Accounting 9706 · AS & A Level · Traditional costing methods

Traditional costing methods — practice question

Justine works as an accountant and bills her clients using an hourly fee plus overheads. She applies a mark-up of $20\%$. The budgeted data below are given. Hours worked in one year: $1610$ Overhead cost per year: $\$56\,350$ Direct labour rate for each hour: $\$45$ Additional fee when a job exceeds $15$ hours: $\$200$ Overheads are absorbed on the basis of direct labour hours. What amount will Justine bill a client for a job that requires $20$ hours to finish?

  • A$\$1920$
  • B$\$2000$
  • C$\$2160$
  • D$\$2250$

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