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CMA Intermediate · Cost Accounting · Direct Expenses

Sharma Fabricators hired a special machine for Job J-21 only, at Rs 6,000 per week for 4 weeks. It also paid Rs 9,000 as a one-time cost of a design specially prepared for the job. What is the direct expense chargeable to Job J-21?

The direct expense for Job J-21 is Rs 33,000. Machine hire of Rs 6,000 for four weeks gives Rs 24,000, and the job-specific design cost of Rs 9,000 is also traceable to the job, so both are added together.

  1. ARs 24,000
  2. BRs 33,000Correct
  3. CRs 9,000
  4. DRs 15,000

Explanation

Hire charges = 6,000 x 4 = Rs 24,000. Add the design cost of Rs 9,000 that is specific to the job. Total = Rs 33,000. Rs 24,000 omits the design cost; Rs 15,000 wrongly adds one week's hire to the design cost.

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