CMA Final · Cost and Management Audit · Audit of Different Service Organisations
A cost auditor examines an IT services firm. Total cost for a month is ₹48,00,000, of which ₹12,00,000 is bench cost of idle staff. Total available staff hours are 12,000, of which 9,000 are billable. What is the cost per billable hour if the entire cost, including bench cost, is absorbed by billable hours?
The cost per billable hour is ₹533.33. The whole monthly cost of ₹48,00,000, including idle bench cost, is spread over only the 9,000 billable hours. Dividing by 12,000 available hours would understate the rate because idle hours earn nothing.
- A₹400
- B₹533.33Correct
- C₹300
- D₹444.44
Explanation
Total cost of ₹48,00,000 is absorbed over 9,000 billable hours: 48,00,000 / 9,000 = ₹533.33. Dividing by available hours (12,000) gives ₹400, which wrongly ignores non-billable hours. Excluding bench cost and using billable hours gives 36,00,000/9,000 = ₹400 as well, and using 12,000 hours with 36,00,000 gives ₹300. Each of those omits the stated absorption basis.
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