Question No33:
A company has been asked to quote for a job. The company aims to make a net profit of
30% on sales. The estimated cost for the job is as follows:
Direct materials 10 kg @ £10 per kg
Direct labour 20 hours @ £5 per hour
Variable production overheads are recovered at the rate of £2 per labour hour.
Fixed production overheads for the company are budgeted to be £100,000 each year and
are recovered on the basis of labour hours.
There are 10,000 budgeted labour hours each year. Other costs in relation to selling, distribution and administration are recovered at the rate of £50 per job.
The company quote for the job should be
A. £572
B. £637
C. £700
D. £833
Answer: C
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