CMA Foundation · Fundamentals of Financial and Cost Accounting · Meaning and Significance of Cost Accounting and its Relationship with Financial Accounting
Verma Industries has a product with total cost of Rs 120 per unit. Management wants a profit of 25% on selling price. What selling price per unit should cost accounting data support?
The selling price should be Rs 160 per unit. With profit at 25% of selling price, cost represents 75% of price, so price equals 120 divided by 0.75, which is Rs 160. Adding 25% on cost would give Rs 150, which is a markup on cost, not on sales.
- ARs 150
- BRs 160Correct
- CRs 144
- DRs 175
Explanation
Profit is 25% of selling price, so cost is 75% of selling price. Selling price = 120 / 0.75 = Rs 160. Check: profit Rs 40 is 25% of 160. Rs 150 wrongly adds 25% on cost (a markup on cost, not on selling price).
Did you get it right without looking?
One question tells you little. A timed set on Meaning and Significance of Cost Accounting and its Relationship with Financial Accounting shows your real accuracy, how long you take and where you lose marks.
More Meaning and Significance of Cost Accounting and its Relationship with Financial Accounting questions
- Budhia Engineering budgeted the cost of 2,000 units at ₹150 per unit. Actual output was 2,200 units at a total actual cost of ₹3,52,000. Man…
- Which statement about the relationship between cost accounting and financial accounting is correct?
- In a textile mill owned by Kaveri Fabrics Ltd, the 'Dyeing Department' is treated as a location to which costs are collected before being ch…
- Which of the following is a feature of cost accounting that distinguishes it from financial accounting?
- Under which situation does cost accounting provide direct help in a make-or-buy decision for a component?
- Which of the following is a scope or function of cost accounting rather than of financial accounting?