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Job and batch costing

Forums › FIA Forums › Job and batch costing

  • This topic has 2 replies, 2 voices, and was last updated 6 years ago by harmeen45.
Viewing 3 posts - 1 through 3 (of 3 total)
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    Posts
  • June 13, 2019 at 12:07 pm #520377
    harmeen45
    Participant
    • Topics: 6
    • Replies: 3
    • ☆

    The following information relates to a management consultancy organisation:
    Salary cost per hour for senior consultants 40
    Salary cost per hour for junior consultants 25
    Overhead absorption rate per hour applied to all hours 20
    The organisation adds 40% margin on sales price to arrive at the final fee to be charged to a client. Assignment number 620 took 54 hours of a senior consultant’s time and 110 hours of junior consultant’s time.
    What is the final fee charged for assignment 620?
    (a) $6,874
    (b) $10,696
    (c) $11,466
    (d) $ 13,650
    My answer is option c but correct option is d

    June 13, 2019 at 5:14 pm #520413
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10606
    • ☆☆☆☆☆

    Salary costs = 54 @ $40 + 110 @ $25 = 4,910.

    Overheads = 164 @ $20 = 3,280.

    Total costs = 8,190.

    Costs + Profit = Selling price
    60 40 100

    (as with your previous question, GP% is applied to selling price)

    So, selling price = 8,190/0.6 = 13,650

    June 13, 2019 at 9:01 pm #520426
    harmeen45
    Participant
    • Topics: 6
    • Replies: 3
    • ☆

    thanks

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    Posts
Viewing 3 posts - 1 through 3 (of 3 total)
  • The topic ‘Job and batch costing’ is closed to new replies.

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