Question

Create a job cost sheet on a furniture manufacturing company.

Describe the flow of different cost items.

Answer 1

Particulars	Calculations	Amount
Direct Material-
Wood	500,000	500,000
Direct labor		50,000
Direct overhead		25,000
Prime cost		575,000
Design cost		20,000
Factory overhead- 60% of wages		30,000
Office and administrative cost- 20% of prime cost		115,000
Total cost of production		740,000
Selling and distribution overhead		37,000
Cost of sales		777,000

Flow of cost-

Direct material mainly includes wood require for manufcaturing and direct labor includes processing of woods.

Direct overhead includes adhesives, tools, paints required for wood and is estimated at 50% of the direct labor.

Design cost is fixed for the month as specialised architect has been employed for this purpose with one helper.

Factory overhead and office & admin cost are taken as percentage of cost of production based on historical experience.

Selling and distributio cost is at 5% of cost of sales based on industry practice.