ACCA Applied Knowledge · Management Accounting · Cost accounting methods
Job 47 used 200 kg of material costing $6 per kg 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 47?
The total cost of Job 47 is $5,040. Production cost is material $1,200 plus labour $1,800 plus overhead $1,200, totalling $4,200. Adding non-production overheads of 20% of production cost, which is $840, gives $5,040.
- A$5,400
- B$4,200
- C$5,040
- D$6,480Correct
Explanation
Material = 200 x 6 = 1,200; labour = 150 x 12 = 1,800; production overhead = 150 x 8 = 1,200. Production cost = 4,200. Add 20% = 840, giving total cost $5,040. Check: 4,200 x 1.2 = 5,040.
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