USEFUL FOR CA, CS, CMA

A PUBLICATION BY RAHUL SHIKHA ACADEMY (RSA)

JOB & BATCH COSTING

CA RAHUL GARG
(TRG)
GOLD MEDALIST
ALL INDIA RANKHOLDER in CA CS CMA
Question 1
A light engineering factory fabricates machine parts to customers. The factory commenced
fabrication of 12 Nos. machine parts to customers’ specifications and the expenditure incurred on
the job for the week ending 21st August, 2001 is given below :
₹ ₹
Direct materials (all items) 780.00
Direct labour (manual) 20 hours @ ₹ 15 per hour 300.00
Machine facilities :
Machine No. I : 4 hours @ ₹ 45 180.00
Machine No. II : 6 hours @ ₹ 65 390.00 570.00
Total 1650.00
Overheads @ ₹ 8 per hour on 20 manual hours 160.00
Total cost 1810.00
The overhead rate of ₹ 8 per hour is based on 3,000 man hours per week; similarly, the machine
hour rates are based on the normal working of Machine Nos. I and II for 40 hours out of 45
hours per week.
After the close of each week, the factory levies a supplementary rate for the recovery of full
overhead expenses on the basis of actual hours worked during the week. During the week ending
21st August, 2001, the total labour hours worked was 2,400 and Machine Nos. I and II had
worked for 30 hours and 32.5 hours respectively.
Prepare a Cost Sheet for the job for the fabrication of 12 Nos. machine parts duly levying the
supplementary rates.

CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com
CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com
CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com
Question 2
Following data is available from the cost records of a company for the month of March 2012 :
: Opening stock of job as on 1st March 2012
Job no. A 99 : Direct Material ₹ 80, Direct Wages ₹150 and Factory Overheads ₹ 200
Job no. A 77 : Direct Material ₹ 420, Direct Wages ₹450 and Factory Overheads ₹ 400

: Direct material issued during the month of February 2012 was:

: Direct labour details for March 2012 were :

: Factory Overheads are applied to jobs on production according to direct labour hour rate which is
₹ 2 per hour.

: Factory Overhead incurred in March 2012 were ₹ 2,100.

: Job numbers A 99 & A 77 were completed during the month. They were billed to the
customers at a price which included 15% of the price of the job for Selling & Distribution expenses
and another 10% of the price for Profit.

Prepare :
(a) Job cost sheet for job number A 77 and A 99.
(b) Determine the selling price for the jobs.
(c) Calculate the value of work in process.

CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com
CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com
CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com
CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com
Question 3
Arnav Confectioners (AC) owns a bakery which is used to make bakery items like pastries, cakes
and muffins. AC use to bake at least 50 units of any item at a time. A customer has given an
order for 600 muffins. To process a batch of 50 muffins, the following cost would be incurred:
Direct materials ₹ 500
Direct wages ₹ 50
Oven set- up cost ₹ 150
AC absorbs production overheads at a rate of 20% of direct wages cost. 10% is added to the
total production cost of each batch to allow for selling, distribution and administration overheads.
AC requires a profit margin of 25% of sales value.
Determine the selling price for 600 muffins.

CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com
CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com
Question 4
Rio Limited undertakes to supply 1000 units of a component per month for the months of
January, February and March 2008. Every month a batch order is opened against which materials
and labour cost are booked at actual. Overheads are levied at a rate per labour hour. The selling
price is contracted at ₹ 15 per unit.
From the following data, present the profit per unit of each batch order and the overall position
of the order for the 3,000 units.
Month Batch Output (Numbers) Material Cost (₹) Labour Cost (₹)
Jan 2008 1,250 6,250 2,500
Feb 2008 1,500 9,000 3,000
Mar 2008 1,000 5,000 2,000
Labour is paid at the rate of ₹ 2 per hour. The other details are:
Month Overheads Total Labour Hours
Jan 2008 12,000 4,000
Feb 2008 9,000 4,500
Mar 2008 15,000 5,000

CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com
CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com
CA Rahul Garg Gold Medalist All India Rankholder in CA, CS, CMA (incl. Rank 1)
Copyright of these notes is with RSA. Buy Regular & Fast Track Lectures @ www.carahulgarg.com