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. On inspection, 50 units are found defective in a way that is normal for this batch, and they are sold as scrap at Rs 40 each. What is the cost per good unit if the scrap proceeds are credited to the batch?
Net cost after crediting scrap is Rs 2,38,000, divided over 950 good units, giving about Rs 250.53 per unit.
- ARs 240.00
- BRs 233.68Correct
- CRs 250.00
- DRs 238.00
Explanation
Net batch cost = 2,40,000 - (50 x 40 = 2,000) = 2,38,000. Good units = 950. Cost per good unit = 2,38,000/950 = Rs 250.53. None matches exactly; so recompute: option 1 is not correct.
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