CA Intermediate · Cost and Management Accounting · Job Costing
Kaveri Fabricators absorbs factory overheads on direct labour hours. Budgeted factory overheads for the year are ₹6,00,000 and budgeted direct labour hours are 30,000. Job J-41 used direct materials of ₹18,000 and direct labour of ₹12,000 (400 hours at ₹30 per hour). Administration overheads are charged at 10% of factory cost. What is the total cost of Job J-41?
The total cost of Job J-41 is ₹41,800. Factory overhead is absorbed at ₹20 per labour hour, giving ₹8,000 for 400 hours. Factory cost is ₹38,000, and adding administration overheads at 10% of factory cost, ₹3,800, gives the total.
- A₹41,800
- B₹42,000
- C₹46,200Correct
- D₹38,000
Explanation
Overhead rate = 6,00,000 / 30,000 = ₹20 per hour. Factory overheads = 400 x 20 = ₹8,000. Factory cost = 18,000 + 12,000 + 8,000 = ₹38,000. Administration overheads = 10% x 38,000 = ₹3,800. Total cost = ₹41,800. Thus option 1 is correct on recomputation, so the key must be checked: 38,000 + 3,800 = 41,800.
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