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CA Intermediate · Cost and Management Accounting · Activity Based Costing

Nilgiri Tea Packers has a material handling pool of ₹4,50,000 driven by number of material movements. Product A needs 150 movements, B needs 250 and C needs 100. Production is A 5,000 units, B 10,000 units, C 2,000 units. What is the material handling cost per unit of Product B?

The correct cost is ₹22.50 per unit: rate ₹900 per movement, B's share ₹2,25,000, divided by 10,000 units.

  1. A₹45Correct
  2. B₹90
  3. C₹60
  4. D₹50

Explanation

Total movements = 150 + 250 + 100 = 500. Rate = 4,50,000 / 500 = ₹900 per movement. B: 250 × 900 = ₹2,25,000. Per unit = 2,25,000 / 10,000 = ₹22.50. Hence none of the printed values matches; the correct figure is ₹22.50.

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