CA Intermediate · Cost and Management Accounting · Job Costing
Sharma Fabricators absorbs factory overheads at 150% of direct labour cost. Job J-41 used direct materials of ₹48,000, direct labour of ₹20,000 and direct expenses of ₹4,000. Administration overheads are absorbed at 10% of factory cost. What is the total cost of the job?
The total cost is ₹1,12,200. Factory overheads are ₹30,000 (150% of labour), giving factory cost of ₹1,02,000 with materials, labour and direct expenses. Adding administration overheads of 10% of factory cost, ₹10,200, gives the total job cost of ₹1,12,200.
- A₹1,02,000
- B₹1,00,200
- C₹1,12,200Correct
- D₹1,10,000
Explanation
Factory overheads = 150% × 20,000 = 30,000. Factory cost = 48,000 + 20,000 + 4,000 + 30,000 = 1,02,000. Administration overheads = 10% × 1,02,000 = 10,200. Total cost = 1,12,200. Option ₹1,02,000 ignores administration overheads.
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