ACC116: Earmax Bhd. is a company that involves in the business of manufacturing speakers for a home theatre company: Introduction to Cost Accounting Assignment, UiTM, Malaysia

University Universiti Teknologi MARA (UiTM)
Subject ACC116: Introduction To Cost Accounting


Earmax Bhd. is a company that involves in the business of manufacturing speakers for a home theatre company. The company has three production centres namely Assembly, Machining and Finishing Department and two service centres namely Canteen and Store. The basis used for Assembly and
Machining Department is machine hours and for Finishing Department, the basis use is direct labour hours.

The budgeted overhead for the year ended 30th June 2022 is as follows:


Additional information related to the allocation of overhead is as follows:


Modern Co produces three products, Spike A, Spike B and Spike C, all made from the same material. Currently, the company employs traditional absorption overhead costings in determining overhead for its products. The company is now considering an activity-based costing system to improve the profitability of its business. The information for Spike A, Spike B and Spike C provided is as follows.


The annual overhead costs for Modern Co are provided as follows:



  • Briefly explain the implementation problems often experienced when ABC is first introduced.
  • Briefly explain the following term
    i. Cost Allocation
    ii. Cost Apportionment
    iii. Overhead Absorption Rate
  • Discuss any five differences between activity-based costing and traditional costing for overhead computation.

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