PA limited operates a job costing system. The company standardsale price is pred

Question

PA limited operates a job costing system. The company standardsale price is predetermined Rs. 505 based on cost plus 20% profitmargin. The estimated cost for Job # 141 is as follows:

Direct material

5 meters@ Rs.20 per meter

Direct labor     

14 hours@ Rs. 8.00 per hour

Production overhead for the year are budgeted to beRs.200,000 and are to be recovered on the basis of the total 40,000direct labor hour for the year.

Required:

v      Calculate Cost of Goods Sold forjob # 141

v      Calculate amount of profit forjob #141

Direct material

5 meters@ Rs.20 per meter

Direct labor     

14 hours@ Rs. 8.00 per hour

Explanation / Answer

Overhead Rate = 200,000/40,000 = Rs. 5 / labor hour Cost of Good Sold DirectMaterial             Rs. 100 DirectLabor                       112 ManufactureOverhead         70 TotalCost                     Rs. 282 Amount of profit = Rs.505 -Rs. 282 = Rs. 223

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