- JOSEPHS COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION – OCTOBER 2014
BCOM – III SEMESTER
COST AND MANAGEMENT ACCOUNTING-I
Duration: 3 Hours Max. Marks: 100
SECTION – A
- Answer ALL the questions. Each carries 2 marks. (10 x 2 = 20)
- What is the difference between Halsey and Rowan Plan in Bonus calculation?
- What is ‘office on cost’? How is it different from Office Cost?
- Briefly explain ABC technique of Material control?
- Z Ltd requires 3000 units of material per month, each costing Rs.42. Cost per order is Rs.2500 and inventory carrying charges work out to 20% of the average inventory. Find out the EOQ and the number of orders per year.
- How do you differentiate ‘Expired Cost’ from ‘Unexpired cost’?
- What do you understand by the term ‘Cost center’?
- Mention the non-cost expenses excluded from Cost Accounting?
- What is the procedure for calculating ‘Work uncertified’ in contract costing?
- What do you understand by’ under-absorption’ and ‘over-absorption of overheads’?
- A transport company is running 4 buses between 2 towns which are 50 kms apart. The seating capacity of each bus is 40 passengers, actual passengers carried were 75% of seating capacity, buses operate all 30 days in a month, and each bus makes 3 round trips per day. Calculate the total passenger kms.
SECTION – B
- Answer any FOUR questions. Each carries 5 marks. (4 x 5 = 20)
- The factory overhead costs of 4 production departments of a company engaged in executing job order for an account year are
Dept-A : Rs.19,300, Dept B :Rs.4,200, Dept C : Rs.4,000 & Dept D : Rs.2,000
Overheads have been applied as under
Dept A – Rs.1.50 per machine hour for 14,000 hours
Dept B – Rs.1.30 per direct labour hour for 3,000 hours
Dept C- 80% of direct labour cost of Rs.6,000
Dept D – Rs.2 per piece for 950 pieces
Find out the amount of department wise under or over-absorbed overheads.
- In a factory works overheads are absorbed@60% of labour and office expenses @20% of works cost.
The total expenditure is as follows
Material Rs.2,00,000;
Labour Rs.1,50,000
Factory expenses Rs.98,000
Office expenses Rs.85,000.
10% of output is in the stock and sales totals up to Rs.5,10,000.
Prepare a cost sheet and Reconciliation statement.
- Calculate the earnings of a worker under Halsey and Rowan plan
- Standard time for producing one dozen articles – 5 hours
- Hourly rate of wages guaranteed – Rs.35
- Actual time taken by the worker to produce 20 dozens – 80 hours
- Prepare stores ledger a/c showing the receipts and issues, pricing materials issued on the basis of: Simple average method
Receipts
1-10-2004 opening stock 800 units at Rs.7.00 per unit
3-10-2004 purchased 1200 units at Rs.8.00 per unit
13-10-2004 purchased 3600 units at Rs.8.60 per unit
23-10-2004 purchased 2400 units at Rs.7.80 per unit
Issues
5-10-2004 issued 1600 units
15-10-2004 issued 2400 units
25-10-2004 issued 2400 units
- The following direct costs were incurred on Job no:239 of Xltd.
Materials Rs.6010
Wages : Dept A- 60 hrs @ Rs.30 per hour
Dept B- 40 hrs @ Rs.20 per hour
Dept C -20 hrs @ Rs.50 per hour
Overheads for these 3 departments were estimated as follows.
Variable overheads : Dept A- Rs.15,000 for 1,500 labour hours
Dept B- Rs.4,000 for 200 labour hours
Dept C –Rs.12,000 for 300 labour hours
Fixed overheads are estimated at Rs.40,000 for 2,000 Normal working hours.
You are required to calculate cost of Job.no.239 and the price to be quoted to earn a profit of 25% on selling price.
- Differentiate Cost Accounting with Financial Accounting?
SECTION – C
- Answer any THREE Each carries 15 marks. (3×15 = 45)
- Alcon Construction Company Ltd commenced a Contract on 1-1-2007. The trial balance as on 31-12-2007 shows the following balance
| Dr (Rs) | Cr (Rs) | |
| Paid up share capital | 1,00,000 | |
| Cash received on account of contract (80% of work certified) |
1,20,000 |
|
| Building | 30,000 | |
| Machinery at cost (75% at site) | 40,000 | |
| Bank | 4,000 | |
| Material at site | 40,000 | |
| Direct Labour | 55,000 | |
| Expenses at site | 2,000 | |
| Vehicles | 30,000 | |
| Furniture | 1,000 | |
| Office equipment | 10,000 | |
| Postage | 500 | |
| Office expenses | 2,000 | |
| Rates and taxes | 3,000 | |
| Power | 2,500 | |
| 2,20,000 | 2,20,000 |
The contract price is Rs.3,00,000 and work certified is Rs.1,50,000.The work completed since certification is estimated at Rs.1000 (at cost). Machinery costing Rs.2,000 was returned to stores at the end of the year. Stock of material at the site on 31-12-2007 was of the value of Rs.5,000. Wages outstanding were Rs.200. Depreciation on machinery is 10%. Calculate the profit from contract and prepare the Balance sheet.
