CMA Intermediate · Cost Accounting · Cost Book-Keeping
Gupta Industries had these cost ledger figures: opening WIP Rs 40,000, direct materials Rs 3,00,000, direct wages Rs 1,50,000, factory overhead absorbed at 80% of direct wages, closing WIP Rs 50,000. What is the cost of production transferred to finished goods?
Cost of production transferred is Rs 5,60,000. Add opening WIP 40,000, materials 3,00,000, wages 1,50,000 and absorbed overhead 1,20,000 to get 6,10,000, then deduct closing WIP of 50,000. Rs 6,10,000 is only the total before deducting closing WIP.
- ARs 6,10,000Correct
- BRs 6,00,000
- CRs 6,20,000
- DRs 5,60,000
Explanation
Overhead absorbed = 80% of 1,50,000 = 1,20,000. Total debits = 40,000 + 3,00,000 + 1,50,000 + 1,20,000 = 6,10,000. Less closing WIP 50,000 gives 5,60,000. Hence the transfer is Rs 5,60,000; option D is correct.
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