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CA Intermediate · Cost and Management Accounting · Job Costing

Sharma Fabricators uses job costing. Job 305 required direct materials of ₹48,000 and direct labour of 400 hours at ₹90 per hour. Factory overheads are absorbed at 125% of direct wages, and administration overheads at 20% of factory cost. The firm wants a profit of 25% on selling price. What is the selling price of Job 305?

Selling price is total cost divided by 75 percent, after adding materials, wages, factory overhead at 125 percent of wages, and administration overhead at 20 percent of factory cost.

  1. A₹2,25,000
  2. B₹2,40,000Correct
  3. C₹2,31,000
  4. D₹2,00,000

Explanation

Direct wages = 400 × 90 = ₹36,000. Factory overhead = 125% × 36,000 = ₹45,000. Factory cost = 48,000 + 36,000 + 45,000 = ₹1,29,000. Admin overhead = 20% × 1,29,000 = ₹25,800. Total cost = ₹1,54,800. Selling price = 1,54,800 / 0.75 = ₹2,06,400. Re-check against options: none match, so recompute carefully: this contradicts the options, hence the correct key is not present.

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