This chapter-wise practice test covers Chapter 9: Job Costing - Test 2 for CA Intermediate Group 2 students preparing for the January 2027 examination attempt. It carries 30 marks across 15 questions in case scenarios and standalone practical MCQs with a time limit of 35 minutes and no negative marking.
15 questions across 1 chapter, 30 marks and 35 minutes in the timed paper. Every answer below is shown with the working behind it and the authority it rests on.
Law and standards used: ICAI Study Material for CA Intermediate Paper 4: Cost and Management Accounting (relevant for 2027 attempt).
Questions
15
Marks
30
Time limit
35 minutes
Attempt
January 2027
Group
Group 2
Law basis
ICAI Study Material for CA Intermediate Paper 4: Cost and Management Accounting (relevant for 2027 attempt)
Content as of
2026-11-10
Chapters covered
Chapter 9: Job Costing (15 Q)
Questions, answers and explanations
Question 1 · 2 marks · Chapter 9: Job Costing · medium
Scenario. Vikram Precision Engineering Ltd. undertakes custom machining jobs and operates a job costing system with departmental overhead recovery rates. The company has three production departments — Machining, Assembly and Finishing. Budgeted annual data for the year 2026-27 are as follows:
Machining: budgeted overheads ₹9,00,000; budgeted machine hours 30,000.
Assembly: budgeted overheads ₹8,00,000; budgeted direct labour hours 40,000.
Finishing: budgeted overheads ₹4,50,000; budgeted direct wages ₹7,50,000.
Overheads are recovered on the basis of machine hours in Machining, direct labour hours in Assembly, and percentage of direct wages in Finishing. Job V-501 was undertaken during October 2026. The job cost card shows:
• Direct materials: ₹2,00,000.
• Direct labour: Machining — 300 hours @ ₹120 per hour (the job used 500 machine hours); Assembly — 400 hours @ ₹100 per hour; Finishing — 300 hours @ ₹80 per hour.
• In addition, 40 hours of rework were carried out in the Assembly department because the customer changed the design specifications after the job had commenced. This rework is directly identifiable with Job V-501.
• A further 20 hours of rework in the Assembly department arose due to general production inefficiencies and is not identifiable with any specific job.
The company's policy is to charge specific rework (labour and applicable overhead) directly to the job concerned and to treat general rework as part of factory overheads. Job V-501 was completed and delivered in October 2026. There was no opening or closing work-in-progress for this job. All amounts are in Indian rupees. Ignore administration and selling overheads.
What is the overhead absorption rate for the Machining department?
₹20 per machine hour
₹25 per machine hour
₹30 per machine hour (correct answer)
₹35 per machine hour
Answer: C — ₹30 per machine hour
Explanation. Machining overhead rate = Budgeted overheads / Budgeted machine hours = ₹9,00,000 / 30,000 = ₹30 per machine hour. Option (a) ₹20 is the Assembly labour hour rate; (b) ₹25 results from dividing by labour hours instead of machine hours; (d) ₹35 is an arbitrary distractor. The rate must be applied to the actual machine hours used by the job (500 hours), not labour hours.
Where it goes wrong. Students divide by direct labour hours instead of machine hours for a machine-intensive department.
Question 2 · 2 marks · Chapter 9: Job Costing · hard
What is the overhead absorption rate for the Finishing department?
50% of direct wages
60% of direct wages (correct answer)
66.67% of direct wages
75% of direct wages
Answer: B — 60% of direct wages
Explanation. Finishing overhead rate = Budgeted overheads / Budgeted direct wages = ₹4,50,000 / ₹7,50,000 = 60% of direct wages. Option (a) 50% uses an incorrect numerator; (c) 66.67% results from dividing ₹5,00,000 by ₹7,50,000; (d) 75% is an arbitrary figure. The rate is applied to actual direct wages in Finishing (₹24,000).
Where it goes wrong. Students use actual wages or actual overheads instead of budgeted figures for the absorption rate.
Question 3 · 2 marks · Chapter 9: Job Costing · medium
What is the total factory overhead charged to Job V-501, including specific rework overhead?
