Amben Ltd 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 per cent 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 labour $3,260

Machine hours140

Calculate the price which the customer for Job 808 would be notified to pay.

The following data are given for sub-questions 3 & 4 below.

The budget of AMBEN Ltd provides for the manufacture and sale of 10,000 singlets per month, the unit standard cost in $, made up as follows:

$

Direct materials3.50

Direct labour0.50

Direct expenses0.25

Variable production overheads0.60

Fixed overheads2.00

while the selling price of each singlet is $12.00 Production and sales quantities for Periods I and II were as follows:

Period IPeriod II

Production10,000 10,000

Sales8,00012,000

Question 3. Compute the profit for periods I and II assuming the company uses marginal costing.

Question 4.Compute the profit for periods I and II assuming the company uses absorption costing.

Question 5. Give brief comments on your answers to questions 3 and 4 above.