CMA Foundation · Fundamentals of Financial and Cost Accounting · Statement of Cost and Profit (Cost Sheet)
Gupta Steels has prime cost of ₹6,00,000 and factory overheads of ₹2,00,000. Opening WIP is ₹40,000 and closing WIP is ₹70,000. Scrap sale realisation from the process is ₹10,000, to be credited to the factory cost. What is the factory cost?
Factory cost is ₹7,60,000. Prime cost plus overheads is ₹8,00,000, adding opening WIP of ₹40,000 and deducting closing WIP of ₹70,000 gives ₹7,70,000, and deducting the ₹10,000 scrap realisation gives ₹7,60,000.
- A₹7,60,000Correct
- B₹7,70,000
- C₹7,50,000
- D₹8,20,000
Explanation
Gross factory cost = 6,00,000 + 2,00,000 = 8,00,000. Add opening WIP 40,000 = 8,40,000. Less closing WIP 70,000 = 7,70,000. Less scrap realisation 10,000 = 7,60,000. Option B forgets to deduct scrap.
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