The Costs of an article at a capacity level of 5,000 units is given under 'A' below. For a variation of 25% in capacity the individual expenses vary as indicated under 'B' below: Item A (₹) B Materials 1,00,000 100% vary

CS Executive · Corporate and Management Accounting · PYQS · December 2018
The Costs of an article at a capacity level of 5,000 units is given under 'A' below. For a variation of 25% in capacity the individual expenses vary as indicated under 'B' below: Item A (₹) B Materials 1,00,000 100% varying Wages 60,000 100% varying Works overhead : Power 5,000 80% varying Repairs 8,000 75% varying Stores 4,000 100% varying Inspection 2,000 20% varying Depreciation 40,000 100% fixed Administrative overhead 20,000 25% varying Selling overhead 12,000 50% varying Find the total cost and total cost per unit at the production levels of 4,000 units and 6,000 units.

Answer & Explanation:

Particulars Level of activity (units) 4000 5000 6000 Variable Cost: ₹ ₹ ₹ Material @ ₹20 per unit (1,00,000/5,000) 80,000 1,00,000 1,20,000 Labour @ ₹12 per unit (60,000/5,000) 48,000 60,000 72,000 Power @ ₹0.8 per unit (5,000*80 = 4000/5000) 3,200 4,000 4,800 Repairs @ ₹1.20 per unit (8,000*75% = 6,000/5000) 4,800 6,000 7,200 Stores @ ₹0.80 per unit (4,000/5,000) 3,200 4,000 4,800 Supervision @ ₹0.08 per unit (2,000*20% = 4,000/5,000) 320 400 4,80 Overhead: Administrative @ ₹1 per unit (20,000*25% = 5,000/5000) 4,000 5,000 6,000 Selling @ ₹1.20 per unit (12000*50% = 6,000/5,000) 4,800 6,000 7,200 (A) 1,48,320 1,85,400 2,22,480 Fixed Cost: Power 1,000 1,000 1,000 Repairs 2,000 2,000 2,000 Inspection 1,600 1,600 1,600 Depreciation 40,000 40,000 40,000 Overhead: Administrative 15,000 15,000 15,000 Selling 6,000 6,000 6,000 (B) 65,600 65,600 65,600 Total Cost (C=A+B) 2,13,920 2,51,000 2,88,080 Total Cost per unit (C/Output) 53.48 50.20 48.01

Topics: Management Accounting

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