LMN makes hand embroidered sweatshirts to customer specifications. The following detail is available from the company's budget: Cost centre Overheads (RM) Activity Cutting and sewing
- LMN makes hand embroidered sweatshirts to customer specifications.
The following detail is available from the company's budget:
Cost centre | Overheads (RM) | Activity |
Cutting and sewing | 93,000 | 37,200 machine hours |
Embroidering and packing | 64,000 | 16,000 direct labor hours |
Administration, selling and distribution overhead is absorbed into batch costs at a rate of 8% of total production cost. Selling prices are set to achieve a rate of return of 15% of the selling price.
Batch number 92 (an order for 45 shirts) has been produced. Details of activity on this batch are as follows:
Direct materials RM113.90
Direct labor
Cutting and sewing (0.5 labor hours at RM9 per hour) RM4.50
Embroidering and packing (29 labor hours at RM11 per hour) RM319.00
Machine hours worked in cutting and sewing 2
Fee paid to designer of logo for sweat shirts RM140.00
Calculate the selling price per shirt in batch number 92.
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