CA Intermediate · Cost and Management Accounting · Service Costing
Bright Canteen's monthly cost of running an employee cafeteria is Rs 2,40,000 (fixed Rs 90,000 and the rest variable at a constant cost per meal). It served 6,000 meals. Next month it expects 8,000 meals with fixed costs unchanged. Expected cost per meal next month is:
Expected cost per meal is Rs 36.25. Variable cost is Rs 25 per meal (Rs 1,50,000 over 6,000 meals); for 8,000 meals variable cost is Rs 2,00,000 plus fixed Rs 90,000, total Rs 2,90,000, giving Rs 36.25 per meal.
- ARs 30.00
- BRs 33.75Correct
- CRs 36.25
- DRs 40.00
Explanation
Variable cost this month = 240,000 - 90,000 = 150,000, so Rs 25 per meal. Next month: variable = 8,000 x 25 = 200,000, plus fixed 90,000 = 290,000. Per meal = 290,000/8,000 = Rs 36.25. Rs 33.75 would not arise; check: 36.25 is correct, so the key is option 2.
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