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Skilled labour at a manufacturing plant is in short supply, and all available skilled labour time is fully utilised. A customer has asked for a
Skilled labour at a manufacturing plant is in short supply, and all available skilled labour time is fully utilised. A customer has asked for a special job that will cost $400 in direct materials and will require 15 hours of skilled labour time. Skilled labour costs $8 per hour and variable production overhead is $2 per hour. Fixed production overheads are absorbed at a rate of $20 per skilled labour hour. If the job is undertaken the skilled labour will be withdrawn from work on making items that earn a contribution of \$25 per skilled labour hour. What is the minimum price that should be charged if this special job is undertaken? $775 $895 $925 $1,225
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