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CMA Foundation · Fundamentals of Financial and Cost Accounting · Cost, Cost Centre, Cost Unit and Cost Drivers

Which of the following pairs correctly matches an industry with its commonly used cost unit?

Brick kilns use cost per 1,000 bricks and electricity generation uses cost per kilowatt-hour; these are standard output-based cost units. The other pairings relate costs to employees, owners, doctors or land, which are inputs rather than units of product or service.

  1. ABrick kiln - per 1,000 bricks; Electricity - per kilowatt-hourCorrect
  2. BCement - per bag of 10 kg only; Hospital - per doctor
  3. CSteel - per employee; Transport - per vehicle owner
  4. DSugar - per acre; Brick kiln - per labourer

Explanation

Bricks are costed per 1,000 and electricity per kilowatt-hour, both standard cost units. The other pairs use inputs, people or unrelated measures that do not represent output.

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