1) Bay Agricultural Engineers is preparing a quote for Job 731.

The costs and other related

Information include:
$
Raw materials 4,250
Direct labour 7,200
Production overhead $5.50 per Labour hour
Administrative overhead 10% of production cost
Profit margin 25% on selling price
Note: Direct labour is paid $7.20 per hour. The sales price of Job 731 to the customer
would have been:
a) $22,882.50
b) $23,306.25
c) $24,680.00
d) $24,860.00

2) Which of the following businesses would operate a batch costing system?

a) Brewery
b) Food canning
c) Coalmine
d) Bakery

3) Which of the following would operate a job costing system?

a) Ship builder
b) Oil refinery
c) Steel producer
d) Kitchen fitter

4) Job costing will normally be used where:

a) a given number of similar products are produced
b) production is continuous
c) production of the product takes an extensive period of time
d) production relates to a single special order

5) A small engineering company that makes generators specifically to customers' own

designs has had to purchase some special tools for a particular job. The tools will have
no further use after the work has been completed and will be scrapped. The cost of these
tools should be treated as:
a) variable production overheads
b) fixed production overheads
c) indirect expenses
d) direct expenses

6) A firm of accountants conducts a number of audits for local companies each year. Which
of the following costing methods would it use?
a) Unit costing
b) Service costing
c) Job costing
d) Batch costing
7) Job XX has been completed at a total production cost of $3,633. Administration and
selling overheads are applied at 20% of production cost. The selling price of each job is
established so as to provide a GROSS profit margin of 30%. What is the selling price of
Job XX?
a) $4,723
b) $5,190
c) $5,668
d) $6,228

8) A jobbing enterprise calculates the prices of its jobs by adding overheads to the prime
cost and adding 30% to total costs as profit margin. Job number 256 was sold for $1,690
and incurred overheads of $694. What was the prime cost of the job?
a) $489
b) $507
c) $606
d) $996

9) The following items are recorded in a costing system:

(i) actual direct material cost
(ii) actual direct labour cost
(iii) actual manufacturing overheads
(iv) absorbed manufacturing overheads
Which of the items are contained in a typical job cost?
a) (i) and (ii) only
b) (i), (ii) and (iii) only
c) (i), (ii) and (iv) only
d) All four items

10) Costs for Job 123 are:

Direct materials $460
Direct labour $600
Overheads 120% of direct labour cost
A profit margin of 20% of selling price is required. What is the selling price of Job 123?
a) $2,136
b) $2,225
c) $2,856
d) $2,975

11) In a factory operating job costing which of the following costs will be overheads
allocated to individual cost centers?
 Salaries of supervisors, each of whom are responsible for two cost centers, where no record
is kept of their time in each cost center
 Wages of skilled operators, assigned to individual jobs, in particular cost centers, with time
recorded on timesheets
 Wages of labourers, who are moved from cost center to cost center and who maintain
detailed time sheets. They are not assigned to work on specific orders in each cost center.
a) Wages of labourers only
b) Wages of skilled operators only
c) Wages of labourers and salaries of supervisors
d) Wages of skilled operators and salaries of supervisors
12) In which of the following manufacturing environments would job costing be
appropriate?
1. Production is carried out in accordance with the special requirements of each customer
2. Products are mass produced for inventory
3. Joint products are manufactured
a) 1 only
b) 1 and 2
c) 3 only
d) 2 and 3

13) A job cost estimate includes 630 productive labour hours. In addition, it is anticipated
that idle time will be 10% of the total hours paid for the job. The wage rate is $12 per
hour. What is the total estimated labour cost for the job?
a) $6,804
b) $7,560
c) $8,316
d) $8,400

14) Which of the following is a feature of job costing?

a) Production is carried out in accordance with the wishes of the customer
b) Associated with continuous production of large volumes of low-cost items
c) Establishes the cost of services rendered
d) Costs are charged over the units produced in the period

