Question 1
Jane Low owns a small business making and selling children’s toys. The following is Jane’s budgeted indirect costs for the coming year.
Jane budgeted 293,440 machine hours (cost driver) the coming year. Jane is investigating the viability of making metal toy cars. She estimates the new toy car will require direct materials costing RM1.50. Labour will cost a minimal RM0.60 a car. Each toy car will require 2 machine hour to make.
Required:
Calculate the Predetermined Overhead Rate (POR).
