Nov 2016 Q2 a.

Smooth Sailing Ltd is a medium size company that specialises in the construction of iron gates for clients. It has three production departments through which all jobs are processed, Assembling, Welding and Finishing. The following data relates to the year ended 30 September, 2015:

It is company policy to make a mark-up of 50% of profit on each job.

Required:
i) Calculate an appropriate overhead absorption rate for each department for the year ended 30 September, 2015; and                                                                                                                                                                                                          (5 marks)

ii) Determine the total costs, and hence, the price of Job CA2.                                                                                        (10 marks)