Skip to content

CMA Intermediate · Cost Accounting · Cost Accounting Standards (CAS 1 to CAS 24)

Under CAS 22 (Manufacturing Cost), which of the following would a manufacturing entity ordinarily include in the cost of manufacture of a product?

Manufacturing cost under CAS 22 consists of direct material, direct employee cost, direct expenses and manufacturing or factory overheads. Selling and distribution costs, unrelated head-office costs and interest on non-qualifying borrowings are excluded because they are not incurred in bringing the product to its manufactured state.

  1. ADirect material, direct employee cost, direct expenses and factory overheadsCorrect
  2. BSelling and distribution overheads
  3. CInterest on long-term borrowings for non-qualifying assets
  4. DHead-office administration costs unrelated to production

Explanation

CAS 22 identifies manufacturing cost as comprising direct material, direct employee cost, direct expenses, and manufacturing overheads attributable to production. Selling and distribution costs, unrelated head-office costs and non-qualifying interest are outside manufacturing cost.

Did you get it right without looking?

One question tells you little. A timed set on Cost Accounting Standards (CAS 1 to CAS 24) shows your real accuracy, how long you take and where you lose marks.

Practise Cost Accounting Standards (CAS 1 to CAS 24)Free diagnostic mock

More Cost Accounting Standards (CAS 1 to CAS 24) questions