Answer to Question #317635 in Management for lydia

Question

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

The details for Job BS are as follows:

Direct materials: 12 units at N$124.

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

10 hours for department B at N$30 per hour

12 hours for department C at N$27.50 per hour

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

a. 124+25= N$149

b. 2500+2000= N$4500

c. Sonja should produce because the cost of production will be cheaper. I'm the process, he will make profits.