15) The following information relates to job 2468, which is being carried out by AB Limited
to meet a customer’s order.
Department A Department B
Direct materials consumed $5,000 $3,000
Direct labour hours 400 hours 200hours
Direct labour rate per hour $4 $5
Production overheads per direct labour hour $4 $4
Administration and other overheads 20% of full production cost
Profit margin 25% of sales price
What is the selling price to the customer for job 2468?
a) $16,250
b) $17,333
c) $19,500
d) $20,800

Data for questions 16 and 17:

A firm uses job costing and recovers overheads on direct labour. Three jobs were worked
on during a period, the details of which are as follows:
Job 1 Job2 Job 3
$ $ $
Opening work in progress 8,500 0 46,000
Material in period 17,150 29,025 0
Labour for period 12,500 23,000 4,500

The overhead for the period were exactly as budgeted, $140,000. Jobs 1 and 2 Were the only
incomplete jobs.
16) What was the value of closing work in progress?
a) $90,175
b) $124,250
c) $214,425
d) $230,175

17) Job3 was completed during the period and consisted of 2,400 identical circuit boards.
The firm adds 50% to total production costs to arrive at a selling price. What is the selling
price of a circuit board?
a) It cannot be calculated without more information
b) $31.56
c) $41.41
d) $55.21

18) P Limited manufactures ring binders which are embossed with the customer’s own logo.
A customer has ordered a batch of 300 binders. The following illustrate the cost for a
typical batch of 100binders.
$
Direct materials 30
Direct wages 10
Machine set up 3
Design and artwork 15
58
P Limited absorbs production overheads at a rate of 20 percent of direct wages cost. Five
percent of total production cost of each batch to allow for selling, distribution and
administration overheads. P Limited requires a profit margin of 25 percent of sales value.
The selling price for a batch of 300 binders (to the nearest penny) will be:
a) $189.00
b) $193.20
c) $201.60
d) $252.00

19) A company provides the following data relating to job 141, direct material used $10,000,
direct labour hourly rate $10, direct labour hour used 150, machine hours used 60,
factory overhead recovery rate per machine hour $30. Based on this data, the
conversion cost for job 141 are:
a) $3,300
b) $6,000
c) $45,000
d) $4,300

20) A machine is hired for use on one job only:

a) The rental will be charged to the job as a direct expense
b) The rental will be charged to the job as an indirect expense
c) The rental and depreciation of the machine will be charged to the job as direct expenses
d) The rental and depreciation of the machine will be charged to the job as indirect expenses

21) The following information relates to job 3579, which is being carried out by Mitten son
Hands Ltd to meet a customer’s order.
 Materials issued to Job 3579 $5,000
Materials transferred to job 2456 $400
Grade X labour (direct labour); 200 hours at $3 per hour basic rate, 100 of these hours
were worked in overtime, at the request of the customer, in order to complete the job
earlier. Overtime premium is $1 per hour. Production overhead rate is $5 per direct
labour hour. A supervisor recorded on his job sheet that 20 hours of his time was spent
on this job. He is paid $5 per hour and the cost of his time is treated as a direct labour
cost in the company’s cost accounts. What is the full production cost of job 3579?
a) $6,300
b) $6,400
c) $6,500
d) $6,900

Data for questions 22-23:

Twist and Turn Ltd is a company that carries out jobbing work. One of the jobs carried
out in February was job 1357, to which the following information relates.
Direct material Y: 400 kilos issued from stores at a cost of $5 per kilo
Direct material Z: 800 kilos issued from stores at a cost of $6 per kilo 60 kilo returned. A further
20 kilos were damaged in Department Q and had to be disposed of this was
treated as an abnormal loss.
Department P: 300hoursoflabour,ofwhich100hoursweredoneinovertime
Department Q: 200hoursoflabour,ofwhich100hoursweredoneinovertime
Overtime work is carried out normally in Department P, where basic pay is $4 per hour
plus an overtime premium of $1 per hour. Overtime work was done in Department Q in
February because of a request by a customer for another job to complete his job quickly.
Basic pay in Department Q is $5 per hour and overtime premium is $1.50 per hour.
Overhead is absorbed at the rate of $3 per direct labour hour in both departments.

