Bailey Publishing is a new publishing company in Windhoek, Namibia. They published their first batch of 20 books in October this
year. The first 2 batches cost the following on direct labour, at a labour rate of N$20 per hour:
– First batch N$4,000
– First 2 Batches N$7,200
The initial labour rate was set on a trial basis and the company has agreed on a 10% increase, starting from the third batch. Other
manufacturing costs are as follow per book:
Direct materials N$250
Variable manufacturing overheads N$100
Fixed manufacturing overheads N$80
So far, the company has produced 2 batches in a month, which earned them monthly sales of N$34,000.
The management accountant expects to increase monthly production over time. The selling price and learning rate is expected to
remain constant.
Required: Calculate the conversion cost charged to book number 70.
1 Answer