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CMA Foundation · Fundamentals of Financial and Cost Accounting · Statement of Cost and Profit (Cost Sheet)

Mehta Industries has: opening stock of raw materials Rs 40,000, purchases Rs 2,10,000, carriage inwards Rs 10,000, closing stock of raw materials Rs 30,000, and sale of scrap of raw materials Rs 5,000 (not deducted anywhere yet and to be credited to materials cost). What is the cost of materials consumed?

Cost of materials consumed is Rs 2,25,000. Opening stock plus purchases plus carriage inwards less closing stock gives Rs 2,30,000, and the Rs 5,000 scrap sale is then deducted. Ignoring the scrap credit would leave the cost overstated at Rs 2,30,000.

  1. ARs 2,25,000Correct
  2. BRs 2,30,000
  3. CRs 2,35,000
  4. DRs 2,40,000

Explanation

Materials consumed = 40,000 + 2,10,000 + 10,000 - 30,000 = 2,30,000. Deducting scrap sale of 5,000 gives 2,25,000. Rs 2,30,000 forgets the scrap credit, while 2,35,000 adds scrap instead of deducting it.

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