Forums › ACCA Forums › ACCA MA Management Accounting Forums › Job Costing Question help

- This topic has 4 replies, 2 voices, and was last updated 1 year ago by John Moffat.

- AuthorPosts
- June 12, 2023 at 11:26 am #686904
Hi how do you answer this question? I’m confused how to find the total overheads and then find 40% of it?

Company A bases its estimates on the following formula:

Total cost = Prime cost + 40% overhead

Selling price = Total cost + 25% profit

Estimates for two jobs show

Job X Job Y

£ £

Direct materials 200 100

Direct wages ?5 per hour 500 600

Prime cost 700 700

Calculate the selling price of each job. Is this the best way to absorb overhead?June 12, 2023 at 4:12 pm #686918In future you must ask in the Ask the Tutor Forum is you want me to answer – this forum is for students to help each other.

I think that either the question is badly written in your book or else you have copied it wrongly.

It has to mean that they add 40% to the prime cost so as to cover the overheads. So the total cost of Job X is 700 + (40% x 700)

You must surely have an answer in the same book in which you found the question, so does the answer not show the workings?

June 12, 2023 at 5:27 pm #686922Hi, this question is from a lecture slide in my course and I cannot get the solution as of now. Unfortunately the layout of the question I wrote changed after posted the question so I have typed it out again below. I have checked and the information was presented this way.

Company A bases its estimates on the following formula:

Total cost = Prime cost + 40% overhead

Selling price = Total cost + 25% profitJob X (in £)

Direct Materials

200

Direct Wages (£5 per hour)

500

Prime Cost

700Job Y (in £)

Direct Materials

100

Direct Wages (£5 per hour)

600

Prime Cost

700Calculate the selling price of each job. Is this the best way to absorb overhead?

June 12, 2023 at 5:30 pm #686923Thank you for your reply and redirection to the Ask the Tutor Forum

June 13, 2023 at 7:00 am #686947You are welcome, but my real remains the same as before. The question is poorly presented, but the answer has to be as I wrote 🙂

- AuthorPosts

- You must be logged in to reply to this topic.