CMA Intermediate · Cost Accounting · Cost Accounting Standards (CAS 1 to CAS 24)
Under CAS 4 (Cost of Production for Captive Consumption), which basis is used to value goods produced and consumed within the same entity?
CAS 4 requires captively consumed goods to be valued at their cost of production, determined as per the standard's cost elements. It does not use market price, selling price or net realisable value because no profit element is added to internal consumption.
- ACost of production determined as per CAS 4 principlesCorrect
- BMarket selling price including profit
- CStandard selling price less trade discount
- DNet realisable value of the goods
Explanation
CAS 4 prescribes determining the cost of production for goods or services captively consumed using the cost elements of production, without a profit margin or market price.
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