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- This topic has 4 replies, 2 voices, and was last updated 10 years ago by ashvin982.
- AuthorPosts
- February 20, 2014 at 12:44 pm #159544
Good morning Sir, Can you help me please?
1. A business operates a job costing system and has the aim of making a net profit of 30% on sales. The cost estimates for one particular job are as follows:
Direct materials 80kg at $5 per kg
Direct labour 40 hours at $6 per hour
The total overheads are budgeted at $120,000 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 $)?
February 21, 2014 at 10:14 am #159685You do not say which part is causing you a problem.
The materials are $400 (80 x 5)
The labour is $240 (40 x 6)
Overheads are charged at 120000/50000 = $2.40 per hour.
So the overheads for the job are 40 x $2.40 = $96This means that the total cost is 400 + 240 + 96 = $736
Since they want the profit to be 30% of sales, it means that the cost will have to be 70% of sales and so the selling price will have to be 736 / 70% = $1,051 (to the nearest $)
February 21, 2014 at 12:39 pm #159695Thanks Sir, my problem was the profit…sorry about that..
February 21, 2014 at 1:07 pm #159703No problem – I hope that it is now clear 🙂
February 22, 2014 at 2:43 am #159764yeah, clear as crystal..hehe
thanks again - AuthorPosts
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