Question:
Batch costing
Needlecraft Limited makes hand embroidered sweat shirts to customer specifications.
The following detail is available from the company's budget.
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Cost centre
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Budgeted overheads
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Budgeted activity
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Cutting and sewing
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£ 93,000
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37,200 machine hours
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Embroidering and packing
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£ 64,000
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16,000 direct labour hours
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Administration, selling and distribution overhead is absorbed into batch costs at a rate of 8 per cent of total production cost. Selling prices are set to achieve a rate of return of 15 per cent of the selling price. An order for 45 shirts, Batch No. 92, has been produced for Shaldene Community Choir. Details of activity on this batch are as follows:
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Direct materials
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£ 113.90
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Direct labour
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|
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Cutting and sewing 0.5 labour hours at £ 9 per hour
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£ 4.50
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Embroidering and packing 29 labour hours at £ 11 per hour
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£ 319.00
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Machine hours worked in cutting and sewing Fee paid to
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2
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designer of logo for sweat shirts
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£ 140.00
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Required
Calculate the selling price per shirt in Batch No. 92.