CA Intermediate · Cost and Management Accounting · Job Costing
Gupta Printers has a job with direct material Rs 24,000 and direct labour Rs 16,000. Factory overhead is absorbed at 75% of direct labour cost. Selling and distribution overhead is 10% of factory cost. The firm quotes a price that gives a profit of 25% on cost. What is the quoted price?
Factory overhead is Rs 12,000, so factory cost is Rs 52,000. Adding selling overhead of Rs 5,200 gives total cost of Rs 57,200. A 25% markup on cost adds Rs 14,300, so the quoted price is Rs 71,500.
- ARs 57,200
- BRs 62,400
- CRs 71,500Correct
- DRs 78,000
Explanation
Factory overhead = 75% x 16,000 = 12,000. Factory cost = 24,000 + 16,000 + 12,000 = 52,000. Selling overhead = 5,200, so total cost = 57,200. Profit 25% of cost = 14,300, so price = Rs 71,500. Check: 71,500/1.25 = 57,200.
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