CA Intermediate · Cost and Management Accounting · Service Costing
A company runs a canteen costing Rs 2,40,000 per month for fixed costs and Rs 20 per meal variable. In a month, 12,000 meals are served. What is the total cost per meal?
Fixed cost per meal is Rs 2,40,000 divided by 12,000 meals, which is Rs 20. Adding the variable cost of Rs 20 gives a total cost of Rs 40 per meal. Using only one component would give Rs 20.
- ARs 40Correct
- BRs 20
- CRs 60
- DRs 30
Explanation
Fixed cost per meal = 2,40,000 / 12,000 = Rs 20. Variable cost per meal = Rs 20. Total cost per meal = Rs 40. Check: 12,000 x 40 = 4,80,000 = 2,40,000 + 12,000 x 20 = 2,40,000 + 2,40,000. Rs 20 ignores one component.
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