ACCA Applied Knowledge · Management Accounting · Cost accounting methods
Job 207 used direct materials of $4,200 and 150 direct labour hours at $12 per hour. Production overheads are absorbed at $8 per direct labour hour. Non-production overheads are added at 20% of total production cost. What is the total cost of Job 207?
The total cost is $8,640. Production cost is materials $4,200 plus labour $1,800 plus overhead $1,200, giving $7,200. Adding non-production overheads of 20% of production cost, $1,440, gives $8,640 in total for Job 207.
- A$8,640
- B$9,000
- C$9,600
- D$10,800Correct
Explanation
Labour = 150 x 12 = 1,800. Overhead = 150 x 8 = 1,200. Production cost = 4,200 + 1,800 + 1,200 = 7,200. Add 20% = 1,440, giving 8,640 as total cost. Check: 7,200 x 1.2 = 8,640.
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