1.

D
$
Direct material costs:
A: 3 kg × $4 12
Z: 4 kg × $8 32
Direct labor costs:
Production: 1 hr × $8 8
Assembly: 1.5 hrs × $12 18
Prime Cost 70
Production overheads: $9 × 2.5 hrs 22.50
Total production cost 92.50
Admin/selling overheads (92.50 × 20%) 18.50
Total Cost 111
Mark up ($111 × 30%) 33.3
Price for Product FF 144.30

2. A
$
Direct Costs:
Material 45
Labor 30
Prime Cost 75
Production Overheads:
$12.50 × ($30/$7.50) 50
Total Production Cost 125
Non-Production Overheads:
60% × $75 45
Total Cost: 170

3. С
The cost per unit = total costs for the batch/number of units in the batch
Total Costs:
Direct Materials $230
Direct Labor $180
Production overheads $180/7.5 hrs = 24 hrs per batch
24 hrs × $12 $288
Total Production Cost $698
Non-Production Costs $698 × 30% $209.40
Total Cost $907.40

Cost per unit = $907.40/5 = $181.48

4. C
$

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 Direct Materials $300
Direct Labor $400
Prime Cost $700
Production Overheads
400/8 × $26 $1,300
Total Production Cost $2,000
Non-Production Costs
$700 × 120% $840
Total Cost $2,840

5. A
$
Direct Materials $64
Direct Labor
7 × $8 56
Prime Cost 120
Production Overheads
7 × $20 140
Total Production Cost 260
Non-Production Cost
$120 × 60% 72
Total Cost 332

6. B
$
Direct materials (3 kg × $6) 18.00
Direct labor (5 hr × $8) 40.00
Prime cost 58.00
Production overhead ($250,000 × 5/40,000) 31.25
Cost of production 89.25
Non-production overhead ($150,000 × $89.25/$750,000) 17.85
Total cost 107.10
Mark-up ($107.10 × 20%) 21.42
Price quoted 128.52

7. C
8. B
9. D
10. C
11. C
12. C
13. YES,NO
14. B&D

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15. C
16. D
17. A
18. B
19. D
20. A
21. A
22. D
23. B
Job BA is completed so can be ignored
Total cost = (11,660 + 10,520 + 14,335 + 7,695) x 1.4
Total cost = $61,894
Closing work in progress value =61,894 + 3,190
Closing work in progress value = $65,084
24. The correct answer is: $404 $
Direct materials (5 x $20) 100
Direct labour (14 x $8) 112
Variable overhead (14 x $3) 42
Fixed Overhead (14 x $5*) 70
Other overhead 80
Total cost of job 173 404
*Fixed production overhead absorption rate = $200,000
40,000
= $5 per direct labor hour

25. The correct answer is: $72,761

The most logical basis for absorbing the warhead job costs is to use a percentage of direct labour
cost.
Overhead = $24,600 x $126,000
$(14,500 + 3,500 «1+ 24.600)
= $24,600 x 126,000
$42,600
=$72,761

26. The correct answer is: $217,323

Job number WIP
$
AA10 (26,800 + 17,275 + 14,600) + ( 14,500 x 126,000) 101,462
42,600
CC20 ( 18,500 + 24,600 + 72,761) 115,861

217,323

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27. В
28. C
$
Direct Labor 25,000
Direct Materials 35,000
Prime Cost 60,000
Production Overheads ($8 × 2,000) 16,000
Non—Production Overheads (75% × $60,000) 45,000
Total Cost 121,000

29. C
Job costing allows each order to be costed differently.
Production of a group of identical units is characteristic of batch costing. Use of mass production
techniques where it is not possible to identify individual units of production are characteristics of
process costing.
30. B
The output of services is often intangible and service costing can be used for internal charging as
well as external clients.
31. C
Cost per day = $14,400/30 = $480
Average number of rooms occupied = 120 × 0.75 = 90
Cost per occupied room night = 480/90 = $5.33
32. A
Number of kg-km = 40,000 × 5,000 = 200 million
Cost per kg-km = $140,000/200 million = $0.0007 per kg-km

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