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  1. avatar says

    Sir, i dont get this question.
    A business operates a job costing system and has the aim of making a net profit of 30% of sales. The cost estimates for one particular job are as follows :
    DM : 80 kg at $5 per kg
    DL : 40 hours at $6 per hour
    The total overheads are budgeted at $120K and are absorbed on the basis of direct labour hours. The budgeted labour hours are 50,000.
    What price should be quoted for this job? (to the nearest $)?

    (answer is 1052)

    • Avatar of John Moffat says

      This is not a process costing question – please post questions like this in the F2 Ask the Tutor Forum and not as a comment on a process costing lecture.

      DM: 80 x 5 = 400
      DL: 40 x 6 = 240
      Overheads: 40 x 120000/50000 = 96

      Total cost – 736

      For 30% profit on sales, selling price = 736 x 100/70 = 1052

  2. avatar says

    Answer
    units $
    Materials 8,000 20,000
    Labour o/h 3,840
    Overheads 8,000 8,000
    Normal loss (10%) (800) (800)
    7,200 $23,040
    There is a mistakes in answer
    Materials 8000 20 000
    Labour O/H 3840
    ———————
    Overheads 8000 8000 (Here it should be 23840 not 8000)
    Normal Loss (800) (800)
    ——————-
    7200 $ 23040

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