Calculate hkss predetermined overhead rate

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Reference no: EM133090108

Question - The business has the following numbers for the year 2021.

Budgeted Actual

Hong Kong Shoe Sdn Bhd (HKS) manufactures bespoke leather shoes to Direct labour hours for the year 8,000 dlh 8,139 dlh

Manufacturing overheads for the year RM52,000 RM57,560

HKS used direct labour hours (dlh) as its costs driver because manufacturing is mainly done by skilled craftsmen.

HKS is producing a pair of leather shoes for a bank manager. The cost data for the order is as follows.

Direct materials RM40.28

Direct labour hours 12 dlh

HKS pays its workers a rate of RM18 an hour.

Required -

a. Calculate HKS's predetermined overhead rate for 2021.

b. Calculate the cost of making the bank manager's leather shoes.

c. Calculate the amount of overhead absorbed for the 2021.

d. Calculate the amount over or under absorbed overhead. Also state whether overhead was over or under absorbed for 2021.

e. Prepare the journal entry to discharge this amount of over or under absorbed overhead.

Reference no: EM133090108

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