Skip to content

CA Intermediate · Cost and Management Accounting · Job Costing

Kaveri Fabricators is working on Job No. 214. Direct materials cost Rs 48,000 and direct wages are 600 hours at Rs 80 per hour. Factory overhead is absorbed at 150% of direct wages, and administration overhead at 20% of factory cost. What is the total cost of the job?

The total cost of the job is Rs 2,01,600. Factory cost is materials 48,000 plus wages 48,000 plus factory overhead 72,000, which gives 1,68,000. Administration overhead at 20% of factory cost adds 33,600, so the total is 2,01,600.

  1. ARs 2,01,600Correct
  2. BRs 2,25,600
  3. CRs 2,34,000
  4. DRs 1,95,840

Explanation

Direct wages = 600 x 80 = 48,000. Factory overhead = 150% of 48,000 = 72,000. Factory cost = 48,000 + 48,000 + 72,000 = 1,68,000. Admin overhead = 20% x 1,68,000 = 33,600. Total cost = 2,01,600. Charging admin overhead on wages instead of factory cost would give a wrong figure.

Did you get it right without looking?

One question tells you little. A timed set on Job Costing shows your real accuracy, how long you take and where you lose marks.

Practise Job CostingFree diagnostic mock

More Job Costing questions