CMA Foundation · Fundamentals of Financial and Cost Accounting · Classification of Costs (CAS 1)
Which one of the following is the most appropriate cost unit for a cost centre that is a brick kiln of a construction materials company?
The most appropriate cost unit is per 1,000 bricks, because a cost unit is the unit of output for which cost is measured. The kiln is the cost centre, while labour hours and sales value do not measure the physical product.
- APer 1,000 bricksCorrect
- BPer kiln
- CPer labour hour of the supervisor
- DPer rupee of sales
Explanation
A cost unit is the unit of product or service in relation to which costs are ascertained and expressed. For a brick kiln the natural measure of output is 1,000 bricks. The kiln itself is the cost centre, not the unit, and labour hours or sales rupees are not the output measure.
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