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Pieman Products Ltd makes road trailers to the precise specifications of individual customers. The following are predicted to occur during the forthcoming year, which is
Pieman Products Ltd makes road trailers to the precise specifications of individual customers. The following are predicted to occur during the forthcoming year, which is about to start: Direct materials cost 50.000 Direct labour costs Direct labour time 160.000 16.000 hours 25.000 8.000 Indirect labour cost Depreciation of machine Rent and rates 10.000 Heating, lighting and power Indirect materials Other indirect costs 5.000 2.000 1.000 Machine time 3.000 hours All direct labour is paid at the same hourly rate. A customer has asked the business to build a trailer for transporting a racing motorcycle to races. It is estimated that this will require materials and components that will cost 1.150. It will take 250 direct labour hours to do the job, of which 50 will involve the use of machinery. Required: Deduce a logical cost for the job, and explain the basis of dealing with overheads that you propose
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