Considering two fiscal years 2013 and 2014, an input price in 2013 and 2014 are $9 and $11 per unit respectively and input required units in 2013 to produce output in 2014 are 30000 units, then cost effect of price recovery will be ___________?
Correct answer: A. $60,000
- A. $60,000
- B. $6,000
- C. $65,000
- D. $6,500
Explanation
The price increase is $11 − $9 = $2 per unit, and applying it to 30,000 units gives a price-recovery effect of $2 × 30,000 = $60,000. This measures the benefit or cost effect caused solely by the change in input price.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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