PRC-1 · Chapter 7 · Question 43 of 100
A business bought 100 units at Rs. 50 each. It paid Rs. 500 for delivery of the batch. Two units were found to be completely destroyed upon arrival (abnormal loss) and cannot be sold. What is the total cost assigned to the remaining 98 units?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Rs. 5,390
Explanation
Total cost of 100 units = (100 x 50) + 500 = 5,500. Cost per unit = 55. The abnormal loss of 2 units must be expensed (2 x 55 = 110). The remaining 98 units are valued at 98 x 55 = Rs. 5,390.
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