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Calculate the total costs of the special order

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Reference no: EM132472310

ABC Ltd makes trailers. It receives a special order to produce 350 trailers for a local retail outlet. The order will take 2,100 kg of material that costs $16.10 per kg and will require 1,400 direct labor hours and 525 machine hours.

The following are the expected/budgeted annual costs for ABC Ltd:

Direct labor                                   $327,600

Direct labor hours                              25,795

Direct materials                              $193,200

Indirect costs                                 $98,400

Machine hours                                   9,840

Required:

Question 1: Calculate the overhead allocation rate: note that the process is labour-intensive

Question 2: Calculate the total costs of the special order

Question 3: Calculate the cost of the special order if ABC Ltd uses machine time as the basis for allocating overheads

Question 4: Calculate the minimum price per trailer that ABC Ltd could accept.

Question 5: Explain how segmented overhead cost pools and activity based costing can assist accurate costing for pricing purpose

Reference no: EM132472310

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