A factory operates 8 hours per day with 6 working days in a week. The worker is paid @500 per day as basic plus 40% dearness allowance. Overtime…

CA Intermediate · Cost and Management Accounting · MTP · May 2026
A factory operates 8 hours per day with 6 working days in a week. The worker is paid @500 per day as basic plus 40% dearness allowance. Overtime rate is payable at double the normal hourly rate. The worker is allowed half an hour break for lunch and two tea breaks of 15 minutes each per day. During last week, worker X was present for 5 days. To meet out demand, X has done overtime for 4 hours. X has spent 60% time on Job A and 40% time on Job B. The overtime worked was for Job A only. Direct material cost incurred are : Job A :5,000 Job B :7,500 Overheads are applied @15 per labour hour. You are required to CALCULATE the total cost of Job A and Job B.

Suggested Answer and Working Notes:

Calculation of total cost of Job A and Job B Particulars Job A Amount (in ₹) Job B Amount (in ₹) Direct Material Cost (Given) 5,000 7,500 Labour Cost (see working note) 2,900 1,400 Overheads 375 (21 hrs + 4 hrs x 15 per hour) 210 (14 hrs x 15 per hour) Total 8,275 9,110 Working Note: Normal time worked = (8 hrs - 11/2 hr - 11/2 hr) x 5day = 35 Hrs Normal hourly wages earned = (500Basic +200 D.A) x 5 days /35 Hrs = 100 per hour Overtime Wages = 2 x 100 per hour = 200 per hour Cost of wages for Job A: = (35 hrs x 100 x 60%) + 4 hrs x 200 = 2,100 +800 = 2,900 Cost of Wages of Job B: = (35 hrs x 100 x 40%) = 1,400

Topics: Job Costing

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