Question 8 The production division of Dreadnought Ltd produces engines for garden tools at the following standard costs per engine. Materials Labour Overhead RM 18.00 8.00 17.00 Total Cost per engine 43.00 The standard labour rate is RM16 per hour. Fixed Overhead is absorbed at a rate of RM20 per labour hour. The remaining overhead is variable. The division is operating at 90% annual capacity of 12,500 labour hours. 60% of the division's output is sold internally to the assembly division of the company at a transfer price of RM50 per engine. The remaining output is sold externally at a price of RM60 per engine (extra variable costs of RM3 per engine are incurred for these sales). The assembly division will further incur the following cost: Materials Labour Overhead Selling RM 5.00 2.00 7.00 8.00 (50% Variable and 50% fixed) Page 9 / 10 Q + 11180 par wit