CA Intermediate · Cost and Management Accounting · Unit & Batch Costing
Kaveri Components makes a batch of 1,000 units. Batch cost is Rs 2,40,000. Normal spoilage of 50 units is sold as scrap at Rs 40 each, with proceeds credited to the batch. Cost per good unit is closest to:
Normal spoilage cost is absorbed by good units. Net batch cost is Rs 2,38,000 after Rs 2,000 scrap proceeds, and dividing by 950 good units gives about Rs 250.53 per unit.
- ARs 240.00
- BRs 233.68
- CRs 250.53Correct
- DRs 238.00
Explanation
Net batch cost = 2,40,000 - (50 x 40 = 2,000) = 2,38,000. Good units = 1,000 - 50 = 950. Cost per good unit = 2,38,000/950 = Rs 250.53. Dividing by 1,000 gives Rs 238, ignoring that normal spoilage cost is borne by good units.
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