Skip to content

CA Intermediate · Cost and Management Accounting · Cost Sheet

Mehta Appliances sold 5,000 units at Rs 400 per unit, earning a profit equal to 20% of the selling price. Selling and distribution overhead was Rs 60 per unit and administration overhead was Rs 40 per unit. Prime cost was Rs 150 per unit. Factory overhead is the balancing figure and there was no stock change. What is the factory overhead per unit?

Factory overhead is Rs 70 per unit. Profit is 20% of Rs 400, i.e. Rs 80, so total cost is Rs 320. Removing selling Rs 60 and administration Rs 40 leaves production cost Rs 220, and subtracting prime cost Rs 150 leaves Rs 70.

  1. ARs 70Correct
  2. BRs 50
  3. CRs 90
  4. DRs 110

Explanation

Profit per unit = 20% of 400 = 80, so cost of sales per unit = 320. Deduct selling 60 and administration 40 = 220 cost of production. Deduct prime cost 150 = Rs 70 factory overhead. Rs 90 would arise by wrongly taking profit as 20% of cost.

Did you get it right without looking?

One question tells you little. A timed set on Cost Sheet shows your real accuracy, how long you take and where you lose marks.

Practise Cost SheetFree diagnostic mock

More Cost Sheet questions