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A firm uses job costing and recovers overheads on a direct labour cost basis.
Three jobs were worked on during a period, the details of which were:
Job 1 Job 2 Job 3
$ $ $
Opening work?in?progress 8,500 0 46,000
Material in period 17,150 29,025 0
Labour for period 12,500 23,000 4,500
The overheads for the period were exactly as budgeted, $140,000. Actual labour costs were also the same
as budgeted.
Jobs 1 and 2 were the only incomplete jobs at the end of the period.236 What was the value of closing work?in?progress?
A $81,900
B $90,175
C $140,675
D $214,425hi can u plz explain how do i solve this one thx
First calculate the overheads per $ of labour. You are told what the total overheads are and what the total labour costs were.
Jobs 1 and 2 were still incomplete and were therefore still work in progress,
The value of Job 1 icloing work in progress is the opening work in progress, plus the material in the period, plus the labour in the period, plus the overheads (using the absorption rate as in my first sentence).
It is the same working for job 2.
(However, why are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers – they have answers together with the workings.)
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