Novak manufactures garden benches. Each bench passes through two departments, machining and finishing. Budgeted sales for the year ending 31 March 2015 are 5000 benches. The following information is available.

Each bench requires $34 direct material. 

Required

a. Calculate an appropriate overhead absorption rate for each department. 

Novak has been asked by a customer to quote for the supply of 120 benches. He prices all jobs in order to make a gross profit margin of 40 per cent. 

Required

b. Prepare a detailed quotation to give to the customer.

c. Explain the difference between job costing and batch costing.

Transcribed Image Text:

Machining Finishing Budgeted direct labour hours per bench 1.5 2.5 Budgeted machine hours per 3 0.5 bench Budgeted overheads for the year $48 000 $7.00 $30 000 Direct labour rate per hour $8.00