).
(k)
Finished-Goods Inventory................................ 1,100
Work-in-Process Inventory.................... 1,100
PROBLEM 3-49 (CONTINUED)
Calculation
Account Explanation Amount* Percentage of Percentage
Work in Process Job P82 only $ 2,500 12.5% 2,500 ¿ 20,000
Finished Goods Job N08 only 12,500 62.5% 12,500 ¿ 20,000
Cost of Goods
Sold Job A79 only 5,000 25.0% 5,000 ¿ 20,000
Total $20,000 100.0%