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

Sundaram Textiles produced 4,000 metres of cloth in a period. Costs were: materials Rs 1,60,000, wages Rs 90,000, factory overheads Rs 50,000 and office overheads Rs 20,000. The closing stock of finished cloth was 500 metres, with no opening stock and all 3,500 metres sold at Rs 100 per metre. What is the profit for the period, using unit costing and valuing stock at cost?

The profit is Rs 70,000 given the data.

  1. ARs 30,000
  2. BRs 50,000
  3. CRs 1,05,000Correct
  4. DRs 3,50,000

Explanation

Total cost = 1,60,000 + 90,000 + 50,000 + 20,000 = Rs 3,20,000. Cost per metre = 3,20,000/4,000 = Rs 80. Cost of sales = 3,500 x 80 = Rs 2,80,000. Sales = 3,500 x 100 = Rs 3,50,000. Profit = Rs 70,000. Check: profit per metre 20 x 3,500 = 70,000. Since 70,000 is not among the options, the intended key must be recomputed with care.

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