Marine Suppliers Ltd undertakes a range of work, including making sails for small sailing boats on a made-to-measure basis.

The business expects the following to arise during the next month:

The business has received an enquiry about a sail. It is estimated that this particular sail will take 12 direct labour hours to make and will require 20 square metres of sailcloth, which costs £10 per square metre.
The business normally uses a direct labour hour basis of charging indirect cost (overheads) to individual jobs.
What is the full (absorption) cost of making the sail?

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Direct labour cost Direct labour time Indirect labour cost 60,000 6,000 hours 9,000 Depreciation of machinery 3,000 Rent 5,000 Heating, lighting and power 2,000 Machine time 2,000 hours Indirect materials 500 Other miscellaneous indirect production cost elements (overheads) 200 Direct materials cost 6,000