Example 3 An advertising agency uses a job costing system to calculate the cost of a...

  

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Example 3 An advertising agency uses a job costing system to calculate the cost of a client contracts. Contract A2 is one of several contracts undertaken in the last accounting period. Cost associated with the contract consist of: Direct materials N$5,500 Direct expenses N$14,500 Design staff worked 1020 hours on contract A2, of which 120 hours were overtime. One third of these overtime hours were worked at the request of the client who wanted the contract to be completed quickly. Overtime is paid at a premium of 25 per cent of the basic wage of N$24.00 per hour. Calculate the prime cost of contract A2. Example 3 An advertising agency uses a job costing system to calculate the cost of a client contracts. Contract A2 is one of several contracts undertaken in the last accounting period. Cost associated with the contract consist of: Direct materials N$5,500 Direct expenses N$14,500 Design staff worked 1020 hours on contract A2, of which 120 hours were overtime. One third of these overtime hours were worked at the request of the client who wanted the contract to be completed quickly. Overtime is paid at a premium of 25 per cent of the basic wage of N$24.00 per hour. Calculate the prime cost of contract A2.

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Answer Prime cost of contract A2 Direct Materials cost Dire... View the full answer