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CMA Intermediate · Cost Accounting · Cost Book-Keeping

A firm's cost ledger shows: opening stock of finished goods Rs 90,000, cost of production transferred Rs 8,10,000, closing finished goods Rs 1,20,000, administration overhead Rs 50,000 and selling overhead Rs 70,000, all charged to cost of sales. Sales were Rs 10,00,000. What is the profit shown in the Costing Profit and Loss Account, before adjusting any overhead under/over-absorption?

Profit is Rs 1,00,000. Cost of goods sold is 90,000 plus 8,10,000 less 1,20,000, which is 7,80,000. Adding administration 50,000 and selling overhead 70,000 gives cost of sales of 9,00,000, and deducting this from sales of 10,00,000 leaves 1,00,000.

  1. ARs 1,60,000Correct
  2. BRs 1,30,000
  3. CRs 1,90,000
  4. DRs 2,10,000

Explanation

Cost of goods sold = 90,000 + 8,10,000 - 1,20,000 = 7,80,000. Add admin 50,000 and selling 70,000 = 9,00,000 total cost of sales. Profit = 10,00,000 - 9,00,000 = 1,00,000. So the correct figure is Rs 1,00,000, which is not listed as option A; correct answer is the value computed.

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