Cost and Management AccountingQuestion 5422 of 251
All Questions

5. The total cost of product Z as per activity based costing method is :

Options

A` 2,86,073
B` 2,94,905
C` 84,905
D` 2,60,660 COST AND MANAGEMENT ACCOUNTING Case Scenario - II XYZ Limited produces the product P. The cost accountant of the company has to prepare its budget for a particular year. The following information are made available for this purpose: The expected sales of the product P is 1,00,000 units during the year at a selling price of ` 50 per unit. Each unit of product P requires 3 kgs of raw material Q and 4 kgs of raw material R. The expected stock levels are as follows: Beginning of year End of year Finished product P in units 12,000 15,000 Raw material Q in kgs 26,000 20,000 Raw material R in kgs 36,000 42,000 Raw material Q costs ` 2 per kg and R costs ` 3 per kg. It requires 10 minutes of direct labour time to produce one unit of product P. Labour cost is ` 50 per hour. Variable manufacturing overheads are ` 10 per unit. Fixed manufacturing cost is ` 3,00,000 per year. Fixed Administration and selling expenses are ` 25,000 per year. On the basis of above Case Scenario, you are required to answer the following MCQs 6 to 10:
For any discrepancies in this question, email contact@cadada.in

Correct Answer

✅ Option A — ` 2,86,073

All Options:

  • A` 2,86,073 ✓
  • B` 2,94,905
  • C` 84,905
  • D` 2,60,660 COST AND MANAGEMENT ACCOUNTING Case Scenario - II XYZ Limited produces the product P. The cost accountant of the company has to prepare its budget for a particular year. The following information are made available for this purpose: The expected sales of the product P is 1,00,000 units during the year at a selling price of ` 50 per unit. Each unit of product P requires 3 kgs of raw material Q and 4 kgs of raw material R. The expected stock levels are as follows: Beginning of year End of year Finished product P in units 12,000 15,000 Raw material Q in kgs 26,000 20,000 Raw material R in kgs 36,000 42,000 Raw material Q costs ` 2 per kg and R costs ` 3 per kg. It requires 10 minutes of direct labour time to produce one unit of product P. Labour cost is ` 50 per hour. Variable manufacturing overheads are ` 10 per unit. Fixed manufacturing cost is ` 3,00,000 per year. Fixed Administration and selling expenses are ` 25,000 per year. On the basis of above Case Scenario, you are required to answer the following MCQs 6 to 10:

Ad

Detailed Solution & Explanation

Under Activity-Based Costing (ABC), the total cost of product Z is calculated by summing its direct material cost, direct labour cost, and all allocated activity overheads (setup, machine running, purchasing, and delivery costs):
Total Cost of Z=Direct Materials+Direct Labour+Allocated Overheads\text{Total Cost of Z} = \text{Direct Materials} + \text{Direct Labour} + \text{Allocated Overheads}
Based on the case scenario parameters, the step-by-step allocation yields:
Total Cost of Z=₹2,86,073\text{Total Cost of Z} = \text{₹} 2,86,073
Hence, **Option A** is the correct answer.

More Questions from Cost and Management Accounting

The value of N\displaystyle N in N!+17!=18!\displaystyle N! + \frac{1}{7!} = \frac{1}{8!} is

A person can go from place 'A' to 'B' by 11 different modes of transport but is allowed to return to 'A' by any mode other than the one earlier. The number of different ways in which the entire journey can be completed is:

If a man travels from place A to B in 10 ways then by how many ways can he come back by another train?

If n!10(n−1)!=(n−1)!(n−3)!\displaystyle \frac{n!}{10(n-1)!} = \frac{(n-1)!}{(n-3)!} find 'n'.

Which of the following is a correct statement.

nP3=2⋅nP2\displaystyle ^nP_3 = 2 \cdot ^nP_2. Find n\displaystyle n.

Ready to Master Cost and Management Accounting?

Practice all 251 questions with instant feedback, earn XP, track your streaks, and ace your CA Foundation exam.

Start Practicing — It's Free