CA Intermediate · Cost and Management Accounting · Cost Sheet
A cost sheet of Gupta Plastics Ltd. shows prime cost of ₹5,00,000, factory overheads of ₹1,00,000, opening work-in-progress of ₹30,000 and closing work-in-progress of ₹45,000. What is the factory cost (works cost)?
Factory cost is ₹5,85,000. Add prime cost and factory overheads to get ₹6,00,000, add opening work-in-progress of ₹30,000, and deduct closing work-in-progress of ₹45,000. The net adjustment for the WIP increase is a reduction of ₹15,000.
- A₹5,85,000Correct
- B₹6,15,000
- C₹6,00,000
- D₹6,45,000
Explanation
Gross factory cost = prime cost 5,00,000 + factory overheads 1,00,000 = 6,00,000. Add opening WIP 30,000 to get 6,30,000, then deduct closing WIP 45,000 to get 5,85,000. Option 6,15,000 wrongly adds the WIP change instead of subtracting closing stock correctly.
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