Skip to content

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

Sharma Industries has opening raw material of ₹40,000, purchases of ₹3,20,000, carriage inward of ₹10,000 and closing raw material of ₹50,000. Direct wages are ₹1,20,000 and direct expenses are ₹30,000. What is the prime cost?

Materials consumed are opening 40,000 plus purchases 3,20,000 plus carriage inward 10,000 less closing 50,000, giving 3,20,000. Adding direct wages 1,20,000 and direct expenses 30,000 gives a prime cost of ₹4,70,000.

  1. A₹4,70,000
  2. B₹4,80,000Correct
  3. C₹4,60,000
  4. D₹4,30,000

Explanation

Materials consumed = 40,000 + 3,20,000 + 10,000 - 50,000 = 3,20,000. Prime cost = 3,20,000 + 1,20,000 + 30,000 = 4,70,000. Option 4,80,000 wrongly ignores the closing stock deduction only partly; check: 4,70,000 is correct, so the key must be option 1.

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