Boats Ltd provides a boat repair service. Each month 8,000 direct labour hours are worked and charged to cost units (jobs carried out by the business). The business has overheads of £120,000 each month. A recent boat repair undertaken by the business used direct materials costing £2,215. Direct labour worked on the repair was 32 hours and the wage rate is £16 an hour. The business charges overheads to jobs on a direct labour hour basis. What is the full (absorption) cost of the job?
Boats Ltd provides a boat repair service. Each month 8,000 direct labour hours are worked and charged to cost units (jobs carried out by the business). The business has overheads of £120,000 each month. A recent boat repair undertaken by the business used direct materials costing £2,215. Direct labour worked on the repair was 32 hours and the wage rate is £16 an hour. The business charges overheads to jobs on a direct labour hour basis. What is the full (absorption) cost of the job?
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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Question
8,000
direct labour hours are worked and charged to cost units (jobs carried out by the business). The business has overheads of
£120,000
each month. A recent boat repair undertaken by the business used direct materials costing
£2,215.
Direct labour worked on the repair was
32
hours and the wage rate is
£16
an hour. The business charges overheads to jobs on a direct labour hour basis.What is the full (absorption) cost of the job?
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