Skip to content

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

Mehta Textiles has a cost of sales of ₹2,40,000 for a job and wants a selling price that gives a profit of 20% on selling price. What is the profit on the job?

The profit is ₹60,000. Because profit is 20% of selling price, cost is 80% of price, so price is ₹2,40,000 divided by 0.8, which is ₹3,00,000. Subtracting the cost gives ₹60,000. Taking 20% of cost would give ₹48,000, which is wrong.

  1. A₹48,000
  2. B₹60,000Correct
  3. C₹80,000
  4. D₹40,000

Explanation

Profit is 20% of selling price, so cost is 80% of price. Price = 2,40,000/0.8 = 3,00,000. Profit = 3,00,000 - 2,40,000 = 60,000. Check: 20% of 3,00,000 = 60,000. Option 48,000 wrongly takes 20% of cost.

Did you get it right without looking?

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

Practise Statement of Cost and Profit (Cost Sheet)Free diagnostic mock

More Statement of Cost and Profit (Cost Sheet) questions