Urgent Costing query relating to syllabus

enhanced by

A plant is capable of operating 5400 machine hours during a month interchangeable

for any one or more products Alpha, Beeta or Gama. The following details are

ascertained :

.

Additional information :

a. Labour cost/ mc. Hr ` 1.8

b. Variable overhead / mc. Hr. ` 2.7

c. The fixed cost of the department p.m. is ` 9,000

d. The share capital is ` 4,86,000 and the expected ROI is 20% (before taxation)

e. All financial expenses are included in the cost

The following two proposals are to be considered :

i. To fix the selling price by adding 20% on costs.

ii. To use marginal costing technique for price fixation.