CA Inter P4 · Chapter 8 · Question 3 of 9
For the same part (annual demand 36,000 units, set-up cost ₹1,500 per batch, carrying cost ₹12 per unit per annum), the total annual set-up and carrying cost when production is in batches of 3,000 units is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) ₹36,000
Explanation
Number of batches = 36,000 / 3,000 = 12; set-up cost = 12 x ₹1,500 = ₹18,000. Average stock = 3,000 / 2 = 1,500 units; carrying cost = 1,500 x ₹12 = ₹18,000. Total = ₹36,000. Using the full batch rather than average stock overstates carrying cost.
More Unit, Batch and Job Costing MCQs
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