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CMA Intermediate · Cost Accounting · Cost Accounting Standards (CAS 1 to CAS 24)

A Pune plant employs 20 workers, each paid for 200 hours in a month at ₹150 per hour. Each worker was idle for 20 hours, of which 12 hours is normal idle time and 8 hours is abnormal idle time. What amount is charged to the Costing Profit and Loss Account for abnormal idle time, in line with CAS 7?

The abnormal idle time cost is ₹24,000, which is 20 workers × 8 abnormal hours × ₹150. It is charged to the Costing Profit and Loss Account. The normal idle time of 12 hours per worker remains part of production cost.

  1. A₹36,000
  2. B₹24,000Correct
  3. C₹60,000
  4. D₹1,200

Explanation

Abnormal idle hours are 20 workers × 8 hours = 160 hours. At ₹150 per hour this is ₹24,000. The ₹36,000 option is the normal idle cost (20 × 12 × 150), which stays in the cost of production. The ₹60,000 option takes all idle time as abnormal.

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