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Job costing

JJohn10y ago
I have a question but I cann't calculate with correct answer Ali Co is a jobbing comapny. Budgeted direct labour hours for the current year were 45,000 hours and budgeted direct wages costs were $ 180,000 Job number 12345, a rush job for which overtime had to be worked by skilled employees, had the following production costs. Direct materials $2,000 Direct wages Normal rate (400hrs) $2,000 Overtime premium $500 Production overhaed $4,000 Total $8,500 Production overhaed is based on a direct labour hour rate If production overhaed had been based on a percentage of direct wages costs instead, the production cost of job number 12345 would have been
John MoffatJohn MoffatTutor10y ago#1
Because the overheads at the moment are based on about hours, it means they are charging at 4,000/400 = $10 per hour. That means that the budgeted overheads would be 45,000 x $10 = 450,000. This is 450,000/180,000 = 250% of budgeted wages. Therefore if overheads were based on % of wages it would mean that the overhead charge for the job would be 250% x 2,000 = $5,000
JJohn10y ago#2
Thank you now I understand which part I have ignored
John MoffatJohn MoffatTutor10y ago#3
You are welcome :-)
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