Job Costing:
1. Following data are available from the cost records of Ram & Co. Ltd. with respect to Job
No. 120:
Materials Rs. 10,000
Wages: Department X 40 hours @ Rs. 10 per hour
Department Y 50 hours @ Rs. 12 per hour
Department Z 60 hours @ Rs. 16 per hour
Factory Overheads (variable):
Department X Rs. 8,000 (estimated)
Department Y Rs. 8,000 (estimated)
Department Z Rs. 8,000 (estimated)
The estimated direct labour hours during the budget period:
Department X 4,000 hours
Department Y 4,000 hours
Department Z 4,000 hours
Fixed overheads: Rs. 20,000 for 20,000 working hours.
You are required to calculate the cost of Job No. 120 and calculate the selling price
required to earn a profit of 20% on cost.
2. A work order of 500 units of a commodity has to pass through four different machines of
which the machine hour rates are:
Machines I II III IV
Hour Rate (Rs.) 1.25 3.00 4.00 2.50
The following expenses have been incurred on the work order: Materials Rs. 20,000 and
Wages Rs. 1,500.
Machines I II III IV
Time (Hours) 200 300 240 100
After the work order had been executed, materials worth Rs. 1,000 were returned to
stores. Administration overheads related to production are to be estimated @ 60% of
works cost; 10% of the production is going to be discarded, being unsatisfactory for
which ½ the amount can be realized from sale in the junk market. Find out the rate of
selling price per unit if 20% profit on selling price is desired.Ans. profit=6949.4
sales=41696.4
3. Rolta manufacturing company processed production through two departments (i)
machining and (ii) finishing. Overhead rates are predetermined based on machine hours
in the machine department and the direct labour wages in the finishing department.
The figures for 2021-22 based on which the overhead rates were arrived at are as follows:
Particulars Machining Department Finishing Department
Direct Labour – Wages Rs. 25,00,000 Rs. 25,00,000
Factory Overheads Rs. 75,00,000 Rs. 50,00,000
Direct Labour Hours 20,00,000 40,00,000
Machine Hours 25,00,000 15,00,000
The cost sheet for Job no. 250 gives the following:
Particulars Machining Department (Rs.) Finishing Department
Direct Labour – Wages Rs. 80 Rs. 10
Factory Overheads Rs. 50 Rs. 40
Direct Labour Hours 30 hours 40 hours
Machine Hours 20 hours 10 hours
Prepare a cost sheet showing the unit cost of the part no. 280 assuming that the production
order no. 250 consisted of 20 numbers of part no. 280. Ans.= job 250 cost=320 part
280
cost= 16
4. Mayur Engineering, engaged in a job work has completed all jobs in hand on 30 th March,
2022 except Job no. 217. The Cost Sheet on 30th March showed direct materials and
direct labour costs of Rs. 40,000 and Rs. 50,000 respectively as having been incurred on
Job No. 217.
The costs incurred by the business on 31st March, 2022 were as follows:
Direct Materials (Job 217) 2,000
Direct Wages (Job 217) 8,000
Indirect Labour 2,000
Miscellaneous Factory Overheads 3,000
It is the practices of the business to make the jobs absorb factory overheads on the basis
of 120 percent of direct labour cost.
Calculate the value of Work-in-Progress of Job No. 217 on 31st March, 2022.Ans. works
cost=169600
5. Following is the data procured from the books of Victory, for the year ended 31st
December, 2022:
Completed Jobs (Rs.) Work-in-Progress (Rs.)
Raw Material Supplied from Stores 45,000 15,000
Chargeable Expenses 5,000 2,000
Wages 50,000 20,000
Material Transferred to Work-in- 1,000
Progress
Materials Returned to Stores 500
Factory overheads is 80% of wages and office overheads 25% of factory cost.
Prepare: i. Work-in-Progress Ledger or Control Account; and
ii. Completed Jobs Account showing the profit or loss. (CorrectCorrection in
question)
6. The production department of a factory furnishes the following information for the month
of December, 2022:
Material used : Rs. 54,000
Direct labour : Rs. 54,000
Overheads : Rs. 36,000
Labour hours worked : 36,000
Hours of machine operation : 30,000
For an order executed by the department during a particular period, the relevant
information was as under:
Material used : Rs.6,000
Direct labour : Rs. 3,200
Labour hours worked : 3,200
Hours of machine operation : 2,400
Calculate the overhead chargeable to the job by the following methods:
i. Direct materials cost percentage rate;Ans.=13200
ii. Labour-hour rate; and
iii. Machine-hour rate.
7. A factory uses job costing. The following data is obtained from its books for the year
ended 31st December, 2022:
Rs.
Direct Materials 9,00,000
Direct Wages 7,50,000
Profit 6,09,000
Selling and Distribution Overheads 5,25,000
General Administration Overheads 4,20,000
Factory Overheads 4,50,000
a. Prepare a Job Cost Sheet indicating the Prime Cost, works Cost, Cost of Production,
Cost of Sales and Sales Value. Ans. profit=609000 sales=3654000
b. For the year 2023, the factory received orders for a number of jobs. It was estimated
that direct materials required would be for Rs. 12,00,000 and direct labour would
cost Rs. 7,50,000. What should be the price for these jobs if factory intends to earn
the same rate of profit on sales as in 2022, assuming that the selling and distribution
overheads had gone up by 15%? The factory recovers factory overheads as a
percentage of direct wages and general administration and selling and distribution
overheads as a percentage of works cost.Ans. profit=714171 sales=4284171
8. The following particulars have been extracted in respect of factory for the year 2022:
Rs.
Cost of Materials 6,00,000
Wages 5,00,000
Factory Overheads 3,00,000
General Administration Overheads 3,36,000
Selling Overheads 2,24,000
Distribution Overheads 1,40,000
Profit 4,20,000
A work order has to be executed in 2023 and the estimated cost are:
Materials 8,000
Wages 5,000
Assuming that in 2023
i. The rate for factory overheads gone up by 20%;
ii. Distribution overheads gone down by 10%;
iii. Selling and general administration overheads have gone up by 15%;
iv. Factory overheads are based on wages;
v. General administration, selling and distribution overheads are based on factory
cost.
Calculate cost of work order and price at which the product should be sold so as to earn
the same rate of profit on selling price as in 2022. Ans. profit=5148
9. M. L. Auto Ltd. is a manufacturer of auto components and the details of its expenses for
the year 2022 are given below:
Rs.
Opening Stock of Material 1,50,000
Closing stock of Material 2,00,000
Purchase of Material 18,50,000
Direct Labour 9,50,000
Factory Overhead 3,80,000
Administrative Overhead 2,50,000
During 2023, the company has received an order from a car manufacturer where it
estimates that the cost of material and labour will be Rs. 8,00,000 and Rs. 4,50,000
respectively. M. L. Auto Ltd. charges factory overhead as a percentage of direct labour
and administrative overhead as a percentage of factory cost based on previous years’ cost.
Cost of delivery of the components at customer’s premises is estimated at Rs. 45,000.
You are required to:
i. Calculate the overhead recovery rates based on actual costs for 2022.
ii. Prepare a detailed cost statement for the order received in 2023 and the price to be
quoted if the company wants to earn a profit of 10% on sales. Ans.
profit=176600
