Lenco Ltd has begun to produce a new product, called Sigma for which the following cost estimates
Fantastic news! We've Found the answer you've been seeking!
Question:
Lenco Ltd has begun to produce a new product, called Sigma for which the following cost estimates have been made:
K'000 | |
Direct Materials | 27 |
Direct Labour (5 hrs@K6000) | 30 |
Variable production Overheads (5hrs at K2,500) | 25 |
Total variable cost | 82 |
Production fixed overheads are budgeted at K30 million per month and budgeted direct labor hours are 25,000 per month. The absorption rate will be based on labor hours. The company wishes to make a profit of 20% on full production cost from product Sigma.
Required
- Ascertain the full cost-plus based price.
- Ascertain the marginal cost-plus based price.
Related Book For
Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher
Posted Date: