job costing theory

Question 1

what is profit mark up

Answer 1

a percentage of the total cost of the product

Question 2

what is a direct cost

Answer 2

these are costs involved with the actual making of the product eg direct materials, direct labour and direct expenses

Question 3

what is an indirect cost

Answer 3

these are overheads which are costs not involved with the actual making of the product but are involved in the running of the business and without which the product would not be made eg rent and insurance

Question 4

layout for job cost statement

Answer 4

DIRECT COSTS
direct materials
direct labour
direct expenses if any
PRIME COST
add indirect costs/ overheads
TOTAL COST
ADD PROFIT(MARK - UP)
ADD VAT@20%
SELLING PRICE/QUOTE TO CUSTOMER

direct costs
direct expenses
prime cost
overheads
total cost
profit mark up
vat
selling price/ quote to customer