CA Inter P4 · Chapter 5 · Question 4 of 8
Total set-up costs are ₹2,40,000 for 120 set-ups during the period. Product M is produced in 18 set-ups and its output is 9,000 units. The set-up cost per unit of Product M under ABC is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) ₹4.00
Explanation
Cost driver rate = ₹2,40,000 / 120 set-ups = ₹2,000 per set-up. Set-up cost charged to M = 18 x ₹2,000 = ₹36,000. Per unit = ₹36,000 / 9,000 = ₹4.
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