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Hello, can someone help me solve this accounting question please? Thank you so much!
Sky Marine Ltd undertakes a range of work, including making sails for small sailing boats on amade~to-measure basis. The following costs are expected to be incurred by the business duringnext month: 35Direct materials costs 3,000Direct labour costs 30,000Depreciaiion of machinery 3,000Heating, lighting and power 2,000Indirect labour coat 0,000Indirect materials 400Direct labour time 6,000 hoursMachine time 2,000 hours The business has received an enquiry.r about a sail and it is estimated that the sail Iwill take 12direct labour hours to make and will require 20 square metres of sail-cloth {which costs $2 persquare metre]- The business norn’Iall’j,t uses a direct-labour-hour basis of charging overheads toindividual jobs. The production manager has suggested that for this job a machine hour basis of overheadrecoveryr might be more appropriate. The sail will take 5 machine hours. Required: (a) Calculate the full cost of making the sail on ihe normal overhead recovery (overheadabsorption) basis. [IE marks} (b) lCalculate, and briefly,r comment on the effect of the production manager’s suggestion.[4 marks}
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