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Unit 10: Job and Batch Costing
Department Z 60 hrs. @ ` 2 120 840 Notes
Fixed : 360 hours @ ` 3 per hr. 1,080
(2)
Total Cost 8,380
1
Profit (25% on selling price or 33 % on Cost price) 2,793
3
Selling price 11,173
Working notes:
(1) Calculation of variable overheads:
Department ‘X’: Total Overheads ÷ Total Direct Labour Hours
` 10,000 ÷ 5,000 hrs. = ` 2 per hour
Department ‘Y’: ` 9,000 ÷ 3,000 hrs. = ` 3 per hour
Department ‘Z’: ` 4,000 ÷ 2,000 hrs. = ` 2 per hour
Totalfixed overheads
(2) Calculation of fixed overheads =
Totaldirecthours
= 30,000 ÷ 10,000 = ` 3 per hour
Example: The information given below has been taken from the cost records of Holani
Engineering Works in respect of the job number 224:
Materials ` 3,200
Wages: Department A 60 hours @` 2 per hour
Department B 40 hours @` 5 per hour
Department C 20 hours @` 3 per hour
The overhead expenses are as follows:
Variable: Department A ` 10,000 for 5,000 hours
Department B ` 4,500 for 1,500 hours
Department C ` 1,500 for 500 hours
Fixed expenses: ` 30,000 for 10,000 working hours.
Calculate the cost of the Job No. 224 and the price from the job to give a profit 25% on the selling
price.
Solution:
Job Cost Sheet for Job No. 224
Particulars Amount (`)
Materials 3,200
Wages :
Department A 60 × ` 2 120
Department B 40 × ` 5 200
Department C 20 × ` 3 60 380
prime Cost 3,580
Overheads expenses: Fixed 360 (2)
Contd…
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