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What would be the most appropriate cost unit for a cake manufacturer?
(A) Cake(B) Batch
(C) Kilogram
(D) Production run
Sir here, answer is B. Please explain.
My second question is this that we have to always give priority to batch rather than a single unit or in this case only.
Like we are car manufacturer so we will divide cost in batches or in units.
Please help.I think the question has some problems. If the cake manufacturer is making bespoke wedding cakes, then the time and materials would be recorded separately for each cake and each cake is a cost unit (unit costing).
If thousands of cakes are being mass-produced in batches, costs are recorded for each batch and the cost unit is the batch (batch costing). From cost per batch, the cost per cake can be calculated as: cost for batch/cakes made in the batch.
Similarly for cars: individually made McLarens cost unit is each car; mass produced Fords, cost unit could be the batch.
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