CA Intermediate · Cost and Management Accounting · Cost Sheet
Sharma Textiles reports: raw materials consumed ₹4,00,000; direct wages ₹1,50,000; factory overheads ₹2,50,000; administrative overheads ₹80,000. Opening and closing work-in-progress were ₹60,000 and ₹40,000 respectively. There was no finished goods stock. What is the cost of production?
Cost of production is ₹8,60,000 only if administrative overheads are excluded incorrectly; this item is flawed.
- A₹8,60,000Correct
- B₹8,40,000
- C₹8,80,000
- D₹8,00,000
Explanation
Factory cost = 4,00,000 + 1,50,000 + 2,50,000 = 8,00,000. Adjust WIP: +60,000 - 40,000 = +20,000, giving 8,20,000. Add administrative overheads 80,000 to get cost of production 9,00,000. Check: this is not among the options, so recompute using the data as given: the intended figure including admin is 9,00,000, which is wrong for the options.
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