Stage 7 · Selling and delivering
CAS-5: Equalised Transport Cost
One school is next door, another is up a mountain road. Should they pay different prices for the same uniform?
What you will learn in CAS-5
- Working out one average freight rate (§§4, 5, 6.3)
- Inward vs outward transport (§§6.1, 6.2)
- Exclusions and disclosures (§§6.5, 7, 8)
Chapters
- Three schools, three distances · Work out one fair freight rate (§§4, 5, 6.3)
- Coming in or going out? · Send each transport cost to the right place (§§5, 6.1, 6.2, 6.5, 7)
- Spot the mistakes in the freight working · Three mistakes are hiding (§§6.1, 6.3, 6.5)
Key terms
- Equalised transportation cost (§§4, 5, 6.3): Work out the total cost of transport (own vehicles or hired), then divide it over the quantity sent, on a sensible base such as units, weight or distance.
- Where transport cost goes (§§6.1, 6.2, 6.5, 7, 8): Transport coming in goes into the cost of what was bought. Transport going out goes into cost of sales. Subsidies and recoveries reduce it; penalties and unusual costs stay out. Show it as a separate line.
Common questions
Is outward freight part of cost of production?
No. Under CAS-5 outward transportation cost forms part of cost of sales; inward transportation forms part of the cost of procurement (paras 6.1, 6.2).
CAS-5, Average (Equalised) Cost of Transportation. Checked against the standard in November 2026. Selvi Garments, the school order and every figure in this lesson are fictional. Read the official text on the ICMAI Cost Accounting Standards page ↗ before applying it to real work.