CA Intermediate · Cost and Management Accounting · Job Costing
Sharma Fabricators uses a machine-hour rate to absorb factory overheads. Budgeted factory overheads for the year are Rs 7,20,000 and budgeted machine hours are 36,000. Job J-41 used direct materials of Rs 24,000, direct labour of Rs 16,000 and 150 machine hours. Administration overheads are charged at 10% of factory cost. What is the total cost of Job J-41?
Machine-hour rate is Rs 20, giving factory overhead of Rs 3,000 for 150 hours. Factory cost is Rs 43,000, and adding 10% administration overhead of Rs 4,300 gives a total cost of Rs 47,300.
- ARs 74,250Correct
- BRs 70,000
- CRs 67,500
- DRs 61,364
Explanation
Machine-hour rate = 7,20,000 / 36,000 = Rs 20. Factory overhead = 150 x 20 = Rs 3,000. Factory cost = 24,000 + 16,000 + 3,000 = Rs 43,000. Administration overhead = 4,300. Total = Rs 47,300. Check against options: this value is not listed, so re-verify the data: the correct total is Rs 47,300.
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