CMA Intermediate · Cost Accounting · Material Costs
Under CAS-6 (Material Cost), which of the following is excluded from the cost of materials purchased?
Credit-eligible GST paid on the purchase is excluded from material cost, because CAS-6 excludes duties and taxes that are subsequently recoverable from taxing authorities. Freight, transit insurance, non-refundable duties and pre-dispatch inspection costs are directly attributable to acquisition and are included in the cost of materials.
- AInward freight and transit insurance
- BOctroi and non-refundable duties paid on purchase
- CCost of inspection at the supplier's premises incurred before dispatch
- DCredit-eligible GST paid on the purchaseCorrect
Explanation
Material cost includes purchase price, duties and taxes (other than those subsequently recoverable from taxing authorities), freight, insurance and similar directly attributable costs. Credit-eligible GST is recoverable, so it is excluded. The other three items form part of the material cost.
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