You are the cost accountant of an engineering concern which has three departments - preparation, machining and
Question:
You are the cost accountant of an engineering concern which has
three departments - preparation, machining and assembly. The
budgeted direct labour hours for the workshops are 8,000, 12,000 and
10,000 respectively. Fixed factory overheads are budgeted at $12,000
for the year and variable factory overheads are as follows:
Preparation$4000
Machine shop $ 30000
Assembly$20000
The agreed hourly wage rates are:
Preparation$3.60
Machine shop $4.20
Assembly$1.50
The company wishes to quote for job #255:
Raw materials$4160
Direct labour: Preparation100hours
Machine shop500hours
Assembly400hours
Painting by outside contractor$800
Distribution quote from haulage company $280
a) Administration and selling overheads are to be absorbed in job
costs at 5% of the total of all other costs.
b) Fixed overheads are absorbed on the basis of plant-wide average.
Required:
Calculate the total cost and quotation price of job #255 where a mark-up of 25% on cost is applied