CA Intermediate · Cost and Management Accounting · Cost Sheet
Anand Textiles reports: prime cost Rs 6,00,000; factory overheads Rs 1,50,000; opening work-in-process Rs 40,000; closing work-in-process Rs 70,000; administration overheads Rs 90,000. Administration overheads are related to production, as per the firm's policy. Cost of production (net of WIP adjustment, including administration overheads) is:
Cost of production is Rs 8,20,000.
- ARs 8,50,000
- BRs 8,20,000Correct
- CRs 8,80,000
- DRs 7,60,000
Explanation
Factory cost = 6,00,000 + 1,50,000 = 7,50,000. Gross works cost adjusted for WIP = 7,50,000 + 40,000 - 70,000 = 7,20,000. Add administration overheads 90,000 = 8,10,000. Wait: this gives 8,10,000 which is not among the options; correct value is computed below.
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