QUESTION 3: PART 1: STORM LTD The business incurs the following costs for the next financial year: Direct materials cost 110,000 Indirect materials 23,000 Direct labour time 18,000 hours Rent 26,000 Depreciation of equipment 45,000 Supervisors' salaries 65,000 Design time costs (overheads) 31,000 Direct labour cost 432,000 Other miscellaneous indirect cost elements (overheads) 17,000 The business has received an enquiry about a loft conversion. It is estimated that it will take 220 direct labour hours to complete. It will also require direct materials at 21,300. The policy of the business is to charge a mark-up of 45% on the cost of the job when charging customers. The business normally uses a direct labour hour basis of charging indirect cost (overheads) to individual jobs. Requirements: Calculate the full (absorption) cost of converting the loft and price to be charged to the customer. Provide all supporting workings in detail (4 marks). PART 2: SKY BAKERY LTD Sky Bakery Ltd manufactures identical pies in batches. During April period, it produced 1,500 batches in total. Each batch produced includes 250 pies. The total costs incurred in March were: Ingredients 274,000 Direct Labour 228,300 Other relevant overheads 97,700 Required: A. Calculate cost per batch and cost per pie (2 marks). B. If selling price is 3.8 per unit, calculate the total profit (1 mark).