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CMA Intermediate · Cost Accounting · Introduction to Cost Accounting

Sundaram Foods Ltd has the following data for a month: direct material consumed Rs 3,00,000; direct wages Rs 1,80,000; factory overheads Rs 1,20,000; administration overheads Rs 60,000; selling and distribution overheads Rs 90,000. There was no opening or closing stock of work-in-progress or finished goods. What is the cost of sales?

Cost of sales is Rs 7,50,000. Prime cost of Rs 4,80,000 plus factory overheads gives Rs 6,00,000, administration overheads take it to Rs 6,60,000, and selling and distribution overheads of Rs 90,000 give the total, as there is no stock change.

  1. ARs 6,60,000
  2. BRs 7,50,000Correct
  3. CRs 6,00,000
  4. DRs 5,10,000

Explanation

Prime cost = 3,00,000 + 1,80,000 = 4,80,000. Factory cost = 4,80,000 + 1,20,000 = 6,00,000. Cost of production = 6,00,000 + 60,000 = 6,60,000. Cost of sales = 6,60,000 + 90,000 = 7,50,000. Rs 6,60,000 is wrong because it leaves out selling and distribution overheads.

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