P Limited produces chairs at 70 each. It receives a special order for 1,000 chairs with padded seats. This requires 6,000 in extra materials, 500 extra labour hours at 15/hour, and 2,000 extra overheads. What is the total cost of this batch?

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SSC Financial and Cost Accounting P-1 QUESTION #6094

Question 1

P Limited produces chairs at $70 each. It receives a special order for 1,000 chairs with padded seats. This requires $6,000 in extra materials, 500 extra labour hours at $15/hour, and $2,000 extra overheads. What is the total cost of this batch?

$13,500
$15,500
$83,500
$85,500✔️

Correct Answer Explanation

1. Base cost = 1,000 $\times$ $70 = $70,000.
2. Extra materials = $6,000.
3. Extra labour = 500 $\times$ $15 = $7,500.
4. Extra overheads = $2,000.
Total = $70,000 + $6,000 + $7,500 + $2,000 = $85,500.

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