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Rectification Cost
If the output is found to be sub-standard, it may be possible to rectify the fault
Rectification Cost
Became part of Direct cost if it occurs not frequently
& directly traceable on final product.
Work in Process
The value of WIP is simple the sum of the costs incurred on incomplete Job.
Question # FFQA2
Which of the following is NOT CORRECT?
A Contract costing is appropriate if each unit of production is unique and takes a
considerable length of time to complete.
B Batch costing refers to a system where either job or process costing techniques
are used to manufacture a product.
D Job costing is required when each unit of production is unique and production
is of long duration
Question # FFQA3
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 number 1012?
A £170 B £195 C £200 D £240
Question # FFQA4
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
Question # FFQA6
A company operates a job costing system. Job number 506 requires £64 of direct
materials and 7 hours of direct labour. Direct labour is paid £8 per hour.
Production overheads are absorbed at the rate of £20 per direct labour hour
and non-production overheads at a rate of 60% of prime cost.
What is the total cost of job number 506?
A £332 B £352 C £416 D £448
Question # FFQA7
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
Question # FFQA8
A company operates a job costing system. Job number 607 requires £300 of
direct materials, £400 of direct labour and £100 of direct expenses. Direct labour
is paid at a rate of £8 per hour. Production overheads are absorbed at a rate of
£40 per direct labour hour and non-production overheads are absorbed at a rate
of 150% of prime cost.
What is the total cost of job number 607?
A £3,750 B £3,850 C £4,000 D £4,200
The total budgeted overhead costs (after the allocation, apportionment and
reapportionment of service cost centre costs), and other information for
production cost centres T and W are as follows:
Cost centre T W
Budgeted Basis of overhead £780,000 £173,400
Budgeted activity 16,250 machine hours 14,450 direct labour
hours
Required:
Calculate the overhead absorption rates for cost centres T and W.
Question # FFQA10
The prime cost of product PP, one of the products made by Mahool Ltd, is as
follows:
£ per unit
Direct material 10
Direct labour:
Cost centre T 14
Cost centre W 21