Discussion 1- ACT-500: Managerial Accounting

Assignment Question(s):   [10 marks]
Q1. What is the difference between the product cost and period cost? Give some examples for each type.         [2.5 marks]
Q2. What do you understand by utilization rate? Give an example.     [2.5 marks]
Q3. The AMS Manufacturing Company uses a job costing system with machine hours as the allocation base for overhead. The company uses normal costing to develop the overhead allocation rate. The following data are available for the latest accounting period:
Estimated fixed factory overhead cost SAR 160,000
Estimated machine-hours 100,000
Actual fixed factory overhead cost incurred SAR 170,000
Actual machine-hours used 110,000
Jobs worked on:
Job No. Machine Hours Used
1020 12,000
1030 18,000
1040 15,000
1050 10,000
a. Compute the overhead allocation rate.     [2 Marks] 
b. Determine the overhead allocated to job 1040.    [2 Marks]
c. Determine total over or under applied overhead at the end of the year.    [1 Mark]

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