Page 205 - DCOM202_COST_ACCOUNTING_I
P. 205

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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