# A business operates a job costing system and has the aim of making a net profit of 30% on sales.

A business operates a job costing system and has the aim of making a net profit of 30% on sales.

The cost estimates for one particular job are as follows:

Direct materials 80 kg at \$5 per kg

Direct labour 40 Hours at \$6 per hour

The total overheads are budgeted at \$120,000 and are absorbed on the basis of direct labour hours. The budgeted labour hours are 50,000.

What price should be quoted for this job (to the nearest \$)?

May 2nd 2014

## 5 Replies

+1 Vote
= .4
Should be
= 2.4
Isn't it?
May 15th 2014 8,730 Points
+1 Vote
Total cost = 400+240+96 = 736
May 24th 2014 380 Points

material cost = 80 x 5 = 400
direct labour cost = 40 x 6= 240
fixed overhead cost = 120,000/ 50,000 x 40 =96
total cost =736

since profit is 30% of sales price:
Assuming S is sales price
((S-736)/S) x 100% = 30%

S-736=0.3S
Hence S = 1051.43

May 24th 2014 380 Points
–1 Vote

= .4
cost card
d material 400
d labour 240
standard direct cost 640
.4 ) 16
full cost of production 656
profit ( on sales 30% ) 656* (100 / 70 ) = 281.14
sales price = 937

May 5th 2014 260 Points
–1 Vote

material 80 x 5 = 400
direct labour = 40 x 6= 240
fixed overhead= 120,000/ 50,000 x 40 =96
total cost =796

on 30% margin means ...796/70 x 100 = 1052.42

May 10th 2014 1,610 Points