CA Intermediate · Cost and Management Accounting · Job Costing
Verma Printers quotes jobs at cost plus 25% profit on selling price. Job P-7 has a total cost of Rs 90,000. What quotation price should be given?
The quotation should be Rs 1,20,000. Since profit is 25% of selling price, cost represents 75% of the price, so price equals Rs 90,000 divided by 0.75. Adding 25% to cost instead would wrongly give Rs 1,12,500.
- ARs 1,12,500
- BRs 1,20,000Correct
- CRs 1,08,000
- DRs 1,15,000
Explanation
Profit is 25% of selling price, so cost is 75% of selling price. Price = 90,000 / 0.75 = Rs 1,20,000. Check: 25% of 1,20,000 = 30,000 and 1,20,000 - 30,000 = 90,000. Option A wrongly applies 25% on cost.
Did you get it right without looking?
One question tells you little. A timed set on Job Costing shows your real accuracy, how long you take and where you lose marks.
More Job Costing questions
- Kaveri Fabricators is working on Job No. 214. Direct materials cost Rs 48,000 and direct wages are 600 hours at Rs 80 per hour. Factory over…
- Gupta Printers has a job with direct material Rs 24,000 and direct labour Rs 16,000. Factory overhead is absorbed at 75% of direct labour co…
- Sharma Fabricators uses a machine-hour rate to absorb factory overheads. Budgeted factory overheads for the year are Rs 7,20,000 and budgete…
- Which of the following best describes the nature of a job costing system?
- In a job costing system, which document is used to accumulate the materials, labour and overheads charged to one specific customer order and…
- Sharma Fabricators absorbs factory overheads on direct labour hours. Budgeted factory overheads for the year are Rs 6,00,000 and budgeted di…