QUESTION 3 (25 marks) Spatula Ltd. has produced the following budgeted information for next year. Direct wages 75,000 Direct materials 145,000 Depreciation 13,000 Indirect salaries 20,000 Rent & insurance 10,000 Electricity 7,000 Hours Machine hours 5,000 Direct labour 25,000 hours 3a) Explain with examples, direct costs and indirect costs. (6 marks) Job RX5 has been received, it uses 40 of materials and 3 hours of direct labour and 6 hours of machine time. Using the above information calculate: 3b) The Overhead Absorption Rate (OAR) (5 marks) 3c) The Prime cost of Job RX5 (5 marks) 3d) The Full Cost of Job RX5 (4 marks) 3e) Explain why companies calculate the full cost of a job/ unit. (5 marks)