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The management accountant of OWF quickly collated cost data of making 300 directors' chairs (Job 725). The direct costs data are as follows:
Direct materials costs $40 000Direct production labour costs $30 000
Problem 1: Indirect costs are allocated based on budgeted factory overhead cost allocation rate. Calculate the total cost of job 725 using normal costing.
Problem 2: Based on the total production cost of Job 725 calculated in the previous question, what is the cost per chair?
Problem 3: OWF uses 'cost-plus' policy for pricing of its products. If the OWF's mark-up is 20% then what price per chair should OWF quote to this customer? (Round the price to nearest dollar)
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