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Real Ltd. has been asked to submit a bid on two prospective jobs, one for Fake Racing a rally team from Trinidad and the other
Real Ltd. has been asked to submit a bid on two prospective jobs, one for Fake Racing a rally team from Trinidad and the other for Hoax Racing of Barbados. The company uses a job costing system and applies overheads using machine hours. Total overhead for the year is expected to be $450 000, and it is expected that 50, 000 machine hours will be worked. Addition information relating to the prospective jobs is as follows: Fake Racing Hoax Racing Direct materials $7 500 $10 000 Direct labour $13 000 $12 500 Number of inspections 4 2 Number of set-ups 3 1 Number of machine hours 2 000 4 500 Number of engineering hours 130 50 Using the traditional job costing system, calculate the total cost of each job.Show the calculation of the OAR.(7 marks)
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