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Away Ltd make trailers. The selling price is 20% on the full cost. The company uses Traditional Absorption costing to calculate its selling prices. Away
Away Ltd make trailers. The selling price is 20% on the full cost. The company uses Traditional Absorption costing to calculate its selling prices. Away Ltd have investigated their budgeted overheads for the next year as follows: Cost Pool E Cost Driver total number of cost drivers per cost pool Sales orders 5,000 Sales orders 200 Machining 16,000 Machine hours 32,000 Machine set ups 7,000 Set ups 350 Warehousing (storage costs) 12,000 Weeks in warehouse 300 Quality control 4,000 Quality Inspections 400 Other overheads 20,000 Direct labour hours 5,000 TOTAL 64,000 Job XZ4 is for a new customer who says that if the price is above $1,900 he will buy from a competitor. Job XZ4 has the following specifications: Job XZ4 Specifications Direct materials $1,000 Direct labour 20 hours @ $10 per hour Sales orders Machine hours 100 Set ups 5 Weeks in warehouse Inspections 4e) Discuss two other qualitative (non-financial factors) the company should consider 4 marks before agreeing to fulfil order XZ4. + 2
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