Question: QUESTION 3 Ombak Decorating uses a job order cost system to collect the costs of its interior decorating business. Each client's consultation is treated as

QUESTION 3 Ombak Decorating uses a job order cost system to

QUESTION 3 Ombak Decorating uses a job order cost system to collect the costs of its interior decorating business. Each client's consultation is treated as a separate job. Overhead is applied to each job based on the number of decorator hours incurred. Listed below are data for the current year Lowest overhead Highest overhead Lowest decorator hours Highest decorator hours RM960,000 RM982,800 4,000 4,500 Every job can trace the direct materials and direct labour accurately and are all variable. However the overhead is a mix of both fixed and mixed costs. This has caused a headache for Ombak where they don't always know what is the profit margin for each job. Required: a. Calculate the fixed and variable cost portions of the overhead. (5 marks) b. Propose two different ways that Ombak can set the contract price (10 marks) C. Assume that there is a client whose job will take up RM10,000 in materials and RM6,000 in direct labour with 250 decorator hours. Calculate the price for the contract. (10 marks) (TOTAL: 25 MARKS) QUESTION 3 Ombak Decorating uses a job order cost system to collect the costs of its interior decorating business. Each client's consultation is treated as a separate job. Overhead is applied to each job based on the number of decorator hours incurred. Listed below are data for the current year Lowest overhead Highest overhead Lowest decorator hours Highest decorator hours RM960,000 RM982,800 4,000 4,500 Every job can trace the direct materials and direct labour accurately and are all variable. However the overhead is a mix of both fixed and mixed costs. This has caused a headache for Ombak where they don't always know what is the profit margin for each job. Required: a. Calculate the fixed and variable cost portions of the overhead. (5 marks) b. Propose two different ways that Ombak can set the contract price (10 marks) C. Assume that there is a client whose job will take up RM10,000 in materials and RM6,000 in direct labour with 250 decorator hours. Calculate the price for the contract. (10 marks) (TOTAL: 25 MARKS)

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