Reference no: EM132523336

Bellavista Ltd remodels gardens for private houses. Each garden will be unique, so prices must be calculated based on full cost principles. For all the gardens that it plans to remodel next month, the company expects to incur the following costs and to work the following time:

Direct labour costs for all the gardens remodeled: £60,000

Direct labour time for all the gardens remodeled: 5,000 hours

Indirect labour costs (supervision, transportation of machines...) : £15,000

Indirect materials (gravel and sand): 5,000 £

Other manufacturing indirect costs (energy, depreciation of machines): £5,000

• Mr Green is a potential customer of Bellavista. He has asked for a quotation for a remodeled garden. Bellavista estimates that 25 labour hours and 10 square metres of paving stones (at a cost of £30 per square metre) will be needed for this particular job.

• To prepare this quotation, Bellavista's owner must first estimate the full manufacturing cost of this job. She has decided to use labour hours as allocation factor (cost driver) for all the indirect manufacturing costs.

Question 1: The full manufacturing cost of the job required by M. Green is

Select one:

a. £725

b. £600

c. £425

d. £900