Reference no: EM132618729

Real Ltd. has been asked to submit a bid on two prospective jobs, one for Fake Racing a rally team from Trinidad and the other for Hoax Racing of Barbados. The company uses a job costing system and applies overheads using machine hours. Total overhead for the year is expected to be $450 000, and it is expected that 50, 000 machine hours will be worked.

Addition information relating to the prospective jobs is as follows:

                                         Fake Racing                  Hoax Racing

Direct materials                         $7 500                    $10 000

Direct labour                              $13 000                $12 500

Number of inspections                     4                         2

Number of set-ups                             3                        1

Number of machine hours                  2 000                   4 500

Number of engineering hours                  130                       50

Problem 1: Using the traditional job costing system, calculate the total cost of each job. Show the calculation of the OAR.