Question
Question 3 (Approximate completion time: 30 mins) [CLO 5] (Total 25 marks) ABC Limited is a jobbing company. On 1 June 2020, there was one
Question 3 (Approximate completion time: 30 mins) [CLO 5] (Total 25 marks)
ABC Limited is a jobbing company. On 1 June 2020, there was one uncompleted job in the factory. The job card for this work is summarized as follows:
Job Card, Job No. 1002 | |
Cost to date: | $ |
Direct materials | 700 |
Direct labour (100 hours) | 400 |
Factory overhead ($5 per direct labour hour) | 600 |
Factory Cost to date | 1,700 |
During June, three new jobs were started in the factory, and costs of production were as follows:
Direct Materials | $ |
Issued to: | |
Job 1002 | 6,000 |
Job 1003 | 9,000 |
Job 1004 | 8,000 |
Material transfers | $ |
Job 1004 to job 1003 | 900 |
Job 1002 to Job 1004 | 1,500 |
Materials returned to store | $ |
From Job 1002 | 1,200 |
Direct labour hours recorded | |
Job 1002 | 250 hrs |
Job 1003 | 300 hrs |
Job 1004 | 480 hrs |
The cost of labour hours during June 2020 was $4 per hour, and production overhead is absorbed at the rate of $5 per direct labour hour. Completed jobs were delivered to customers as soon as they were completed, and the invoiced amounts were as follows:
Job 1002 | $10,000 |
Job 1004 | $24,000 |
Administration and marketing overheads are added to the cost of sales at the rate of 20% of factory cost.
Required:
-
Prepare the summarized job costs cards for each job, and calculate the profit on each completed job. (22 marks)
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Differentiate between job and contract costing. (3 marks)
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