Question 1

Section A

ProConsult, a service firm, uses job costing. For Job #802, direct consultant labor is $4,000 and direct expenses are $500. Production overheads are absorbed at 150% of direct labor cost. Non-production overheads are added at 20% of total production cost. What is the total cost of Job #802?

Accepted Answer

Step 1: Calculate Prime Cost (Labor + Expenses). Step 2: Add Production Overhead to get Total Production Cost. Step 3: Add Non-production Overhead (20% of Total Production Cost) to get Total Cost.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Calculating production overhead on prime cost instead of direct labor, or calculating non-production overhead on prime cost.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 3

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