CA Intermediate · Cost and Management Accounting · Job Costing
Sharma Fabricators absorbs factory overheads on direct labour hours. Budgeted factory overheads for the year are Rs 6,00,000 and budgeted direct labour hours are 50,000. Job J-41 uses direct materials of Rs 40,000, direct labour of 600 hours at Rs 50 per hour, and direct expenses of Rs 4,000. What is the factory cost of Job J-41?
The factory cost of Job J-41 is Rs 81,200. The overhead rate is Rs 12 per labour hour, giving Rs 7,200 for 600 hours. Adding materials Rs 40,000, labour Rs 30,000 and direct expenses Rs 4,000 to this overhead gives the total.
- ARs 81,200Correct
- BRs 74,000
- CRs 77,200
- DRs 83,200
Explanation
Overhead rate = 6,00,000/50,000 = Rs 12 per hour. Overhead absorbed = 600 x 12 = Rs 7,200. Labour = 600 x 50 = Rs 30,000. Factory cost = 40,000 + 30,000 + 4,000 + 7,200 = Rs 81,200. Rs 74,000 omits overhead and Rs 77,200 omits direct expenses.
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