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CMA Foundation · Fundamentals of Financial and Cost Accounting · Classification of Costs (CAS 1)

Rohit Foods' packing department had these costs last quarter: direct wages Rs 2,40,000; supervisor's salary Rs 60,000 (fixed by HR policy at head office); packing material Rs 1,00,000; depreciation on building share Rs 70,000 (allocated). The manager can control wages and material, but also decided to hire a temporary helper costing Rs 25,000, which is included in direct wages. If the company classifies the supervisor's salary and the allocated depreciation as non-controllable, what percentage of the department's total cost is controllable?

About 72%. Total cost is Rs 4,70,000 and controllable cost is wages Rs 2,40,000 plus material Rs 1,00,000, which is Rs 3,40,000. The helper cost is already within wages, and supervisor salary and allocated depreciation are non-controllable.

  1. AApproximately 72%
  2. BApproximately 79%Correct
  3. CApproximately 85%
  4. DApproximately 100%

Explanation

Total = 2,40,000 + 60,000 + 1,00,000 + 70,000 = Rs 4,70,000. Controllable = 2,40,000 + 1,00,000 = Rs 3,40,000 (the helper cost is already inside wages). 3,40,000/4,70,000 = 72.3%. Check options: the correct computation gives about 72%, so option 1 is correct and the other values come from errors such as adding the helper again or excluding items wrongly.

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