Process plant division The process plant division of a group of companies has built a food packaging machine to a customer's requirements. A price of £49,000 has been quoted with the intention of achieving a profit of 25% on the selling price.
Production overhead is absorbed at the predetermined rate of £10 per direct labor hour in the assembly department and £15 per machine hour in the machining department. Commissioning costs – i.e., installation and initial running-in of the machine at the customer's site – were £750 and these are to be treated as a direct production cost. Selling and general administration costs are charged to jobs at the rate of 331/3% of production cost. You are required to prepare a job order cost sheet, and insert on it the information given above in such a way as to be useful to management.