CMA Foundation · Fundamentals of Financial and Cost Accounting · Meaning and Significance of Cost Accounting and its Relationship with Financial Accounting
Sharma Tools Ltd. produced 4,000 units. Its cost records show direct materials ₹2,40,000, direct wages ₹1,20,000 and factory overheads ₹80,000. Cost accounting is used to find cost per unit for pricing. What is the factory cost per unit?
Factory cost is direct materials ₹2,40,000 plus direct wages ₹1,20,000 plus factory overheads ₹80,000, totalling ₹4,40,000. Dividing by 4,000 units gives a cost of ₹110 per unit, which is the factory cost used for pricing.
- A₹110Correct
- B₹100
- C₹90
- D₹120
Explanation
Factory cost = 2,40,000 + 1,20,000 + 80,000 = ₹4,40,000. Dividing by 4,000 units gives ₹110. Option ₹100 ignores factory overheads; ₹90 omits wages.
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