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CA Intermediate · Cost and Management Accounting · Cost Sheet

Mehta Tools Ltd. made 5,000 units. Materials consumed Rs 3,00,000; direct labour Rs 2,00,000; factory overheads Rs 1,50,000 (total); administration overheads Rs 1,00,000; selling overheads Rs 50,000. Scrap from the process, a normal loss, realised Rs 10,000 and is credited to the factory cost. The firm sells all units at a profit of 20% on sales. What is the selling price per unit?

The selling price per unit is Rs 197.50. Total cost is Rs 7,90,000 after crediting scrap of Rs 10,000; with profit at 20% of sales, sales equal cost divided by 0.8, which is Rs 9,87,500, or Rs 197.50 for each of the 5,000 units.

  1. ARs 150
  2. BRs 156.25Correct
  3. CRs 162.50
  4. DRs 175

Explanation

Factory cost = 3,00,000 + 2,00,000 + 1,50,000 - 10,000 = 6,40,000. Add administration 1,00,000 and selling 50,000: total cost = 7,90,000. Sales = 7,90,000 / 0.8 = 9,87,500. Per unit = 9,87,500/5,000 = Rs 197.50. Thus none matches except by recomputation; the correct figure is Rs 197.50.

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