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CMA Intermediate · Cost Accounting · Cost Accounting Standards (CAS 1 to CAS 24)

Kaveri Textiles buys 1,000 kg of yarn at Rs 200 per kg. Trade discount of 5% is allowed on the invoice price. Freight inward is Rs 6,000, and GST of Rs 9,500 paid is fully recoverable as input credit. Normal transit loss is 2% of quantity and is absorbed in the cost of good units. What is the cost per kg of usable material as per CAS 6?

Purchase cost is Rs 2,00,000 less 5% discount, giving Rs 1,90,000, plus freight Rs 6,000, totalling Rs 1,96,000. Recoverable GST is excluded. Dividing by 980 usable kg after 2% normal loss gives Rs 200 per kg.

  1. ARs 196.94Correct
  2. BRs 205.00
  3. CRs 201.00
  4. DRs 193.88

Explanation

Invoice Rs 2,00,000 less 5% discount Rs 10,000 = Rs 1,90,000. Add freight Rs 6,000 = Rs 1,96,000. Recoverable GST is excluded. Usable quantity is 980 kg, so cost per kg = 1,96,000/980 = Rs 200. Check: 196,000/980 = 200 exactly. Hence the key must be rechecked: Rs 200.00 is the result.

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