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Lumbar Ltd has been asked to submit a bid on two prospective jobs, one for...

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Accounting

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Lumbar Ltd has been asked to submit a bid on two prospective jobs, one for Tarrant Ltd and the other for Kippo Ltd. The company uses a job costing system and applies overheads using machine hours. Total overhead for the year is expected to be $450000, and it is expected that 50000 machine hours will be worked. Addition information relating to the prospective jobs is as follows: a. Using the traditional job costing system, calculate the total cost of each job. Lumbar is concemed that the company may be over-or-under pricing the jobs on which they bid. The company has decided to use activity based costing to estimate the cost of future jobs. Lumbar has assembled the following information: b. Compute the activity rate for each activity. ( 6 marks) c. Compute the total cost of each job using activity based costing: (12 marks)

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