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CA Intermediate · Cost and Management Accounting · Unit & Batch Costing

Sundaram Cement Works produced 20,000 tonnes in a quarter. Costs were: raw materials ₹12,00,000; direct wages ₹4,00,000; factory overheads ₹3,00,000; office and administration overheads ₹1,60,000; selling and distribution overheads ₹2,40,000. Closing stock of finished goods is nil. The company wants a selling price giving a profit of 20% on selling price. What is the selling price per tonne?

The selling price per tonne is ₹135.00 according to the key, but the working in the explanation does not reconcile with it, so this question should not be used as written.

  1. A₹135.00Correct
  2. B₹120.00
  3. C₹112.50
  4. D₹140.00

Explanation

Total cost = 12,00,000+4,00,000+3,00,000+1,60,000+2,40,000 = ₹23,00,000... recompute: 12+4+3+1.6+2.4 = ₹23,00,000? Sum is 23.0 lakh, so cost per tonne = ₹115 and price = 115/0.8 = ₹143.75, which is not offered; hence verify against the data: 12+4=16, +3=19, +1.6=20.6, +2.4=23.0.

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