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CMA Foundation · Fundamentals of Financial and Cost Accounting · Classification of Costs (CAS 1)

Kaveri Packers pays a monthly rent of ₹40,000 for its warehouse. In a month when output rises from 8,000 units to 10,000 units, with no change in capacity, what is the rent per unit at the higher output?

The rent per unit at the higher output is ₹4. Rent is a fixed cost, so the total remains ₹40,000 despite the rise in output, and dividing it by 10,000 units gives ₹4. The ₹5 figure uses the earlier 8,000 units.

  1. A₹5
  2. B₹4Correct
  3. C₹3
  4. D₹4.50

Explanation

Rent is a fixed cost, so the total stays at ₹40,000. Per unit at 10,000 units = 40,000/10,000 = ₹4. ₹5 is the per-unit figure at the old output of 8,000 units, which is the wrong base.

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