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CA Intermediate · Cost and Management Accounting · Unit & Batch Costing

Meera Toys Ltd. produces a batch of 500 units. Direct materials are ₹60,000 and direct wages ₹40,000. Factory overhead is absorbed at 150% of direct wages. Administration overhead is 10% of factory cost. Set-up cost for the batch is ₹5,000, included in neither of the above. What is the total cost per unit of the batch, with set-up cost treated as part of the batch cost?

Factory overhead is 150% of wages, giving ₹60,000. Adding set-up cost gives factory cost of ₹1,65,000, plus 10% administration overhead gives ₹1,81,500, or ₹363 per unit. This figure does not appear in the listed options.

  1. A₹338Correct
  2. B₹328
  3. C₹360
  4. D₹348

Explanation

Factory overhead = 150% x 40,000 = 60,000. Factory cost = 60,000 + 40,000 + 60,000 + 5,000 set-up = 165,000. Admin overhead = 10% x 165,000 = 16,500. Total = 181,500. Per unit = 181,500/500 = 363. This does not match option A, so the question has an inconsistency.

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