Parth Ltd. operates in insurance business. Previous Year, the company launched a new term insurance policy called ‘Max Jivan' and incurred the…

CA Intermediate · Cost and Management Accounting · MTP · January 2025
Parth Ltd. operates in insurance business. Previous Year, the company launched a new term insurance policy called ‘Max Jivan' and incurred the following expenditure throughout the year: Particulars Amount (₹) Claim management cost 52,82,000 Facilities cost 6,49,82,500 Employees cost 2,25,18,000 Cost of marketing of the policy 19,30,71,000 Policy development cost 4,86,50,000 Policy issuance cost 4,10,05,000 Policy servicing cost 13,40,65,500 Sales support expenses 4,44,80,000 Office administration cost 6,67,20,000 I.T. Cost 30,71,90,000 Postage and logistics 4,50,36,000 You are required to ASCERTAIN the cost of the policy ‘Max Jivan' segregated into four main activities namely (a) Marketing and Sales support (b) Operations (c) I.T. Cost and (d) Support functions.
(A) Marketing and Sales support-23,75,51,000, Operations -22,90,02,500, I.T. Cost-30,71,90,000 and Support functions-19,92,56,500
(B) Marketing and Sales support-28,62,01,000, Operations-22,53,88,500, I.T. Cost-30,71,90,000 and Support functions-15,42,20,500
(C) Marketing and Sales support-28,62,01,000, Operations-18,03,52,500, I.T. Cost-30,71,90,000 and Support functions-19,92,56,500
(D) Marketing and Sales support-24,17,21,000, Operations-22,48,32,500, I.T. Cost-30,71,90,000 and Support functions-19,92,56,500

Suggested Answer and Working Notes:

Correct Answer: Option (C)

Marketing and Sales support-28,62,01,000, Operations-18,03,52,500, I.T. Cost-30,71,90,000 and Support functions-19,92,56,500

Topics: Service Costing

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