CMA Foundation · Fundamentals of Financial and Cost Accounting · Classification of Costs (CAS 1)
A composite cost unit is one that is expressed using two measures together. Which of the following is a composite unit?
Passenger-kilometre is a composite cost unit because it combines two measures, the number of passengers and the distance travelled. Tonne, litre and piece each rely on one measure only, so they are simple units.
- APassenger-kilometreCorrect
- BTonne
- CLitre
- DPiece
Explanation
Passenger-kilometre combines number of passengers and distance travelled, so it is a composite unit. Tonne, litre and piece are simple units based on a single measure.
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