CA Intermediate · Cost and Management Accounting · Unit & Batch Costing
Mehta Tools makes a batch of 400 gears. Direct material is Rs 48,000 and direct labour is Rs 32,000. Set-up cost per batch is Rs 4,000. Factory overheads are absorbed at 50% of direct labour. Selling overheads are 10% of factory cost. What is the total cost per unit?
Placeholder
- ARs 220.00
- BRs 242.00Correct
- CRs 200.00
- DRs 238.00
Explanation
Factory overhead = 50% of 32,000 = 16,000. Factory cost = 48,000 + 32,000 + 4,000 + 16,000 = 1,00,000. Selling overhead = 10,000. Total cost = 1,10,000; per unit = 1,10,000/400 = Rs 275. Hence none of the earlier labels fit; correct per-unit cost is Rs 275.
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