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Which of the following isare items that would be separately included in a job cost?
(1) Cost of sales
(2) Direct labour
(3) Seling overhead
(4) Profit(A) 2 and 3 only
(B) 1 Only
(C) 2, 3 and 4
(D) 3 and 4 onlySir the answer is ‘A’. Please explain this. Actually in BPP text book it is clearly mentioned that markup is added.
In a job costing card, you are trying to work out the COST of making a specific item. perhaps to work out a price for a customer. Although profit is important, it depends on selling price and is not a cost
The cost of production certainly includes (2). Cost of sales is only determined when items are sold; profit is only determined when a selling price has been agreed.
I’m unsure about 3, the selling overheads in the context of job costing where an item is being made to a specific customer’s requirements. Selling overheads make more sense if goods are mass produced and have to be marketed…..but here we have no way of leaving it out (as option B is clearly wrong)
Sir, here, separately included means separately included in what? In job card?
I really do not know what is meant by ‘separately’ here or how the question would be changed if that word was omitted.
I think I ignored it!
Don’t worry. Not all questions are good questions. ACCA carefully reviews all of theirs.
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