Answered: The selling price per unit is OMR 13.…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter4: Job Order Costing

Section: Chapter Questions

Problem 3MC: Which of the following is a prime cost? A. indirect materials B. direct labor C. administrative...

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The selling price per unit is OMR 13. The above figures are for an output of 85,000 units, the capacity of the firm is 100,000 units. A foreign customer is desirous of buying 15,000 units at a price of OMR 10.50 per unit. (A) Advise the manufacturer, whether the order should be accepted. (B) What will be your advice, if the orders were from a local merchant, at the same price? (C) What would be the profits, if the local selling price falls to OMR 11 from OMR 13, after acceptance of the order from a local merchant?

The Cost Sheet of a product is given as under:
OMR
Direct Materials
Direct Wages
Factory Overheads:
6.00
3.00
Fixed
0.50
Variable
Administrative Expenses:
Selling and Distribution Overheads:
0.50
0.75
Fixed
0.25
Variable
0.50
Total
11.50

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1 of 12
Assignment: 1
Case: 1
The Cost Sheet of a product is given as under:
Direct Materials
Direct Wages
Factory Overheads:
Fixed
Variable
Administrative Expenses:
Selling and Distribution Overheads:
Fixed
Variable
Total
OMR
6.00
3.00
0.50
0.50
0.75
0.25
0.50
11.50
The selling price per unit is OMR 13. The above figures are for an output of
85,000 units, the capacity of the firm is 100,000 units. A foreign customer is
desirous of buying 15,000 units at a price of OMR 10.50 per unit.
(A) Advise the manufacturer, whether the order should be accepted.
(B) What will be your advice, if the orders were from a local merchant, at the
same price?
(C) What would be the profits, if the local selling price falls to OMR 11
from OMR 13, after acceptance of the order from a local merchant?

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