Reference no: EM132933487

Problem 1: Which ONE of the following costs would NOT be classified as a production overhead cost in a food processing company?

Option 1: The cost of renting the factory building

Option 2: The salary of the factory manager

Option 3: The depreciation of equipment located in the materials store

Option 4: The cost of ingredients

Problem 2: An engineering firm operates a job costing system. Production overhead is absorbed at the rate of Khs.8.50 per machine hour. In order to allow for non-production overhead costs and profit, a mark up of 60% of prime cost is added to the production cost when preparing price estimates.

The estimated requirements of job number 808 are as follows:

Direct materials Khs.10,650

Direct labour Khs.3,260

Machine hours 140

The estimated price notified to the customer for job number 808 will be

Option 1: Khs.22,256

Option 2: Khs.22,851

Option 3: Khs.23,446

Option 4: Khs.24,160