Ace Ltd Makes Trailers for Boats REQUIRED:
A)Calculate the Overhead Recovery Rate to Apply Overhead to Would

question 21

Essay

Ace Ltd makes trailers for boats. Management have decided they would like to implement a full cost recovery system as detailed below. Direct materials and direct labour are the only costs that can be traced directly to jobs. All other costs will be recovered using an overhead recovery rate based on direct labour cost. Profit (mark-up)will be 12% of full costs.
$\begin{array}{ll}\text { Annulal Budget Forecast } & \$ \\\text { Sales (as per invoices) } & 230,000 \\\text { Direct Materials } & 50,000 \\\text { Direct Labour } & 60,000 \\\text { Variable Overheads } & 2,400 \\\text { Advertising for Business } & 4,000 \\\text { Rent of Premises } & 10,000 \\\text { Depreciation } & 20,000 \\\text { Administration expenses } & 12,000\end{array}$ REQUIRED:
A)Calculate the overhead recovery rate to apply overhead to jobs.
B)Provide a quotation (full cost estimate plus mark-up)for the following job.
An initial examination of the job identifies the following direct costs
$\begin{array}{ll}\text { Direct materials } & \$ 9,000 \\\text { Direct labour } & \$ 60,000\end{array}$

• A)Calculate the overhead recovery rate to apply overhead to jobs.
• B)Provide a quotation (full cost estimate plus mark-up)for the following job.
• An initial examination of the job identifies the following direct costs
• \(\begin{array}{ll}
• \text { Direct materials } & \$ 9,000 \\
• \text { Direct labour } & \$ 60,000
• \end{array}\)

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