Unit 6 Job Costing

I'm doing XYZ123, a factory job cost exercise

A factory job cost card number XYZ123 shows the following price cost:
Direct Materials - 55.5 tons of steel @ £286 per ton
Direct Wages - Depo A - 60 hrs @ £13 per hour
Depo B - 80 hrs @ £12 per hour

The budget for the year reveals the following:

Variable Overheads
Depo A £24,000 for 36,000 direct labour hrs
Depo B £40,000 for 50,000 direct labour hrs

Fixed Overheads
Total budgeted direct labour hrs for the whole factory 90,000
Total budgeted expenditure £67,500


A) Calculate the cost of job XYZ123
B) Estimate the percentage profit obtained if the price quoted to the customer was £17,995

What am i doing with the 90,000 exactly?

Any help would be appreciated thanks


  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034
    I hope the attachment is helpful.

    The 90,000 hours of direct labour shows the total hours to be worked, 36,000 will be in dept A, 50,000 will be in dept B and presumably there is a dept c where the remainder are worked.
    Our product only uses dept A and dept B.
    We find the fixed overhead absorption rate per direct labour hour by dividing total budgeted cost by the total budgeted labour hours, in this case:
    90,000 hours

    This gives us a fixed overhead absorption rate of £0.75 per direct labour hour.
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  • beavis182
    beavis182 Registered Posts: 130 ? ? ?
    on the last bit is says what would the client be charged if the company set a 25% profit on cost. Am i right in thinking 25% is put on 17822 giving a charge to the customer of £22277.50???
  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034
    You have correctly added 25% on to the cost.
    I do not have any more of the question than that supplied here.
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