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CA Intermediate · Cost and Management Accounting · Cost Sheet

Sharma Plastics reports: opening raw material Rs 40,000; purchases Rs 2,60,000; carriage inward Rs 20,000; closing raw material Rs 50,000; direct wages Rs 1,50,000; direct expenses Rs 30,000. Prime cost is:

Materials consumed are opening stock plus purchases plus carriage inward less closing stock, which is Rs 2,70,000. Adding direct wages of Rs 1,50,000 and direct expenses of Rs 30,000 gives a prime cost of Rs 4,50,000.

  1. ARs 4,50,000
  2. BRs 4,70,000Correct
  3. CRs 4,20,000
  4. DRs 4,00,000

Explanation

Materials consumed = 40,000 + 2,60,000 + 20,000 - 50,000 = 2,70,000. Prime cost = 2,70,000 + 1,50,000 + 30,000 = 4,50,000. Check: wait, 2,70,000+1,80,000 = 4,50,000. So the correct key is Rs 4,50,000.

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