Problem:2A firm has received an order from customer X to beexecuted for RO1,800 ( all inclusive). The order requiresthe following materials, labour etc.Materials Requirements In stock BookvalueAB100kg300kg50kg RO 250140kg RO 280Replacementcost per kgRO 7RO 3Realizablevalue per kgRO 3RO 1Labour:Department I: 10 hrs @ RO15Department II: 8 hrs @ RO12Variable Overhead: RO 150Material A is regularly used by the firm and if used onthis order has to be replaced for the use of other orders.Material B has no use and is the result of excessivepurchase made for an order executed two years ago.Labour in department I is available for this order butlabour in department II is fully engaged on another orderwhich is earning a contribution of RO 20 per hour and ifthe order from X is to be executed, labour in departmentII has to be diverted from current operations. Statewhether the order received from customer X has toaccepted.

Introduction: Since there are two bottlenecks for the above order one is Material A and second one…

A firm has received an order from customer X to be executed for RO1,800 (all inclusive). The order requires the following materials, labour etc. Materials Requirements In stock Book value A B 100kg 300kg 50kg RO 250 140kg RO 280 Replacement cost per kg RO 7 RO 3 Labour: Department I 10 hrs @ RO15 Department II: 8 hrs @ RO12 Realizable value per kg RO 3 RO 1

A firm has received an order from customer X to be executed for RO1,800 (all inclusive). The order requires the following materials, labour etc. Materials Requirements In stock Book value A B 100kg 300kg 50kg RO 250 140kg RO 280 Replacement cost per kg RO 7 RO 3 Labour: Department I 10 hrs @ RO15 Department II: 8 hrs @ RO12 Realizable value per kg RO 3 RO 1

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter2: Accounting For Materials

Section: Chapter Questions

Problem 1E: Order Point Pershing, Inc. expects daily usage of 500 lb of material X, an anticipated lead time of...

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