₹37,400
₹38,600
₹37,000
₹38,200 (correct answer)
Answer: D — ₹38,200
Explanation. Base OH: Machining 500 × ₹30 = ₹15,000; Assembly 400 × ₹20 = ₹8,000; Finishing 60% × ₹24,000 = ₹14,400. Total base = ₹37,400. Specific rework OH: 40 hrs × ₹20 = ₹800. Total charged to job = ₹38,200. Option (a) omits specific rework OH; (b) adds general rework OH (₹400) which should go to factory overheads; (c) ₹37,000 results from a wrong Finishing rate.
Where it goes wrong. Students include general rework overhead in the job cost instead of charging it to factory overheads.
Question 5 · 2 marks · Chapter 9: Job Costing · medium
Scenario. Apex Polychem Ltd. manufactures customised polymer components against specific customer orders and uses a job costing system. Job P-220 was received for 2,000 units of a specialised component. The following cost data relate to the job:
• Direct materials: ₹2,12,000.
• Direct labour: 900 hours @ ₹100 per hour = ₹90,000.
• Factory overhead: absorbed at ₹100 per direct labour hour = ₹90,000.
After the job commenced, the customer requested a minor design modification. This required 40 hours of rework in the production department. The rework involved direct labour of 40 hours @ ₹100 per hour and factory overhead at the same absorption rate of ₹100 per direct labour hour. This rework is directly attributable to Job P-220.
Separately, 20 hours of rework arose during the month due to general production scheduling issues. This rework was not identifiable with any specific job and is treated as part of factory overheads. It involved direct labour of 20 hours @ ₹100 per hour and factory overhead of 20 hours @ ₹100 per hour.
Administration overheads are charged at 10% of works cost. Selling and distribution overheads are charged at 5% of works cost. The company's policy is to earn a profit margin of 20% on the sales value of each job.
There was no opening or closing work-in-progress for Job P-220. All amounts are in Indian rupees.
What is the total factory overhead charged to Job P-220, including specific rework overhead?
₹90,000
₹96,000
₹94,000 (correct answer)
₹88,000
Answer: C — ₹94,000
Explanation. Base OH = 900 hrs × ₹100 = ₹90,000. Specific rework OH = 40 hrs × ₹100 = ₹4,000. Total charged to job = ₹94,000. Option (a) omits rework OH; (b) adds general rework OH ₹2,000 (₹90,000 + ₹4,000 + ₹2,000 = ₹96,000) which is not chargeable to the job; (d) ₹88,000 results from an incorrect base calculation.
Where it goes wrong. Students add general rework overhead to the specific job instead of treating it as factory overhead.
Question 8 · 2 marks · Chapter 9: Job Costing · hard
What quotation price per unit should Apex Polychem Ltd. charge for Job P-220 (2,000 units), assuming a 20% profit margin on sales value?
₹276.00
₹300.00
₹262.50
₹287.50 (correct answer)
Answer: D — ₹287.50
Explanation. Total cost = ₹4,60,000. Profit is 20% on sales, so total cost = 80% of sales. Sales = 4,60,000 / 0.80 = ₹5,75,000. Price per unit = 5,75,000 / 2,000 = ₹287.50. Option (a) ₹276.00 uses 20% profit on cost; (b) ₹300.00 is a rounded distractor; (c) ₹262.50 omits administration overhead.
Where it goes wrong. Students apply the profit margin on cost instead of on sales value.
Question 9 · 2 marks · Chapter 9: Job Costing · medium
Scenario. A job required 30 hours of rework due to a design change requested by the customer. The rework involved direct labour of 30 hours @ ₹80 per hour and factory overhead @ ₹40 per hour. How should this rework cost be treated in job costing?
A job required 30 hours of rework due to a design change requested by the customer. The rework involved direct labour of 30 hours @ ₹80 per hour and factory overhead @ ₹40 per hour. How should this rework cost be treated in job costing?
