CMA Intermediate · Cost Accounting · Batch Costing
Batch B-14 of Sundaram Industries: direct materials ₹60,000, direct wages ₹40,000, factory overhead absorbed at 50% of direct wages, and a one-time machine set-up cost of ₹8,000 for the batch. The batch has 400 units. What is the factory cost per unit?
Factory cost is materials 60,000 plus wages 40,000 plus overhead 20,000 plus set-up 8,000, totalling ₹1,28,000. Dividing by 400 units gives ₹320 per unit. Leaving out the batch set-up cost would wrongly give ₹300.
- A₹320Correct
- B₹300
- C₹250
- D₹345
Explanation
Factory overhead = 50% × 40,000 = 20,000. Factory cost = 60,000 + 40,000 + 20,000 + 8,000 = 1,28,000. Per unit = 1,28,000/400 = ₹320. Omitting the set-up cost gives 1,20,000/400 = ₹300.
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