CA Intermediate · Cost and Management Accounting · Job Costing
Sharma Fabricators uses a machine-hour overhead rate. Budgeted factory overheads for the year are Rs 7,20,000 and budgeted machine hours are 12,000. Job J-41 uses direct material Rs 18,000, direct labour Rs 9,000 and 150 machine hours. Administration overheads are charged at 10% of factory cost. What is the total cost of Job J-41?
Total cost is Rs 39,600. The machine-hour rate is Rs 60, so factory overhead is Rs 9,000. Factory cost is Rs 36,000, and administration overhead at 10% adds Rs 3,600.
- ARs 36,000
- BRs 39,600
- CRs 41,250
- DRs 45,375Correct
Explanation
Rate = 7,20,000/12,000 = Rs 60 per hour. Factory overhead = 150 x 60 = Rs 9,000. Factory cost = 18,000 + 9,000 + 9,000 = Rs 36,000. Administration overhead at 10% = Rs 3,600, so total cost = Rs 39,600. Hence the correct choice is Rs 39,600, but check: the options list shows Rs 39,600 as option 2 (index 1).
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