- SNS travels operates a 2 buses in a route covering 95 kms. Cost of each vehicle is 60,00,000 (fuel efficiency – 7 kmpl). The annual charges are
| Insurance | Rs.4,85,000 |
| Road tax | Rs.1,60,000 |
| Garage rent | Rs.75,000 |
| Cost of repairs | Rs.1,10,000 |
| Expenses on tires and tubes | Rs.13,200 pm |
| Office expenses | Rs.16,000 pm |
| Cost of fuel (diesel) | Rs.60 per liter |
| Drivers salary | Rs.12,500 pm |
| Conductors salary | Rs.8,000 pm |
In addition the driver and conductor are entitled to 2.5% commission on ticket sale. Effective life of each vehicle is 10 years with a scrap value of Rs.5,00,000 at the end. Each bus has 60 seats and is expected to run 3 two way trips for 30 days in a month (including 4 Sundays where the buses run at 80% capacity). Calculate the passenger fare structure for approval by transport authorities who allow 12.5% profit on net sales. Interest on loan is allowed on vehicle cost which amounted to Rs.7,15,000 p.a.
- A company manufactured and sold 1,000 radios during a year. Prepare a statement of cost in proper form, showing the different elements of cost per unit from the summarized trading and profit and loss account set out below.
| Rs. | Rs. | ||
| To materials | 80,000 | By Sales | 4,00,000 |
| “ Direct wages | 1,20,000 | ||
| “ works on cost | 50,000 | ||
| “ Gross Profit | 1,50,000 | ||
| 4,00,000 | 4,00,000 | ||
| To Salaries | 60,000 | By Gross Profit | 1,50,000 |
| “ Rent | 10,000 | ||
| “ selling expenses | 30,000 | ||
| “ General expenses | 20,000 | ||
| “Net profit | 30,000 | ||
| 1,50,000 | 1,50,000 |
Using the above information, prepare a statement of estimate for the next year if
- Output and sales will be 1,200 radios
- Price of materials will rise by 20% and wages rate by 5%
- Works on cost will rise in proportion to the combined cost of materials and wages
- A profit at 10% on the selling price is expected.
- Selling price per unit and others will remain unchanged.
- A manufacturing concern has three production departments and two service departments. The expenses for the departments were as follows.
| Production Departments | Service Departments
|
| Dept A = Rs.20000
Dept B = Rs.17,000 Dept C = Rs.15,000 |
Department X = Rs.8000
Department Y = Rs.4000
|
The service department expenses are charged out on percentage basis as follows.
| Dept A | Dept B | Dept C | Dept X | Dept Y | |
| Dept X | 25% | 20% | 35% | 20% | |
| Dept Y | 30% | 20% | 40% | 10% |
Show the apportionment of the service department expenses on the basis of the (a) simultaneous equation method (b) trial & error method.
- Compute the machine hour rate for a machine purchased to cover the following overhead expenses
Rent of the department- Rs.6,000 p.a.
The machine occupies one-fourth space
Lighting (no. of points in the dept 15:3 points are engaged on this machine) Rs.2,500 pa
Insurance Rs.600 pa
Cotton waste, oil etc Rs.400 pa
Salaries of foremen and supervisors (one-third of their time is occupied by the machine) –Rs.35,850.
The machine was purchased for Rs.50,000 and its scrap value was Rs.4,000, its estimated working life is 10 years.
It is assumed from past experience
- That machine will work for 2,300 hours per annum
- That it will necessitate an expenditure of Rs.17,250 towards repairs and maintenance through its working life
- Machine consumes 5 units of power at a cost of 15 paise per unit.
SECTION – D
- Compulsory Question (15 marks)
- Zed Shoe company manufactures 2 types of sandals Alpha and Beta. Costs for the year ended 31-3-2012 were
| Rs. | |
| Direct Material | 15,00,000 |
| Direct wages | 8,40,000 |
| Production overheads | 3,60,000 |
| 27,00,000 |
There was no work in progress at the beginning or at the end of the year. It is ascertained that
- Direct material in Alpha sandals consisted twice as much as that in Beta.
- The direct wages for Beta sandals were 60% of those of Alpha
- Production overheads was the same per pair of Alpha and Beta
- Administrative overheads for each type was 150% of Direct wages
- Selling cost was Rs.1.50 per pair.
- Production during the year were : Alpha 40,000 pairs of which 36,000 were sold. Beta 1,20,000 pairs of which 1,00,000 were sold.
- profit to be earned on Manufacturing – Alpha is estimated at Rs.2,34,000 and on Beta estimated at Rs.5,50,000
Prepare a statement showing cost, profit and Sales.
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