Management Accounting. Solve this Berjaya Berhad has an excess manufacturing capacity (in normal time) of 2,000 direct labourhours available over the next two months. The company is considering two options in order toutilise this spare capacity. The first alternative is to early manufacture its future orders that woulddefinitely reduce the overtime hours in the next few months. The premium overtime rate is 30%of basic rate of RM4.00 per hour. The overheads are charged at RM 6.00 per direct labour hourand 40% of the overheads vary with the number of labour hours worked.Alternatively, Berjaya Berhad has an intention to quote for a special job order that can becompleted over the next two months. This job requires a total of 2,200 labour hours and will beusing 960 kg of material A, 570 kg of material B and other materials with a cost of RM3,360.The purchase cost for material A is RM3.02 per kg and RM5.26 per kg for material B. MaterialA is being used by the company continuously and has a replacement cost of RM3.10 per kg,while the current replacement cost for material B is RM5.85 per kg. Material B has a disposalvalue of RM2.30 per kg and has no other use and would not be replaced.Required:a. Establish the relevant costs that could be quoted by Berjaya Berhad for the special job order,compared with the alternative use of the spare capacity.b. Evaluate the adoption of the relevant cost in (a) above as the pricing policy for the special joborder.

Management Accounting is the part of accounting system which provides the managers adequate…

a. Establish the relevant costs that could be quoted by Berjaya Berhad for the special job order, compared with the alternative use of the spare capacity. b. Evaluate the adoption of the relevant cost in (a) above as the pricing policy for the special job order.

a. Establish the relevant costs that could be quoted by Berjaya Berhad for the special job order, compared with the alternative use of the spare capacity. b. Evaluate the adoption of the relevant cost in (a) above as the pricing policy for the special job order.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 4EB: Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all...

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