A. Magnificent Century manufactures ring binders that come in various sizes and can accommodate an array of
Question:
A. Magnificent Century manufactures ring binders that come in various sizes and can accommodate an array of paper sizes. The binders can also be customized and embossed with the customers’ own logo.
The company has been approached to produce a batch of 1,500 binders by an insurance company. The following illustrate the cost for a typical batch of 100 binders:
Cost | RM |
Direct materials | 30.00 |
Machine set-up | 10.00 |
The followings are additional details related to the job prepared by the production department:
▪ Direct employees are paid on a piecework basis. Magnificent Century pays a piece rate of RM0.30 for each output produced.
▪ Design and art work RM150.00.
▪ Special mold is needed to emboss the client’s logo. The cost of the mold is RM500.00. ▪ Magnificent Century absorbs production overheads at a rate of 20% of direct wages cost.
▪ Selling, distribution and administration overheads is allocated at 10% of total production cost.
▪ Magnificent Century requires a profit margin of 20% of sales value.
Required:
a. Determine the price to be quoted, clearly identifying Prime Cost, Production Cost and Total Cost.
b. Describe three (3) differences between job and batch costing.
Vector Mechanics for Engineers Statics and Dynamics
ISBN: 978-0073212227
8th Edition
Authors: Ferdinand Beer, E. Russell Johnston, Jr., Elliot Eisenberg, William Clausen, David Mazurek, Phillip Cornwell