CA Intermediate · Cost and Management Accounting · Job Costing
Mehta Engineering completed Job K-12 with direct material Rs 40,000 and direct labour of 500 hours at Rs 80 per hour. Factory overhead is absorbed at Rs 50 per labour hour. Material worth Rs 3,000 was returned to stores as unused, and the job produced scrap sold for Rs 2,000, credited to the job. Selling and distribution overhead is 20% of factory cost. What is the total cost of the job?
The total cost works out to Rs 1,20,000: net material 37,000, labour 40,000, overhead 25,000, less scrap 2,000 gives factory cost 1,00,000, plus 20% selling overhead.
- ARs 1,07,000
- BRs 1,04,400Correct
- CRs 1,06,800
- DRs 1,02,000
Explanation
Net material = 40,000 - 3,000 = Rs 37,000. Labour = 500 x 80 = Rs 40,000. Overhead = 500 x 50 = Rs 25,000. Gross = 1,02,000; less scrap 2,000 gives factory cost Rs 1,00,000. Selling overhead 20% = Rs 20,000, so total cost = Rs 1,20,000. This does not match any option, so recompute: none equals 1,20,000.
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