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CA Intermediate · Cost and Management Accounting · Job Costing

A job was completed by Sunrise Tools after the company gave a customer a quotation. During the job, a quantity of materials worth Rs 4,000 issued to the job was returned to stores. How should the return be treated in job costing?

The return should be credited to the job cost sheet and debited to stores. Materials sent back unused were not consumed by the job, so the job's material cost falls by Rs 4,000 and the stock records are increased by the same amount.

  1. ACredited to the job cost sheet and debited to storesCorrect
  2. BDebited to the job cost sheet as additional cost
  3. CCharged to factory overheads as normal loss
  4. DIgnored until the end of the year

Explanation

Materials returned from a job to stores reduce the cost of the job, so the job account or sheet is credited and the stores ledger is debited. Treating it as overhead or a cost addition would misstate the job cost.

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