ABC Limited manufactures four products A, B, C and D in the same factory. The following information is given for a certain period: Particulars A B C…

CA Intermediate · Cost and Management Accounting · PYQS · January 2026
ABC Limited manufactures four products A, B, C and D in the same factory. The following information is given for a certain period: Particulars A B C D Input Materials (in units) 600 400 400 200 Average Yield 80% 90% 96% 72% The finished goods' packaging cost is 4,600. Other information: (1) All the products are packed in boxes where each box is having capacity of 24 units. (2) Product A and product B are packed in larger boxes whereas product C and product D are packed in smaller boxes, which cost half the price of bigger box. (3) Each box contains only one type of product. There is no product mix up in packaging. You are required to: (i) Find out how many large and small boxes are used. (ii) Find out the cost of per large box and per small box. (iii) Allocate the packaging cost among the four finished products.

Suggested Answer and Working Notes:

(i) Calculation of Output Units and Boxes required Product A B C D Input Units 600 400 400 200 Yield % 80% 90% 96% 72% Output Units 480 360 384 144 Boxes Required* 20 15 16 6 * Capacity per box = 24 units Large boxes used = 20 + 15 = 35 Small boxes used = 16 + 6 = 22 (ii) Let Cost of one small box = ₹ x and Cost of one large box = 2 x 35(2x) + 22x = 4,600 70 x + 22x = 4,600 Cost of one small box 'x' = 50 Cost of one large box ‘2x′ = 100 (iii) Allocation of Packaging Cost Product Boxes Cost per Box Packaging Cost (₹) A 20 (Large) 100 2,000 B 15 (Large) 100 1,500 C 16 (Small) 50 800 D 6 (Small) 50 300 Total 4,600

Topics: Overheads - Absorption Costing Method

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