Job & Batch Costing

QUESTION 1 (CW -1)

From the records of a manufacturing company, the following budgeted details are available:
₹ ₹
Direct materials
Direct wages: 199000
Machine shop (12000 hours) 63000
Assembly shop (10000 hours)
Work overhead: 48000 111000
Machine shop 88200
Assembly shop 51800 140000
Administrative overhead 90000
Selling overhead 81000
Distribution overhead 62100 233100
Assuming that the company follows absorption method of costing, you are required to :
a) Prepare a schedule of overhead rates from the figures available stating the basis of
overhead recovery rates used under the given circumstances.
b) Work out a cost estimate for the following job based on overhead computed.
Direct material: 25 kg. @ ₹. 16.80 per kg.
15 kg. @ ₹. 20.00 per kg.
Direct labour: Machine shop 30 hours
Assembly shop 42 hours

QUESTION 2 (CW -2)

In an engineering company, the factory overheads are recovered on fixed percentage
basis on direct wages and administration overheads are absorbed on fixed percentage
basis on factory cost.
The company has furnished the following data relating to two jobs undertaken by it in a period:
Job 101 Job 102
Direct material ₹. 54000 ₹ 37500
Direct wages ₹.42000 ₹.30000
Selling price ₹.166650 ͅ₹ 128250
Profit percentage on total cost
Required: 10% 20%

(i) Computation of percentage recovery rates of factory and administration overheads.

(ii) Calculation of amount of factory overheads, administration overheads and profit for
each of the two jobs.
(iii) Using the above recovery rates, fix the selling price of Job 103. The additional data

being: Direct material Rs.24000

Direct wages Rs.20000
Profit percentage on selling price 12 ½%

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Job & Batch Costing
QUESTION 3 (CW -3)
A manufacturing unit has predetermined the overhead recovery rates as 40% on direct wages,
20% on works cost and 25% on cost of production for works expenses, management expenses
and commercial expenses respectively.
At the end of the year, it has been found that the works overheads show under recover of one
eighth of the absorbed amount, and the recovery of commercial expenses result in an over
absorption of one third of the total amount absorbed. If the prime costs of three jobs are as
under, find the profit/loss on the respective selling prices (both on the basis of standard cost
and on the basis of full absorption of overheads):

Job A ₹. Job B ₹. Job C ₹.

Direct materials 45.50 32.60 26.80
Direct wages 15.20 8.60 7.20
60.70 41.20 34.00
Selling price 200.00 130.00 90.00

QUESTION 4

Units to be produced in year are 24000. The set up cost of one batch is Rs.324. The inventory
carrying cost per unit per annum is Rs.31.20. compute Economic Batch Quantity

QUESTION 5
Given below are the cost details for the organization during 1999:
Direct material ₹ 500000 Direct Factory expenses ₹ 300000
Direct labour ₹ 1000000 factory overheads ₹ 500000
WIP at the beginning ₹ 400000 Selling Expenses ₹ 200000
WIP at the end ₹ 300000 Sales ₹ 3500000
Office & Admin.
Overheads ₹.200000
During March, 2000 there is an enquiry for a job requiring Direct Materials cost of Rs.5000.
Direct labour cost of Rs.10000 and direct factory expenses of Rs.1000. Factory overheads are
recovered as percentage to prime cost, office & admn., overheads as percentage to works cost
and selling and distribution overheads as percentage to cost of production. However, it is felt
that this year there is higher office and admn. Costs to the extent of 10% and selling cost
have gone up by about 15%. What should be the quotation for the job if the same rate of
profit on sale is to be maintained as during 1999.

QUESTION 6 (CW -6)

The following budgeted cost information is available from the records of a manufacturing
concern for a particular year: (Rs. in lakhs)
Direct material 61.20
Direct wages
- Rolling shop (120000hours) 6.00
- Milling shop (240000hours) 14.40
Works overheads
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Job & Batch Costing

- Rolling shop 9.60

- Milling shop 28.80
Administration overheads 24.00
Selling overheads 43.20
The works overheads are recovered on the basis of labour hours, the administration overheads
on the basis of works cost and selling overheads on the basis of cost of production.
You are required to –
1) Prepare annual cost statements so as to compute the budgeted cost of sales.
2) Compute overhead recovery rates.
Compute total cost of a job which requires the following-
a. Direct material Rs.7560
b. Labour cost
- Rolling shop 40 hours @ Rs.6 per hour
- Milling shop 70 hours @ Rs. 5 per hour.

QUESTION 7 (CW -7)

The following information for the year ended December 31st, 1998 is obtained from the books
and records of a factory:
Completed Work in
jobs progress
Rs. Rs.
Raw materials supplied from 90000 30000
stores
Wages 100000 40000
Chargeable expenses 10000 4000
Materials transferred to WIP 2000 2000
Materials returned to stores 1000
Factory overhead is 80% of wages and office
overhead 25% of factory cost. The price of the
executed contracts during 1998 was Rs.410000.
Prepare
(i) consolidated completed jobs account showing the profit made or loss incurred,
and also (ii) consolidated WIP account.
QUESTION 8 (CW -8)
Component 893-X is made entirely in cost centre 476. Material cost is 6 paise per component
and each component takes 10 minutes to produce. The machine operator is paid 72 paise per
hour and the machine hour rate is Rs.1.50. The setting up of the machine to produce component
893-X takes 2 hours 20 minutes.
On the basis of this information, prepare cost sheet showing the production and setting up
cost, both in total and per component, assuming a batch of
(a) 10 components, (b) 100 components, and (c) 1000 components is produced.

CA Aditya Sharma Page no.8.3