Answer to Question #317663 in Finance for lydia

Question

Sonja Cc is a small firm that make outfits for customers tailored for their functions, in May 2021 she was order for a baby shower (BS).

The details Job for BS are as follows:

Direct materials: 120 units at N124

Direct labour: 20 hours for department A at N$25 per hour.

10 hours for department B at N30 per hour

12 hour s for department C at N$27.50

The firm allocates manufacturing overheads budgeted at N$2500 in department A, N$2000 in department B and N$3000 in department C.

The firm expects a profit of 55% on the total cost of BS.

Required:

a)Calculate the cost of a baby shower (BS)

b)Calculate the selling price of a baby shower (BS)

c)If the number of outfits are the same for each type of function, which function should Sonja choose to produce and why?

Answer 1

choose the function with the highest profit and lowest cost