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CMA Final · Cost and Management Audit · Overview of Cost Accounting Standards and GACAP

A cost auditor of a company finds that the cost of production for captive consumption has been valued differently from the method prescribed in the relevant Cost Accounting Standard. Which standard prescribes the valuation principles for goods produced and consumed within the same entity?

CAS 4, Cost of Production for Captive Consumption, prescribes valuation principles for goods made and used within the same entity. The other standards cover utilities, packing material and royalty respectively, so they do not govern the valuation of captively consumed production.

  1. ACAS 4 Cost of Production for Captive ConsumptionCorrect
  2. BCAS 8 Cost of Utilities
  3. CCAS 9 Packing Material Cost
  4. DCAS 20 Royalty and Technical Know-how Fee

Explanation

CAS 4 on Cost of Production for Captive Consumption lays down principles for determining the cost of goods produced and consumed internally. CAS 8 covers utilities such as power and steam cost, and does not address captive consumption valuation generally.

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