Define the full cost of making the sail briefly

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Reference no: EM131437977

Question: Suppose that Marine Suppliers Ltd used a machine hour basis of charging overheads to jobs. What would be the cost of the job detailed if it was expected to take 5 machine hours (as well as 12 direct labour hours)?

Marine Suppliers Ltd undertakes a range of work, including making sails for small sailing boats on a made-to-measure basis.
The business expects to incur the following costs during the next month:

- Direct labour costs £60,000

- Dirct labour time 6,000 hours

- Indirect labour cost £9,000

- Depreciation of machinery £3,000

- Rent and rates £5,000

- Heating, lighting and power £2,000

- Machine time 2,000 hours

- Indirect materials £500

- Other misceallaneous indirect costs £200

- Direct material costs £3,000

The business has received an enquiry about a sail, and it is estimated that the sail will take 12 direct labour hours to make and will require 20 square metres of sailcloth, which costs £2 per square metre. The business normally uses a direct labour hour basis of charging overheads to individual jobs. What is the full cost of making the sail?

Reference no: EM131437977

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