Costing Group Assignment

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COSTING GROUPASSIGNMENT

-ACOF 014-

MAFIA ENTERPRISE

SECTION :1 BM

LECTURER :MISS JULIANA ANIS BT RAMLI

DATE SUBMIT:12 JANUARY 2009


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TOPIC PAGES

INTRODUCTION 2

COSTING PROBLEM & SOLUTION3 & 4

DIRECT MATERIAL 5

DIRECT LABOUR 8

OVERHEAD COSTS 10


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Our group have discussed and camewith an idea to open a company namely,Mafia Enterprise. Our company producesa type of local traditional biscuits,Samprit. We have decided to produce

various flavours of Samprit.

There are certain stages of calculation while producing this product.Firstly, are the calculations of directmaterials such as eggs, flour, sugars and

strawberry essence. Next, the directlabour. Every company needs workers toproduce their product and sell them inthe market.

Our company also uses the effort ofthe labour. Overhead costs are also

being used without us realising it. Forexample, electricity, water, rental,depreciation of machines used and manymore. Well, we shall move on to knowmore about our product, Sampritincluding the calculations required.


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Mafia Enterprise is a manufacturing

company, which uses three productiondepartments to make its product. It has

the following factory costs, which are

expected to be incurred in the year 31

December. Consequently, the company is

thinking about changing its basis for

overhead absorption from a percentage of

direct labour to a machine either hour or

labour hour basis.

Therefore these are the following

solutions provided:


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1) DIRECT MATERIALS

2) DIRECT LABOURS

3) OVERHEAD


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To produce 1 kg of Samprit :

Eggs > 6 x 0.30 = RM1.80

Sugar > 400 g x 1.45 = RM0.58

Flour > 200 g x 2.00 = RM0.40

Vanilla essence> 1 t/s x 0.60 = RM

0.60

Flavour > 1 bottle x 2.00 = RM2.00

Cost to produce 1 kg = RM5.38of Samprit.


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CALCULATION OF DIRECT MATERIALSUSING WACO METHOD:

DATERECEIPTS ISSUES STOCK BALANCES

QUANTITY PRICE AMOUNT QUANTITY PRICE AMOUNT QUANTITY PRICE AMOUNT

Jan-01 5 5.38 26.9 5 5.38 26.9

Jan-05 3 5.4 16.2 3 5.4 16.2

8 5.39 43.1

Jan-10 6 5.39 32.34 6 5.39 32.34

2 5.39 10.76

Jan-12 10 6 60 10 6 60Jan-14 5 5.8 29 5 5.8 29

17 5.9 99.76

Jan-17 15 5.9 88.5 15 5.9 88.5

2 5.9 11.26

Jan-20 5 5.5 27.5 5 5.5 27.5

7 5.54 38.76

Jan-25 6 5.54 33.24 6 5.54 33.24

1 5.54 5.54

Jan-28 10 5.5 55 10 5.5 55

11 5.5 60.54

Jan-31

8 5.5 44 8 5.5 44

3 5.51 16.54


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Benefits of using WACOmethod:

Less complicated to administer

than LIFO and FIFO.

Cost comparisons between jobsare easier.

Reduce price fluctuation effect.


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PIECEWORK SCHEME

GOOD UNITSSPOILT>10%

PIECEWORK WAGES

GUARANTEEDMINIMUM % X

HOURLY RATE XACTUAL HOURS

TOTAL WAGEPAYMENT

48 - 10

= 38

10 / 48 =

0.21%

20 X RM2 = RM 408 X RM3 = RM24 75% X RM5 X RM40

= RM 150

RM 150

RM 64


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ADVANTAGES OF USING

PIECEWORK SCHEME:

To increase production and reducesoverheads per unit.

To provide competitive edge duringinflation.

To improve employees morale.

To attract efficient workers.


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Mafia Enterprise has prepared the followingbudgeted information for the coming year:

PARTICULAR DEPARTMENT TOTAL (RM)

Direct Wages Machining 2005

Production 2955

Packaging 1500

Indirect Wages Machining 906Production 2761

Packaging 807


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OVERHEAD COST TOTAL (RM)

Factory Rent 11675

Business Rates 2320

Heat & Lighting 786

Machinery Power 1878

Depreciation 4000

Canteen Subsidy 3050


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Other information is available as a follow:

Machining Production Packaging Total

No. of Employees5 5 5 15

Floor SpaceOccupied(m) 160 120 60 340

Horse Power ofMachinery 1500 400 1000 2900

Value ofMachinery (RM00)

150 80 90 320

No. of LabourHours 30000 11000 6300 47300

No. of MachineHours 12000 400 500 12900


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Mafia Enterprise overhead analysis sheet forthe year ended 31 December:

Expenses Basis Machining Production Packaging Total

Indirect WagesActual/ Allocated 906 2761 807 4474

Factory RentFloor space area(m) 5494 4121 2060 11675

Business RatesFloor space area(m) 1092 819 409 2320

Heat & LightFloor space area(m) 370 277 139 786

Machinery Power Horse Power ofMachinery

971 259 648 1878

DepreciationValue of Machinery 1875 1000 1125 4000

Canteen SubsidyNo. of Employees 1017 1017 1017 3051

Total 11725 10254 6205 28184


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Overhead Absorption Rates:

Machinery Production Packaging

Costdriver

11725/12000 10254/11000 6205/6300

OARRM 0.98

per machinehours

RM 0.93per labour

hours

RM 0.98per labour

hours


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Calculation of the selling price of 1 kg ofSamprit:

(Mafia Enterprise profit margin is equal to 20%)

Machining Production Packaging

DirectMaterials

300 200 100

DirectLabours

50 100 70

DirectExpenses

150 350 250

Overhead0.98x120 0.93x220 0.98x80

118 205 78Total cost 618 855 498Totalproductioncost

1971

Mark-up(20%) 394


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selling priceper kg

2365/300

~RM

7.90/kg

So, the selling price of 1 packet of Samprit

is RM7.90.

PREPARED BY:

MUHAMMAD ALIF BIN NORAZMI

(AA80908)(GROUP LEADER)

MUHAMMAD IKHWAN BIN ABU BAKAR

(AA80866)

AHMAD FARIZ BIN AHMAD PUAD

(AA80860)

AKMAL FARHAN BIN AZIZ

(AA80886)

ADIB FADZLI BIN AHMAD FAUZI

(AA80890)


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Costing Group Assignment