Skip to content

CA Intermediate · Cost and Management Accounting · Introduction to Cost and Management Accounting

In Anand Engineering, the following costs were recorded for a month: depreciation of factory machine Rs 30,000; salary of the factory supervisor Rs 45,000; salary of the sales manager Rs 60,000; carriage on sales Rs 12,000; direct wages Rs 1,50,000. Total of costs that are not part of prime cost and are classified as production overheads is:

Production overheads are Rs 75,000, being factory machine depreciation of Rs 30,000 and factory supervisor salary of Rs 45,000. Sales manager salary and carriage on sales are selling and distribution costs, and direct wages belong to prime cost, so they are excluded.

  1. ARs 75,000Correct
  2. BRs 87,000
  3. CRs 1,35,000
  4. DRs 1,47,000

Explanation

Production (factory) overheads are depreciation of factory machine 30,000 plus supervisor salary 45,000 = Rs 75,000. Sales manager salary and carriage on sales are selling and distribution overheads, and direct wages are prime cost. Rs 87,000 wrongly adds carriage on sales.

Did you get it right without looking?

One question tells you little. A timed set on Introduction to Cost and Management Accounting shows your real accuracy, how long you take and where you lose marks.

Practise Introduction to Cost and Management AccountingFree diagnostic mock

More Introduction to Cost and Management Accounting questions