Question 2 Real Ltd received an order for 10 race coil-over struts for team Blackout...
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Accounting
Question 2
Real Ltd received an order for 10 race coil-over struts for team Blackout from California. The units were manufactured as Job #525 and passed through three cost centres. Fabrication Hydraulics and Finishing whose overhead absorption rates are as follows:
- Fabrication $80 per machine hour
- Hydraulics $36 per labour hour
- Finishing $48 per man hour
The following production costs and data were recorded:
Direct Materials $2 520
Labour:
- Fabrication 160 hours @ $22.00 per hour
- Hydraulics 280 hours @ $16.00 per hour
- Finishing 120 hours @ $18.00 per hour
80 machine hours were recorded in Fabrication, and General and Administration overheads are absorbed at 20% of production cost. Profit is calculated at 40% mark-up.
Required:
- Calculate the total cost and selling price for job #525 showing a summarized job card. (20 marks)
- Prepare the job account for job #525. (5 marks)
(Total 25 marks)
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