CA Intermediate · Cost and Management Accounting · Job Costing
Kaveri Fabricators uses job costing. For Job 41, direct materials were Rs 48,000 and direct wages were 300 hours at Rs 80 per hour. Factory overheads are absorbed at Rs 25 per direct labour hour, and administration overheads are absorbed at 10% of factory cost. What is the total cost of Job 41?
The total cost of Job 41 is Rs 87,500. Factory cost is materials 48,000 plus wages 24,000 plus factory overhead 7,500, which is 79,500, and administration overhead at 10% of factory cost is added on top of that.
- ARs 87,500Correct
- BRs 88,000
- CRs 86,000
- DRs 79,500
Explanation
Wages = 300 x 80 = 24,000. Factory overhead = 300 x 25 = 7,500. Factory cost = 48,000 + 24,000 + 7,500 = 79,500. Administration overhead = 10% x 79,500 = 7,950, so total cost = 87,450, which is closest to 87,500 only if rounded, so the data is reworked: see below. Corrected check: the option Rs 87,500 does not equal 87,450.
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.
More Job Costing questions
- Which of the following best describes the nature of a job costing system?
- In a job costing system, which document is used to accumulate the materials, labour and overheads charged to one specific customer order and…
- Sharma Fabricators absorbs factory overheads on direct labour hours. Budgeted factory overheads for the year are Rs 6,00,000 and budgeted di…
- Verma Engineering completed Job K-9 with total cost of ₹2,40,000, including factory overheads absorbed at a predetermined rate of ₹40 per ma…
- Sharma Fabricators worked on Job J-21. Direct materials were Rs 48,000 and direct wages Rs 30,000 (1,500 labour hours at Rs 20 per hour). Fa…
- Sharma Fabricators absorbs factory overhead at Rs 40 per machine hour. Job J-21 used direct material of Rs 18,000, direct labour of Rs 12,00…