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CA Intermediate · Cost and Management Accounting · Job Costing

Sharma Fabricators worked on Job J-21. Direct materials were Rs 48,000 and direct wages Rs 30,000 (1,500 labour hours at Rs 20 per hour). Factory overhead is absorbed at Rs 12 per labour hour, and administration overhead at 10% of factory cost. What is the total cost of Job J-21?

Total cost is Rs 1,05,600. Factory overhead of Rs 18,000 added to prime cost of Rs 78,000 gives factory cost of Rs 96,000, and administration overhead at 10% of factory cost adds Rs 9,600, giving Rs 1,05,600.

  1. ARs 1,00,000
  2. BRs 1,03,800Correct
  3. CRs 1,05,600
  4. DRs 1,14,180

Explanation

Factory overhead = 1,500 x 12 = Rs 18,000. Factory cost = 48,000 + 30,000 + 18,000 = Rs 96,000. Administration overhead = 10% x 96,000 = Rs 9,600. Total cost = Rs 1,05,600. Check: 96,000 x 1.10 = 1,05,600. Option B wrongly adds 10% only on prime cost plus factory overhead partially.

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