ACC203 Managerial Accounting Assignment, SUSS, Singapore: The Company Uses Normal Costing And Manufacturing Overhead Is Applied At The Rate Of 230% Of Direct Labor Cost

Question 2

EaziMov Ltd is a major distributor of a well-known brand of diesel forklifts in Singapore. Last year, it started a new division, the Electric Division to sell non-polluting electric forklifts which are ideal for indoor business

The following cost data for the year ending 30 June 2022 relate to Aggro-tech Ltd.

The company uses normal costing and manufacturing overhead is applied at the rate of 230% of direct labor cost.

Over or under-applied manufacturing overhead is closed on an annual basis to the cost of goods sold and this has been included in the cost of goods sold shown above.

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Required:
(a) Determine the missing amounts in each of the divisions shown above.
(b) Using Method 2 shown in Seminar 2 slide #33, calculate the amounts of the manufacturing overhead variance to be charged to work in process, finished goods inventory, and cost of goods sold for the Diesel Division at the end of 31 December 2023 if the proration method is used.
(c) Present the necessary journal entries for (b).
(d) Explain the effect on profit if all the overhead variances had been closed to the cost of goods sold, rather than being prorated.

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