Office Works Factory (OWF) Ltd. manufactures multiple products (e.g., various types of office chairs, document holding shelves, monitor stands and tables etc.) and uses a job-costing system with two direct-cost categories (direct materials and direct production labour) for each product and one production overhead cost pool for all products.

OWF provides the following budgeted costs information for the whole factory for all jobs:

Budget for 2021Direct materials costs$2 250 000Direct production labour costs$1 700 000Production overhead costs$4 760 000

OWF uses budgeted direct labour costs as the basis for allocating its production overhead costs.

Required:

(a) Why does OWF use direct labour costs as the basis for allocating its factory overhead costs to various jobs?

(b) It is September 16, 2021 today. A customer wants to buy 300 of OWF's directors' chairs and has requested OWF to quote a price per chair within next 30 minutes. Will it be possible for the OWF to adoptactual costingfor determining costs of its chairs for quoting the price? Explain.

(c) The management accountant of OWF quickly collated cost data of making 300 directors' chairs (Job 725). The direct costs data are as follows:

Direct materials costs$40 000

Direct production labour costs$30 000

Indirect costs are allocated based on budgeted factory overhead cost allocation rate. Calculate the total cost of job 725 usingnormal costing.(2 marks)

(d) Based on the total production cost of Job 725 calculated in the previous question, what is the cost per chair?

(e) OWF uses 'cost-plus' policy for pricing of its products. If the OWF's mark-up is 20% then what price per chair should OWF quote to this customer? (Round the price to nearest dollar)