CA Inter P4 · Chapter 8 · Question 8 of 9
A batch of 500 units incurred direct material ₹42,000, direct labour ₹28,000 and set-up cost ₹6,000. Production overheads are absorbed at 40% of direct labour. The cost per unit of the batch is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) ₹174.40
Explanation
Overheads = 40% x ₹28,000 = ₹11,200. Total batch cost = ₹42,000 + ₹28,000 + ₹6,000 + ₹11,200 = ₹87,200. Cost per unit = ₹87,200 / 500 = ₹174.40. Set-up cost is a batch cost and must be included.
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