A firm makes special assemblies to customers' orders and uses job costing. The data for a period are: Job A & Job B & Job C & E & E & E Opening work in progress & 26,800 & 42,790 & 0 Material added in period & 17,275 & 0 & 18,500 Labour for period & 14,500 & 3,500 & 24,600 The budgeted overheads for the period were £ 126,000 and these are absorbed on the basis of labour cost. Job B was completed and delivered during the period and the firm wishes to earn a 33 (1)/(2) % profit margin on sales. Requirement What should be the selling price of job B? £ 84,963 £ 258,435 £ 69,435 £ 75,523

## Step 1: Calculate Total Labour Cost for Job B<br />### The labour costs for Job B are given as £0, £0, and £3,500. Therefore, the total labour cost for Job B is £0 + £0 + £3,500 = £3,500.<br /><br />## Step 2: Determine Overhead Absorption Rate<br />### The budgeted overheads for the period are £126,000, and these are absorbed based on labour cost. To find the overhead absorption rate, we need to calculate the total labour cost for all jobs (A, B, and C).<br />- **Job A:** £26,800 + £17,275 + £14,500 = £58,575<br />- **Job B:** £3,500 (calculated in Step 1)<br />- **Job C:** £0 + £18,500 + £24,600 = £43,100<br /><br />### Total Labour Cost for all jobs = £58,575 + £3,500 + £43,100 = £105,175<br /><br />### Overhead Absorption Rate = $\frac{£126,000}{£105,175}$ per £1 of labour cost.<br /><br />## Step 3: Calculate Overheads for Job B<br />### Using the overhead absorption rate calculated in Step 2, we determine the overheads for Job B.<br />- Overheads for Job B = £3,500 * $\frac{£126,000}{£105,175}$<br /><br />## Step 4: Calculate Total Cost for Job B<br />### Total Cost for Job B = Labour Cost + Overheads<br />- Total Cost for Job B = £3,500 + (£3,500 * $\frac{£126,000}{£105,175}$)<br /><br />## Step 5: Calculate Selling Price for Job B<br />### The firm wishes to earn a 33⅓% profit margin on sales. This means the cost represents 75% of the selling price (since 100% - 33⅓% = 66⅔%, which is equivalent to 75% of the selling price).<br />- Let the selling price be \( S \).<br />- Then, \( 0.75S = \text{Total Cost for Job B} \).<br /><br />### Solving for \( S \):<br />\[ S = \frac{\text{Total Cost for Job B}}{0.75} \]<br /><br />## Step 6: Substitute Values and Solve<br />### Substitute the values from Steps 3 and 4 into the equation from Step 5 to find the selling price.