Company X is preparing a job cost estimate that will be used to provide a quote for a potential
customer. Estimated costs for the job are to be based on the following:

Direct materials N$2 893
Direct labour 210 hours at a basic rate of N$8.00 per hour

Direct production staff also receive a bonus each period.

The bonus is paid on actual hours worked
at a rate per hour calculated using the following formula:

{[(time allowed – time worked) ÷ time allowed] × basic rate per hour}

The bonus to be included currently in the costing of all jobs is based on the following estimates for
the period:

Total time worked 3 400 labour hours,

Total time allowed 4 000 labour hours

Production overheads Absorbed at 20% of prime cost (including labour bonus) + N$9·00 per direct
labour hour

Non-production overheads are absorbed at 25% of total production cost
Quoted prices are calculated to provide Company X with a net profit margin of 20% of sales.

Questions To Solve

a) Calculate the total estimated PRODUCTION cost of the job.
b) Calculate the price that should be quoted for the job