Charged to Factory Overhead Control Account
Charged to Costing Profit and Loss Account
Charged directly to the specific job (correct answer)
Apportioned equally between factory overhead and the job
Answer: C — Charged directly to the specific job
Explanation. Rework arising from a customer-specific requirement (such as a design change) is directly identifiable with the job and must be charged to that specific job. It is not a general factory overhead because it does not benefit other jobs. Option (a) is wrong because general factory overheads cover normal, unidentified rework. Option (b) applies only to abnormal rework not attributable to any job. The cost is recoverable through the job price.
Where it goes wrong. Students treat all rework as factory overhead, ignoring whether it is specific to a job or general in nature.
Question 10 · 2 marks · Chapter 9: Job Costing · hard
Scenario. A job was executed in 500 hours, including 80 hours of overtime. The normal wage rate is ₹100 per hour and overtime is paid at 150% of the normal rate. The overtime was worked at the specific request of the customer for early delivery. What is the direct labour cost chargeable to the job?
A job was executed in 500 hours, including 80 hours of overtime. The normal wage rate is ₹100 per hour and overtime is paid at 150% of the normal rate. The overtime was worked at the specific request of the customer for early delivery. What is the direct labour cost chargeable to the job?
₹50,000
₹52,000
₹58,000
₹54,000 (correct answer)
Answer: D — ₹54,000
Explanation. Normal wages for all 500 hours = 500 × ₹100 = ₹50,000. Overtime premium = 80 hrs × ₹50 (50% of ₹100) = ₹4,000. Since the overtime is due to the customer's request, the entire premium is charged to the job. Total DL = ₹50,000 + ₹4,000 = ₹54,000. Option (a) omits the premium; (b) uses only a 25% premium; (c) doubles the premium.
Where it goes wrong. Students either omit the overtime premium or charge it to factory overhead even when it is customer-specific.
Question 11 · 2 marks · Chapter 9: Job Costing · medium
Scenario. A production department has budgeted overheads of ₹6,00,000 and budgeted direct labour hours of 15,000. Actual overheads were ₹6,20,000 and actual hours worked were 16,000. What is the overhead absorption rate for the department?
A production department has budgeted overheads of ₹6,00,000 and budgeted direct labour hours of 15,000. Actual overheads were ₹6,20,000 and actual hours worked were 16,000. What is the overhead absorption rate for the department?
₹40.00 per labour hour (correct answer)
₹38.75 per labour hour
₹41.33 per labour hour
₹37.50 per labour hour
Answer: A — ₹40.00 per labour hour
Explanation. Overhead absorption rate = Budgeted overheads / Budgeted base = ₹6,00,000 / 15,000 hours = ₹40.00 per labour hour. Option (b) uses actual OH / actual hours (6,20,000/16,000 = ₹38.75); (c) uses actual OH / budgeted hours (6,20,000/15,000 = ₹41.33); (d) uses budgeted OH / actual hours (6,00,000/16,000 = ₹37.50). Absorption rates are always based on budgeted figures.
Where it goes wrong. Students mix actual and budgeted figures when computing the predetermined absorption rate.
Question 12 · 2 marks · Chapter 9: Job Costing · hard
Scenario. The total cost of a custom job is ₹4,00,000. The company wants to earn a profit margin of 20% on the sales value. What should be the selling price of the job?
The total cost of a custom job is ₹4,00,000. The company wants to earn a profit margin of 20% on the sales value. What should be the selling price of the job?
₹4,80,000
₹5,20,000
₹4,50,000
₹5,00,000 (correct answer)
Answer: D — ₹5,00,000
Explanation. Profit is 20% on sales, so total cost represents 80% of sales. Sales = Total cost / 0.80 = ₹4,00,000 / 0.80 = ₹5,00,000. Option (a) ₹4,80,000 applies 20% on cost; (b) ₹5,20,000 applies 30% on cost; (c) ₹4,50,000 applies 12.5% on cost. Profit on sales is always calculated on the selling price, not on cost.
Where it goes wrong. Students calculate profit as a percentage of cost rather than sales value.
Question 13 · 2 marks · Chapter 9: Job Costing · medium
Scenario. Job 45 has an opening work-in-progress of ₹25,000. During the month, direct materials of ₹40,000 and direct labour of ₹30,000 were incurred on the job. Factory overhead is absorbed at 50% of direct labour. The job remained incomplete at month-end. What is the closing work-in-progress of Job 45?
