CORRECT TEXT

CORRECT TEXT

Refer to the exhibit.

Patchit Limited operates a job costing system. They have been asked to quote for a rush job that will require to be done in overtime hours.

It is estimated that the job will incur the following costs:

Production overheads are absorbed on a direct labour hour basis. Budgeted direct labour hours for the year were 50,000 and budgeted direct labour cost was $300,000.

If production overheads had been based on a percentage of direct labour cost, the revised production costs for the job would be:

Answer: $8