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Exercise 3 ABC Company received an order for the manufacturing and supply of a given...

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Accounting

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Exercise 3 ABC Company received an order for the manufacturing and supply of a given item of machine. The details of the expenses are given below. You are required to estimate the cost and suggest the suitable price for the supply of the machine if the company is willing to charge a profit at 15% on the total cost. 1. The direct materials required for the manufacturing of the machine amounted to 20 kgs at the rate of 20 per kg. 2. The direct labour cost involves the 40 labour hours at the rate of 15 per hour 3. Direct expenses amounted to RO.1,000 4. Factory overheads are charged at 15% of the prime cost while the office and administration overheads are absorbed at 17% of the factory cost. 5. The selling and distribution overheads are charged at 20% of the cost of production

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