Question

Builder bug company allocates overhead at sh 60% of direct labour cost. job a45 required 4 boxes of direct materials at a cost of sh 30 per box and took employees 15 hours to complete. employees earn sh 18 per hour. if the company policy is to add a profit margin of 20%, prepare the job quotation price.

Answer 1

The job quotation price for job A45 is calculated by adding the direct materials, labor, and overhead costs, and then applying a 20% profit margin resulting in a total of SH 662.4.

Step-by-step explanation:

Job Quotation Price Calculation

To calculate the job quotation price, we first need to determine the total cost of direct materials, direct labor, and overhead for job A45. Then, we add a profit margin as specified by company policy.

The direct material cost is calculated by multiplying the number of boxes by the cost per box: 4 boxes × SH 30 per box equals SH 120. The direct labor cost comes from the number of hours worked multiplied by the hourly wage: 15 hours × SH 18 per hour equals SH 270. The overhead charge is 60% of the direct labor cost, which is 0.60 × SH 270 equals SH 162.

Combining these costs, we get a total cost before profit: SH 120 + SH 270 + SH 162 equals SH 552. Finally, the company adds a 20% profit margin, calculated as 0.20 × SH 552, which is SH 110.4. Therefore, the final job quotation price is the total cost plus profit margin: SH 552 + SH 110.4 equals SH 662.4.

The job quotation price for job A45 is SH 662.4. This includes direct materials, labor, overhead, and a 20% profit margin.