XYZ Limited specializes in manufacture of high end office furniture. They use a batch costing system to track production costs. The company received…

CA Intermediate · Cost and Management Accounting · PYQS · May 2026
XYZ Limited specializes in manufacture of high end office furniture. They use a batch costing system to track production costs. The company received an order for a special production run, Batch A - 01, consisting of 20 Ergonomic Executive Chairs. The estimated costs for this specific batch are as follows: Direct Material 55,500 Direct Labour: Cutting & Shaping 300 hours @50 per hour Polishing & Finishing 200 hours @40 per hour Factory Overheads: Cutting & shaping 300 hours @8 per hour Polishing & Shaping 200 hours @8 per hour Administrative & Selling Overheads 20% of Works Cost Profit 25% on Selling Price You are required to calculate: (i) Total Cost of the Batch. (ii) Selling Price per Chair.

Suggested Answer and Working Notes:

Answer (a) (i) Statement showing Total Cost of the Batch A – 01 Particulars Amount (in ₹) Direct Material Cost 55,500 Direct Labour: Cutting & Shaping (300 hours @50 per hour) 15,000 Polishing & Finishing (200 hours @40 per hour) 8,000 Prime Cost 78,500 Add: Factory Overheads: Cutting & Shaping (300 hours @8 per hour) 2,400 Polishing & Finishing (200 hours @8 per hour) 1,600 Factory Cost/Works Cost 82,500 Add: Administrative & Selling Overheads (20% of Works Cost) 16,500 Total Cost 99,000 (ii) Selling Price per Chair: Units produced & sold = 20 chairs Sales = Total cost + 25% profit on sales or 33.3% (1/3 rd ) profit on cost = 99,000 + 33.33% (1/3 rd ) of 99,000 = 1,32,000 Selling price per chair = Total sales/no. of chairs sold = 1,32,000/20= 6,600 per chair

Topics: Unit & Batch Costing

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