MA1-Management Information
Job Order Costing & Batch Costing
Class practice question
1 Which of the following costing methods is most likely to be used by a company involved in the
manufacture of customized furniture?
A Batch costing
B Service costing
C Job costing
D Process costing
2 A company calculates the prices of jobs by adding overheads to the prime cost and adding 50% to total
costs as a mark up. Job number AB71 was sold for $30,000 and incurred overheads of $6,000.
What was the prime cost of the job?
3 A company operates a job costing system.
The estimated costs for job 256 are as follows.
Direct materials
10 metres @ $15 per metre
Direct labour
15 hours @ $10 per hour
Variable production overheads are recovered at the rate of 150% of material cost.
Fixed production overheads for the year are budgeted to be $300,000 and are to be recovered on the basis
of the total of 50,000 direct labour hours for the year.
What is the production cost of job 256?
4 A company operates a job costing system. Job number 1312 requires $55 of direct materials and $50 of
direct labour. Direct labour is paid at the rate of $12.50 per hour. Production overheads are absorbed at a
rate of $7.50 per direct labour hour and non-production overheads are absorbed at a rate of 60% of prime
cost. Profit margin at that type of job is 30%
What is the selling price of job number 1312?
5 Which TWO of the following are most likely to use batch costing?
A A film making company
B An oil refinery
C A footwear manufacturer
D A bakery
Prepared by: Muzzamil Malik
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MA1-Management Information
6 A firm makes special assemblies to customers' orders and uses job costing.
The data for a period are:
Opening WIP
Material added in period
Labour for period
Job number
AA25
$
30,400
19,675
18,500
Job number
BB65
$
82,750
12,515
21,500
Job number
CC500
$
0
16,700
30,000
The budgeted overheads for the period were $150,000 (Absorbed on labour cost).
Job number AA25 was completed on the last day of the period.
What was the cost of closing work in progress in the last period?
7 The following information relates to a management consultancy organisation:
Salary cost per hour for senior consultants
Salary cost per hour for junior consultants
Overhead absorption rate per hour applied to all hours
$
30
20
15
The organization adds 40% margin to arrive at the final fee to be charged to a client.
Assignment number 786 took 74 hours of a senior consultant's time and 210 hours of junior consultants'
time.
What is the final fee to be charged for Assignment 786?
8 A company operates a job costing system.
Job number 1015 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 nonproduction overheads are absorbed at a rate of 120% of prime cost.
What is the production cost of job number 1015?
9 A company operates a lob costing system Job number 1207 requires $80 of direct materials and $150 of
direct labour Direct labour is paid at a rate of $15 per hour Direct expenses for the job are $70 Production
overheads are absorbed at a rate of $25 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 1207?
Prepared by: Muzzamil Malik
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MA1-Management Information
10 The following items may be used in costing batches.
(i) Actual material cost
(ii) Actual manufacturing overheads
(iii) Absorbed manufacturing overheads
(iv) Actual labour cost
Which of the above are contained in a typical batch cost?
A (i), (ii) and (iv) only
B (i) and (iv) only
C (i), (iii) and (iv) only
D (i), (ii), (iii) and (iv)
11 A company operates a Batch costing system Batch number 347 requires $800 of direct materials and
$1,500 of direct labour Direct labour is paid at a rate of $10 per hour Direct expenses for the Batch are
$700 Production overheads are absorbed at a rate of $25 per direct labour hour and non production
overheads are absorbed at a rate of 50% of prime cost. Batch 347 consist 3,000 units.
What is the total cost per unit of Batch number 347?
12 A company operates a Batch costing system. Batch number 1312 requires $550 of direct materials and
$500 of direct labour. Direct labour is paid at the rate of $12.50 per hour. Production overheads are
absorbed at a rate of $7.50 per direct labour hour and non-production overheads are absorbed at a rate of
60% of prime cost. Profit margin at that type of Batch is 25%. Batch 1312 consist 2,000 units.
What is the selling price per unit of Batch number 1312?
Prepared by: Muzzamil Malik
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