Cima C01 Exam Question No 11

Question No 11:

An engineering firm operates a job costing system. Production overhead is absorbed at the rate of $8.50 per machine hour. In order to allow for non-production overhead costs and profit, a mark up of 60% of prime cost is added to the production cost when preparing price estimates.
The estimated requirements of job number 808 are as follows:
Direct materials             $10,650
Direct labor                 $3,260
Machine hours                 140
The estimated price notified to the customer for job number 808 will be

A. $22,256
B. $22,851
C. $23,446
D. $24,160

Answer: C