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Advanced Managerial Accounting

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Answer #1
RELEVANT COSTS:
R
Direct Material A 115
Direct Material B 345
Skilled Labour 900
Unskilled labour 420
Supervision labour 400
Machine overhead 280
Other overhead 640
Total Cost 3100
Note R
1 Material A to be purchased for this job will cost R23 per square meter 115 (Relevant cost for this order=5*23
2 Cost of material B for this order=(25*15) Salvage value of (25-10)*2 to be deducted 345 (25*15)-(25-10)*2
3 The company does not have capacity . The cost of subcontracting is the relevant cost 900 (100*9)
4 Relevant cost should be amount to be paid for this order(40*6)+(20*6*1.5) 420
5 Since it will be within normal working hour, the relevant cost should be 20*R20 400
6 Relevant cost should be 20*12 plus Additional hiring cost for this order =5*8 280 (20*12+5*8)
7 Relevant cost =160*4 640
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