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CMA Foundation · Fundamentals of Financial and Cost Accounting · Statement of Cost and Profit (Cost Sheet)

A Chennai firm has opening work-in-progress of Rs 30,000 and closing work-in-progress of Rs 45,000. Prime cost is Rs 4,00,000 and factory overheads are Rs 1,00,000. What is the factory cost (works cost) of goods completed?

Works cost of goods completed is Rs 4,85,000. Prime cost plus factory overheads is Rs 5,00,000; adding opening work-in-progress of Rs 30,000 and deducting closing work-in-progress of Rs 45,000 gives Rs 4,85,000. Closing WIP is deducted because it is not yet completed.

  1. ARs 4,85,000Correct
  2. BRs 5,15,000
  3. CRs 5,45,000
  4. DRs 5,00,000

Explanation

Gross works cost = 4,00,000 + 1,00,000 = 5,00,000. Add opening WIP 30,000 to get 5,30,000, then deduct closing WIP 45,000 to get 4,85,000. Rs 5,15,000 results from reversing the WIP adjustments.

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