TS Limited is suffering from material deterioration and finds that their valuable stocks are not properly stored. The company furnishes following…
CA Intermediate · Cost and Management Accounting · PYQS · September 2025
TS Limited is suffering from material deterioration and finds that their valuable stocks are not properly stored. The company furnishes following information: Serial No. Material Name Units Total Cost (₹) 1 MA 54,105 14,855 2 MB 32,300 12,823 3 MC 28,600 13,972 4 MD 10,250 47,685 5 ME 23,410 39,015 6 MF 2,580 1,08,260 7 MG 8,900 89,410 8 MH 4,855 98,980 Store-keeper of the company argues that he has taken proper care in storing three types of material named MA, MB and MC as they are in bulk quantity. He further argues that only a few units of material MG and MH has been deteriorated due to bad weather. The management of TS Limited wants to get him aware about value of different items. Required: Rank the materials and draw a plan of ABC selective control by using the following basis of selective control. 50,000 & above 'A' category items 15,000 to 50,000 'B' category itemsBelow - 15,000 'C' category items
Suggested Answer and Working Notes:
Statement of Total Cost and Ranking Item Material Name Units % of Total units Total cost (₹) % of Total cost Ranking 1 MA 54,105 32.80 14,855 3.49 6 2 MB 32,300 19.58 12,823 3.02 8 3 MC 28,600 17.33 13,972 3.29 7 4 MD 10,250 6.21 47,685 11.22 4 5 ME 23,410 14.19 39,015 9.18 5 6 MF 2,580 1.56 1,08,260 25.47 1 7 MG 8,900 5.39 89,410 21.04 3 8 MH 4,855 2.94 98,980 23.29 2 1,65,000 100 4,25,000 100 Basis for selective control: 50,000 & above --- 'A' items 15,000 to 50000 --- 'B' itemsBelow - 15,000 --- 'C' items On this basis, a plan of A B C selective control is given below: Ranking Item Nos. % of Total units Cost (₹) % of Total Cost Category 1 6 1.56 1,08,260 25.47 2 8 2.94 98,980 23.29 3 7 5.39 89,410 21.04 Total 3 9.89 2,96,650 69.80 A 4 4 6.21 47,685 11.22 5 5 14.19 39,015 9.18 Total 2 20.40 86,700 20.40 B 6 1 32.80 14,855 3.49 7 3 17.33 13,972 3.29 8 2 19.58 12,823 3.02 Total 3 69.71 41,650 9.80 C Grand Total 8 100 4,25,000 100
Topics: Material Cost
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