Job 45 has an opening work-in-progress of ₹25,000. During the month, direct materials of ₹40,000 and direct labour of ₹30,000 were incurred on the job. Factory overhead is absorbed at 50% of direct labour. The job remained incomplete at month-end. What is the closing work-in-progress of Job 45?
₹95,000
₹1,10,000 (correct answer)
₹1,05,000
₹1,00,000
Answer: B — ₹1,10,000
Explanation. Closing WIP = Opening WIP ₹25,000 + Materials ₹40,000 + Labour ₹30,000 + Factory OH (50% × ₹30,000 = ₹15,000) = ₹1,10,000. Option (a) ₹95,000 omits factory overhead; (c) ₹1,05,000 uses an incorrect overhead rate; (d) ₹1,00,000 omits part of the overhead. All costs incurred to date, including opening WIP, form part of closing WIP for an incomplete job.
Where it goes wrong. Students either omit opening WIP or forget to absorb factory overhead on the labour incurred.
Question 14 · 2 marks · Chapter 9: Job Costing · hard
Scenario. A job produces 500 units with a total cost of ₹1,25,000. The company adds a profit margin of 25% on total cost. What is the selling price per unit?
A job produces 500 units with a total cost of ₹1,25,000. The company adds a profit margin of 25% on total cost. What is the selling price per unit?
₹250.00
₹300.00
₹312.50 (correct answer)
₹275.00
Answer: C — ₹312.50
Explanation. Total sales value = Total cost × (1 + 25%) = ₹1,25,000 × 1.25 = ₹1,56,250. Selling price per unit = ₹1,56,250 / 500 units = ₹312.50. Option (a) ₹250.00 is the cost per unit; (b) ₹300.00 uses a 20% markup; (d) ₹275.00 uses a 10% markup. When profit is on cost, selling price = cost × (1 + profit rate).
Where it goes wrong. Students confuse profit on cost with profit on sales or apply the wrong markup percentage.
Question 15 · 2 marks · Chapter 9: Job Costing · medium
Scenario. Material costing ₹8,000 issued to Job 10 was found unsuitable and transferred to Job 15 by means of a material transfer note. How should this transfer be recorded in the job cost accounts?
Material costing ₹8,000 issued to Job 10 was found unsuitable and transferred to Job 15 by means of a material transfer note. How should this transfer be recorded in the job cost accounts?
Debit Factory Overhead ₹8,000 and Credit Job 10 ₹8,000
Debit Stores Ledger ₹8,000 and Credit Job 10 ₹8,000
Answer: B — Debit Job 15 ₹8,000 and Credit Job 10 ₹8,000
Explanation. A material transfer note transfers the cost of materials from the original job to the receiving job. Job 10 (transferor) is credited by ₹8,000 and Job 15 (transferee) is debited by ₹8,000. Option (a) reverses the entries; (c) incorrectly routes the transfer through factory overhead; (d) incorrectly treats it as a return to stores. The net effect on total WIP is nil — only the job-wise allocation changes.
Where it goes wrong. Students reverse the debit and credit entries or treat an inter-job transfer as a return to stores.
ICAI SM: Cost and Management Accounting, Chapter 9 (Job Costing)
Questions people ask
What does this Chapter 9: Job Costing - Test 2 practice test cover?
This practice test carries 30 marks across 15 questions covering core costing principles, cost accounting standards, formulas, mathematical models, and practical ICAI case scenarios.
How many questions are there and what is the time limit?
There are 15 questions carrying 2 marks each, giving a maximum score of 30 marks in 35 minutes with no negative marking.
Which study material and syllabus apply to these questions?
Questions strictly reflect the official ICAI Study Material for CA Intermediate Paper 4 Cost and Management Accounting for the 2027 examination sessions.
Can I sit this test in both exam and practice modes?
Yes. Practice mode gives immediate answers with mathematical step-by-step workings and trap explanations after each question. Exam mode simulates actual exam conditions with a live timer and issues a downloadable performance certificate.
