X Ltd is found to be working below the normal capacity due to recession. The directors have been approached by another company with an enquiry for a special purpose job. The costing department estimated the following in respect of that job:
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Direct materials – Rs. 1,00,000. |
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Direct labour – 5000 hours @ Rs. 3 = 15,000. |
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Overhead costs: Normal recovery rates: |
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Variable = Re 1 per hour. |
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Fixed = Rs. 1.50 per hour. |
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You are required to advise the company on the minimum prices to be charged.