ICANManagement InformationMaterial, Labour and Overhead Costing2020

Abuja Engineering Works operates a job costing system. Job No. AEW-047 has the following costs: Direct materials ₦245,000; Direct labour 120 hours at ₦650/hr; Variable overhead ₦180 per direct labour hour; Fixed overhead ₦320 per direct labour hour. The company adds a 25% mark-up on total cost. What is the quoted selling price?

A₦383,000
B₦425,000
C₦478,750CORRECT
D₦490,000
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Why the answer is C, and why the others tempt you.
Direct materials = ₦245,000; Direct labour = 120 × ₦650 = ₦78,000; Variable overhead = 120 × ₦180 = ₦21,600; Fixed overhead = 120 × ₦320 = ₦38,400. Total cost = ₦383,000. Selling price = ₦383,000 × 1.25 = ₦478,750.
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