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CMA Final · Strategic Cost Management · Activity Based Cost Management

Kaveri Components Ltd has a quality inspection cost pool of Rs 3,60,000 with a cost driver of number of inspections, total 1,200 inspections. Product P required 300 inspections and 6,000 units were produced. Under ABC, the inspection cost per unit of P is:

The inspection cost per unit of P is Rs 15. The rate is Rs 300 per inspection (3,60,000 divided by 1,200), P consumes 300 inspections costing Rs 90,000, and spreading this over 6,000 units gives Rs 15 per unit.

  1. ARs 15.00Correct
  2. BRs 60.00
  3. CRs 18.00
  4. DRs 12.50

Explanation

Rate per inspection = 3,60,000 / 1,200 = Rs 300. Cost to P = 300 x 300 = Rs 90,000. Per unit = 90,000 / 6,000 = Rs 15. Rs 60 results from dividing the pool by 6,000 units, ignoring the driver.

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