CA Intermediate · Cost and Management Accounting · Service Costing
In service costing, a 'composite cost unit' is best described as:
A composite cost unit combines two measures to describe the service delivered, such as passenger-km, tonne-km or patient-days. It is used where a single simple unit cannot capture the service, so two factors like quantity and distance or time are multiplied together.
- AA unit combining two measures, such as passenger-km or tonne-kmCorrect
- BA unit measured only in rupees of revenue
- CA unit used only for manufacturing batches
- DA unit equal to total cost divided by total sales
Explanation
A composite unit combines two related measures, for example passengers and kilometres to give passenger-km, or tonnes and kilometres to give tonne-km. The other options do not describe a cost unit in service costing.
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