CA Intermediate · Cost and Management Accounting · Unit & Batch Costing
Verma Engineering completes a batch of 800 units at a total cost of ₹4,00,000. It sells the batch at a profit of 25% on selling price. What is the selling price per unit?
The selling price per unit is ₹666.67. Cost per unit is ₹500 (₹4,00,000 ÷ 800). Since profit is 25% on selling price, cost is 75% of price, so price equals ₹500 ÷ 0.75 = ₹666.67. Using 25% on cost would wrongly give ₹625.
- A₹666.67Correct
- B₹625.00
- C₹500.00
- D₹600.00
Explanation
Cost per unit = 4,00,000 / 800 = ₹500. Profit is 25% of selling price, so cost is 75% of selling price. Selling price = 500 / 0.75 = ₹666.67. The ₹625 option wrongly treats profit as 25% on cost.
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