CMA Intermediate · Cost Accounting · Contract Costing
Materials costing Rs 2,00,000 were sent to a contract site and at the year end Rs 15,000 of materials were lost by theft and Rs 25,000 of materials remained unused at site. What is the amount of material cost to be charged to the contract for the year, taking the theft as a contract cost?
The material cost charged is Rs 1,75,000, calculated as materials sent to site of Rs 2,00,000 less unused closing stock of Rs 25,000. The stolen Rs 15,000 stays in contract cost, so it is not deducted again.
- ARs 1,75,000Correct
- BRs 2,00,000
- CRs 1,60,000
- DRs 1,85,000
Explanation
Material charged = materials sent less closing stock at site = 2,00,000 - 25,000 = Rs 1,75,000. The stolen materials remain part of the cost because they are consumed and not in closing stock. Deducting the theft too gives Rs 1,60,000, which is wrong.
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