22) What was the direct material cost of job1357?

a) $6,300
b) $6,440
c) $6,680
d) $6,600

23) What was the direct labour cost of job1357?

a) $2,200
b) $2,280
c) $2,530
d) $2,600

24) In which of the following circumstances would a manufacturing organisation

implement job costing?
a) Where volume production exists
b) Where each order is different
c) Where products are identical and cost is averaged
d) Where production is continuous

25) A firm operates a job costing system and uses absorption costing. What should the cost
control procedure be for each job?
a) Direct costs should be compared to the estimate/quotation as the job progresses and remedial
 action taken
b) Profit or loss should be compared to estimate when the job is complete
c) Feedback should be obtained from the customer
d) Direct and indirect costs should be compared to the selling price as the job progresses and remedial
action taken

26) How are direct and indirect expenses coded in job costing system?
a) Direct expenses are coded to jobs, indirect expenses are initially coded to cost centres
b) Direct expenses are initially coded to cost centres, indirect expenses are recoded to jobs
c) Direct and indirect expenses are initially coded to cost centers
d) Direct and indirect expenses are coded to jobs

27) Job costs for job No. 637 are:

Direct material $150
Direct labour $75
Overhead 100% of direct labour
Profit 20% of selling price
What is the selling price of Job No.637?
a) $360
b) $375
c) $540
d) None of the above

28) At the end of month 1, Job ABC was in progress. Production costs incurred on the job in
Month 1were:
Direct material $6,270
Direct labour $3,480
Production overhead absorbed $4,350
Job ABC was completed in Month 2 during which the following relevant events occurred:
Direct material issued from stores to Job ABC $1,960
Direct material returned to stores from Job ABC $180
Direct material transferred from Job ABC to another job $115
Direct labour hours worked on Job ABC 396 hours
Direct labour is paid at a rate of $6.00 per hour. Production overhead is absorbed at a
rate of $7.50 per direct labour hour.
a) What is the total direct cumulative material cost for Job ABC?
b) What is the total cumulative production OH absorbed for Job ABC?

29) A manufacturing business absorbs production overheads into the cost of jobs as a
percentage of direct labour cost. Four jobs were worked on during a period. Details of
the jobs are as follows:
Job 1 Job2 Job 3 Job 4
$ $ $ $
Opening work-in-progress 4,360 1,200 2,625
Direct materials in the period 1,595 2,310 3,175 1,380
Direct labour in the period 1,240 1,580 1,905 1,315

Production overheads incurred in the period totaled $8,970. Jobs 1 and 2 Were completed
 in the period. What is the value of work-in-progress at the end of the period (to the
nearest$) ?

30) Production costs, including absorbed overheads, of $950.50 have been incurred to date
on Job XYZ. A further $296.75 of direct costs, including the cost of 85 direct labour
hours, is expected to be required to complete the job. Production overheads are
absorbed at a rate of $2.50 per direct labour hour. What is the expected total production
cost of Job XYZ? $ .

31) All Pali Ltd is a small jobbing company. Budgeted direct labour hours for the current
year were 45,000 hours and budgeted direct wages costs were $180,000. Job number
34679, a rush job for which overtime had to be worked by skilled employees, had the
following production costs.
$ $
Direct material 2,000
Direct wages
Normal rate (400 hrs.) 2,000
Overtime premium 500
2,500
Production overhead 4,000
8,500
Production overhead is based on a direct labour hour rate. If production overhead had
been based on a percentage of direct wages costs instead, the production cost of job
number 34679 would have been:
a) $5,500
b) $9,000
c) $10,250
d) $10,750

32) A firm uses job costing and absorption costing. It seeks to improve cost control at the
individual job level. Which of the following should management prioritize?
a) The planning and control of direct costs
b) Bases for the absorption of overhead
c) The planning and control of overheads
d) Estimation procedures and techniques

33) Production cost, including absorbed overhead, of $4,094 have been incurred to date on
Job XYZ. A further $1,735 of direct cost, including the cost of 80 direct labour hours, is
expected to be required to complete the job. Production overheads are absorbed at rate
of $10 per direct labour hour. What is the expected total production cost of Job XYZ?
$ .

