Question 2

Real Ltd received an order for 10 race coil-over struts for team Blackout from California. The units were manufactured as Job #525 and passed through three cost centres. Fabrication Hydraulics and Finishing whose overhead absorption rates are as follows:

• Fabrication $80 per machine hour
• Hydraulics $36 per labour hour
• Finishing $48 per man hour

The following production costs and data were recorded:

Direct Materials $2 520

Labour:

• Fabrication 160 hours @ $22.00 per hour
• Hydraulics 280 hours @ $16.00 per hour
• Finishing 120 hours @ $18.00 per hour

80 machine hours were recorded in Fabrication, and General and Administration overheads are absorbed at 20% of production cost. Profit is calculated at 40% mark-up.

Required:

1. Calculate the total cost and selling price for job #525 showing a summarized job card. (20 marks)
2. Prepare the job account for job #525. (5 marks)

(Total 25 marks)