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CMA Foundation · Fundamentals of Financial and Cost Accounting · Meaning and Significance of Cost Accounting and its Relationship with Financial Accounting

Kaveri Foods' cost records show that a batch of 500 kg of snacks cost ₹30,000, of which wastage inefficiency worth ₹3,000 was identified through cost analysis and later eliminated. Assuming the same output and other costs unchanged, what is the new cost per kg?

After eliminating the ₹3,000 of identified wastage, the batch cost falls from ₹30,000 to ₹27,000. Dividing by 500 kg gives ₹54 per kg. This shows how cost accounting highlights inefficiencies and helps reduce unit cost.

  1. A₹54Correct
  2. B₹60
  3. C₹66
  4. D₹6

Explanation

Cost after removing inefficiency = 30,000 − 3,000 = ₹27,000. Cost per kg = 27,000/500 = ₹54. The ₹60 option is the old cost per kg, and ₹66 wrongly adds the wastage.

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