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asar Babil LLC is one of the largest manufacturers and sellers of unique, custom-made residential doors in the Sultanate of Oman. The company has developed
asar Babil LLC is one of the largest manufacturers and sellers of unique, custom-made residential doors in the Sultanate of Oman. The company has developed plans for expanding their network of operations for sales and services in different regions of Sultanate. Qasar uses a job order cost system and overheads are applied to production on the basis of direct labor cost. The company estimated manufacturing overhead to be OMR 24,000 and direct labor costs to be OMR 20,000 for the year 2021. Following information are also available: Actual Costs Incurred During 2021 Direct materials used Direct labor cost incurred Factory Insurance Indirect labor OMR 30,000 OMR 21,000 OMR 500 Factory maintenance Rent on factory building OMR 7,500 OMR 1,000 OMR 11,000 OMR 2,000 Depreciation factory equipment Required: a. Explain why Qasar Babil LLC uses a job order costing system? (2 Marks)
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