worked 30,000 5 Machine hours operated 10,00
The following information relates to the activities of the production department of Will Smith Sdn Bhd for the month of March 2019:
|
Production Department |
Order Number 123 |
|
|
Direct materials consumed |
120,000 |
20 |
|
Direct wages |
180,000 |
25 |
|
|
150,000 |
|
|
Direct labor hours worked |
30,000 |
5 |
|
Machine hours operated |
10,000 |
2 |
The company adds a margin of 50 per cent to the total production cost of specific units in order to cover administration expenses and to provide a profit.
Required:
a) Calculate the total selling price of order number 123 if overhead is absorbed using the following methods of overhead absorption:
I. Direct labor hours
II. Machine hours
b) State which of the two methods you would recommend for the production department.
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