CMA Foundation · Fundamentals of Financial and Cost Accounting · Classification of Costs (CAS 1)
Which of the following is the most appropriate cost unit for a cement manufacturing company such as Shree Setu Cements?
Per tonne is the appropriate cost unit for a cement company because cement is a bulk product measured by weight. Kilometre and passenger-kilometre units belong to transport services, and bed-day belongs to hospitals, so they do not measure cement output.
- APer tonneCorrect
- BPer kilometre
- CPer bed-day
- DPer passenger-km
Explanation
Cement is a bulk product measured by weight, so cost per tonne is the natural unit. Per kilometre and passenger-km suit transport, and bed-day suits hospitals. Choosing a unit that matches the output makes cost comparison meaningful.
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