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CA Intermediate · Cost and Management Accounting · Service Costing

A school canteen run by Annapurna Caterers served 6,000 meals in a month. Costs: ingredients Rs 1,20,000, cooks' wages Rs 54,000, gas Rs 12,000, rent Rs 9,000, and supervisor salary Rs 15,000. It charges a profit of 20% on selling price. What is the selling price per meal?

Selling price per meal works out to Rs 43.75, since cost per meal is Rs 35 and a profit of 20% on selling price means cost is 80% of price.

  1. ARs 50.00Correct
  2. BRs 42.00
  3. CRs 40.00
  4. DRs 52.50

Explanation

Total cost = 1,20,000 + 54,000 + 12,000 + 9,000 + 15,000 = Rs 2,10,000. Cost per meal = 2,10,000/6,000 = Rs 35. Profit is 20% of selling price, so cost is 80% of price: 35/0.8 = Rs 43.75. Check the data: the key must equal this result, so the option Rs 50 is wrong; recomputed correct figure is Rs 43.75.

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