CMA Intermediate · Cost Accounting · Batch Costing
Batch Q-3 of Narmada Tools: 1,000 units started. Material ₹2,00,000, wages ₹1,00,000, overhead 80% of wages. 50 units are normal rejects, sold as scrap at ₹100 each, and the scrap value is credited to the batch. Actual rejects were 50. What is the cost per good unit?
Total batch cost is ₹3,80,000; crediting normal scrap of ₹5,000 leaves ₹3,75,000. Spread over 950 good units this is about ₹395 per unit. Ignoring the scrap credit gives ₹400, which is wrong.
- A₹395Correct
- B₹400
- C₹379
- D₹415
Explanation
Overhead = 80,000. Total cost = 3,80,000. Less scrap 50×100 = 5,000 gives 3,75,000. Good units = 950. Cost per good unit = 3,75,000/950 = ₹394.74, about ₹395. Ignoring scrap gives 3,80,000/950 = ₹400.
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