Principles of Costing

Assignment 2
[100 marks]
FA36024 – Principles of Costing
Name: ……………………………………………………………….            Lecturer: ……………………….
Intake Group: …………………………………………………………..   Date: …………………………………….

1.       Answer ALL questions. This is can be a GROUP or INDIVIDUAL assignment.
2.       Your assignment should be typed neatly using either the following applications; Microsoft Word or Microsoft Excel or Google Docs or Google Sheets.
3.       Font size and font type is any font as long as it is readable and does not crowd the assignment.
4.       State which Assignment set that your group are assigned to complete the assessment.
5.       A list of references used to complete this assessment must be included at the end of the assessment (if any).
6.       For submission purposes, each student needs to submit the soft copy using the link provided in the Google Classroom.
7.       Ensure the originality of the works submitted and if there is any plagiarism or “copy and paste” piece of work detected; it will cause you to lose marks significantly.


  1. A manufacturing company has two production departments: Machining and Assembly, and two service departments: Tooling and Maintenance.

The budgeted monthly activity level of the Machining Department is 400 machine hours and the budgeted overhead cost RM18, 000. The Assembly Department’s overhead budget is RM12, 600 per month during which 3,000 direct labour hours are expected to be worked.
In determining the overhead budgets of the production departments, the expenses of the service department were dealt with as follows:

Tooling 80% to Machinery
10% to Assembly
10% to Maintenance
Maintenance 60% to Machining
30% to Assembly
10% to Tooling

During November 2009, the Machining Department booked 540 hours of machine time production, and the Assembly Department booked 4,500 direct labour hours.
Overhead incurred during the month was as follows:

  Machining Assembly Tooling Maintenance
Material 5,600 6,200 4,800 1,800
Labour 7,100 2,200 5,700 3,200
Miscellaneous 1,700 1,900 1,500 1,800

You are required to prepare the overhead analysis sheet for each production department showing the amount of any over/under absorption of overheads.

(15 marks)

  1. An engineering company has 5 cost centres: 3 production departments – machine shop, welding shop and assembly shop – and 2 service departments – maintenance and power house. The following departmental rates are used:
Machine shop RM4 per machine hour
Welding shop 100% of direct labour cost
Assembly shop RM2 per direct labour hour

The following are the allocated cost:

  Machine Welding Assembly Maintenance Power
Indirect wages 1,200 3,400 900 750 650
Indirect material 2,400 3,600 1,500 1000 400
Repairs and maintenance 9,000 7,500 4,500 6,500 2,950

 Other costs:      Rent                                                     15, 900
Power                                                    3, 500
Lighting                                                 5,650
Depreciation of equipment                  15,000
Insurance on equipment                        3,000
The following basis of apportionments is available:

  Machine Welding Assembly Maintenance Power
Direct labour cost RM25,000 RM18,000 RM10,000
Machine hours 9,000 12,000 5,000
Area (sq. meters) 400 400 300 50 50
Direct labour hrs 12,000 13,500 10,500
Effective horsepower 40 30 20 5 5
No. of employees 20 10 30 20 20
Equipment value RM40,000 RM30,000 RM30,000 RM25,000 RM25,000

It is decided that the cost of the service cost centre should be apportioned as follows:
Machine     Welding Assembly Maintenance Power House
Maintenance               15              50              25                    –                       10
Power house               10              70              10                  10                         –
You are required to:

  1. prepare an analysis of the overheads using the basis provided
  2. using the continuous allotment method apportion the service cost centre costs among the production cost centres and service cost centres

(15 marks)


  1. A company undertook 3 jobs in August 2008. All jobs were started in August 2008. The costs associated with the job, for the month of August were as follows:


  Job 1 Job 2 Job 3
Materials issued from stores 6,500 9,600 4,500
Materials returned to store 60 100
Special materials purchased 250 570 830
Direct wages 1,200 2,800 900

The overheads for 2008 are estimated to be RM105, 000 and the direct labour hours as 25,000. Overhead is to be absorbed on a direct labour hour basis. Actual overheads incurred in January were RM4, 000. Direct workers are to be paid RM4 per hour.
Job 1 and 3 were the only job completed and dispatched in August. The selling price is RM18, 590 and RM28,000.

  1. Tabulate cost cards for Job1, 2 and 3.
  2. The Work In Progress and production overhead control accounts; and
  3. The costing profit and loss accounts


(15 marks)  

Marks Allocation:

Question no. Items/Criteria Marks
Part 1                 
1 Stock record card 15
2 Stock valuation 15
3 Stock planning 9
4 Stock planning 6
Part 2                 
5 Overheads analysis sheet 15
6 Overheads absorption 15
7 Job costing 15
•    Cover page
•    Presentation
•    Submission in Google Classroom
Total 100

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