Question
Jakaya Limited, manufactures a single product Bakadi. The company uses job costing methos. Jakaya limited has received a job order from a customer whose estimated
Jakaya Limited, manufactures a single product Bakadi. The company uses job costing methos. Jakaya limited has received a job order from a customer whose estimated cost is as follows: Direct materials 10 kilograms at Sh.40 per kilogram and direct labour for 20 hours at Sh.20 per hour. Variable overheads are recovered at the rate of Sh.8 per labour hour. Fixed production overheads are budgeted to be Sh.440,000 per annum and are recovered on the basis of labour hours. There are 10,000 budgeted labour hours per annum. The distribution and administrative costs are recovered at the rate of Sh.200 per job. It is the companys policy to load profit at the rate of 30% on sales.
Required: As the cost accountant of Jakaya limited, advise the management on the price that the customer should pay for a single job
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