34) A company operates a job costing system. Job 812 requires $60 of direct materials, $40
of direct labour and $20 of direct expenses. Direct labour is paid $8 per hour.
Production overheads are absorbed at a rate of $16 per direct labour hour and non-
production overheads are absorbed at a rate of 60% of prime cost. What is the total cost
of Job 812?
a) $240
b) $260
c) $272
d) $320
35) A business operates a job costing system and prices its jobs by adding 20% to the total
cost of the job. The prime cost of a job was $6,840 and it had used 156 direct labour
hours. The fixed production overheads are absorbed on the basis of direct labour hours.
The budgeted overhead absorption rate was based upon a budgeted fixed overhead of
$300,000 and total budgeted direct labour hours of60,000. The job should be sold for:
a) $7,620
b) $8,208
c) $9,144
d) $9,525

36) A company operates a job costing system. Job number 605 requires $300 of direct
materials and $400 of direct labour. Direct labour is paid at the rate of $8 per hour.
Production overheads are absorbed at a rate of $26 per direct labour hour and non-
production overheads are absorbed at a rate of 120%of prime cost. What is the total cost
of job number 605?
a) $2,000
b) $2,400
c) $2,840
d) $4,400

37) A builder has produced a quote for some alterations. The price is made up as follows:
$
Direct materials 100 kg @ $4 per kg 400
Direct labour 5 hours @ $10 per hour 50
15 hours @$5 per hour 75
Hire of machine 1 day @ $100 per day 100
Overheads 20 hours @ $8 per hour 160
Total cost 785
Profit mark-up @ 20% 0.2 x $785 157
Price quoted $942
Actual costs for the job were as follows:
Direct materials 120 kg @$4 per kg
Direct labour 3 hours @ $10 per hour
20 hours @ $5 per hour
Hire of machine 2 days @ $100 per day
The actual profit/ (loss) made on the job was:
a) $52 loss
b) $28 loss
c) $28 profit
d) $52 profit

38) A company operates a job costing system. The company's standard net profit margin is
20 percent of sales. The estimated costs for job 173 are as follows.
Direct materials 5 meters @ $20 per mere
Direct labour 14 hours @$8 per hour
Variable production overheads are recovered at the rate of $3 per direct labour hour.
Fixed production overheads for the year are budgeted to be $200,000 and are to be
recovered on the basis of the total 40,000 direct labour hours for the year. Other
overheads, in relation to selling, distribution and administration, are recovered at the
rate of $80 per job. The price to be quoted for job 173 is, to the nearest$?
a) $404
 b) $424
c) $485
d) $505

39) Annie is to set up a small hairdressing business at home. She anticipates working a 35-
hour week and taking four weeks' holiday per year. Her expenses for materials and
overheads are expected to be $3,000 per year, and she has set herself a target profit of
$18,000 for the first year. Assuming that only 90% of her working time will be
chargeable to clients, what price should she charge for a 'colour and cut' which would
take 3 hours?
a) $13.89
b) $35.71
c) $37.50
d) $41.67

40) A company operates a job costing system. Job number 1012 requires $45 of direct
materials and $30 of direct labour. Direct labour is paid at the rate of $7.50 per hour.
Production overheads are absorbed at a rate of $12.50 per direct labour hour and non-
production overheads are absorbed at a rate of 60% of prime cost. What is the total cost
of job number1012?
a) $170
b) $195
c) $200
d) $24