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Perkasa Berhad is a bracelets jeweller headquartered in Kuala Lumpur. The company uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of direct labour hours (DLH).

At the beginning of January, Perkasa Berhad had no work-in-process inventory or finished goods inventory. Balance in the raw materials inventory accounts for RM50,000 of direct materials at the beginning of January 2020. Jobs 101, 102 and 103 were created in January. The company estimates a total of 560 DLH to be worked for the orders at a manufacturing overhead cost of RM196,000.

The following transactions were recorded during the month:

Date	Transactions	RM
Jan. 1	Raw materials (assuming no indirect materials) purchased for use in production	350,000
5	Raw materials requisitioned for use in production: 20% of the materials were classified as indirect materials	275,000
5	Rental cost on building per annum: 80% related to factory operations 20% related to sales office	40,000
25	Salary and wages incurred: Direct labour (600 hours) Indirect labour Selling & administrative salaries	245,000 60,000 23,000
26	Utility incurred: 70% related to factory operations 30% related to selling & administrative activities	65,000
31	Depreciation recorded for the year: 50% related to factory equipment 50% related to sales office equipment	7,000
31	Manufacturing overhead costs was applied to jobs

A summary of source documents reveals the following information:

Job	Material Requisition Slips	Labour Time Tickets
101	RM70,000	RM80,000 for 190 hours
102	100,000	120,000 for 280 hours
103	50,000	45,000 for 130 hours
General Use	55,000	60,000

Jobs 101 and 103 were completed and sold for RM364,400 and RM508,800 respectively at the end of the month, and Job 102 was incomplete.

Required:

1. Prepare journal entries to record the transactions for January 2020.

Exclude journal entries for source documents and the completion and sales of Jobs 101 and 103 in your answers. (10 marks)

2. Prepare a Cost of Goods Manufactured Schedule for January 2020. (5 marks)

3. Journalise the adjusting entry to assign the under- or overapplied manufacturing overhead, assuming the balance is allocated entirely to Cost of Goods Sold. (3 marks)

4. Assuming Setia Berhad received an order for a batch of limited edition bracelets for an upcoming expo. The batch order is for 1,000 similar units of bracelets.

Discuss the suitability (applicability) of the current job order costing system in costing the batch order. (2 marks)

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