St. Joseph’s College of Commerce (Autonomous)

End Semester Examination – March/April 2013

B.B.M. – IV Semester

COST ACCOUNTING

Duration: 3 hours Max. Marks: 100

SECTION – A

Answer ALL the following questions. (10×2=20)

What is target costing?
What is a cost centre?
State any 4 items which are excluded from the cost sheet.
What is Bill of Material?
What is EOQ? Give its utility?
What are the methods of time keeping?
What are fringe benefits? Give examples.
Differentiate between normal and abnormal process loss.
What is meant by uncertified work in contract?
What is ‘operating costing? In which industry do you apply? Give 2 examples.

SECTION – B

Answer any FOUR questions. Each carries 5 marks. (4×5=20)

Sagar Private Limited has three production departments A, B, C and two service departments D.E. The expenses incurred for the year ended 31-3-2004 are as follows:

	Rs.
Rent	50000
Repairs to plant	7000
Supervisor’s salary	28000
Insurance on machinery	17500
Power	18000
Lighting	4000
Staff welfare	21000
General Expenses	12000

The following additional information is also supplied.

	Dept. A	Dept. B	Dept. C	Dept. D	Dept. E
Area in sq.mts.	140	120	110	90	40
Value of plant (Rs)	40000	36000	32000	20000	12000
No. of workers	30	20	10	5	5
H.P. Machines	30	25	25	10	–
Light points	8	6	3	2	1
Total wages	20000	16000	10000	10000	4000

Apportion the costs to the various departments on the most equitable basis.

From the following details compute total wages, labour cost per hour and labour cost per unit:
Name: Abdul Carrim
Ticket No: 786

Job commenced : Monday, 23^rd February, 8 A.M.

Job finished: Saturday, 28^th February, 12 noon.
Quantity produced and approved: 400 units.
Wage rate: Rs.2 per hour.

Time allowed: 8 units per hour.
Bonus: 50% of time saved.

Shift timings: 8 A.M. to 4 P.M.
Overtime worked: Nil.

A company has three production departments and two service departments, and for a period the departmental distribution summary has the following totals:

Rs.

Production Departments:

P₁ —Rs.800; P₂ —700 and P₃—Rs.500 2,000

Service Departments:

S₁ —Rs.234 and S₂ —Rs.300 534

2,534

The expenses of the service departments are charged out on percentage basis as follows:

P₁ P₂ P₃ S₁ S₂

Service Department S₁ 20% 40% 30% – 10%

Service Department S₂ 40% 20% 20% 20% –

Prepare a statement showing the apportionment of two service departments expenses to Production Departments by Simultaneous Equation Method.

A company manufactures a standard product. From the following data, prepare a statement of Cost and Profit:

Raw materials consumed —–Rs.45,000

Direct labour —–Rs.27,000

Machine hours worked —– 900.

Machine hour rate ——- Rs.15

Administration overhead—20%on works cost.

Selling cost —Rs.1.50 per unit

Units produced —–Rs.15,000

Units sold —14,000 at Rs.12 per unit.

Explain in detail the various techniques of costing?

Differentiate between job costing and process costing.

SECTION – C

Answer any THREE questions. Each carries 15 marks. (3×15=45)

Following are the particulars of production of 1,500 machines of ABC Company Ltd. for the year 2009:

Rs.

Cost of materials .. 1,20,000

Salaries .. 90,000

Wages .. 1,80,000

Factory expenses .. 75,000

Rent, rates and insurance .. 15,000

Sales expenses .. 45,000

General expenses .. 30,000

Sales revenue .. 6,00,000

The Sales Manger of the company estimates that the sales during 2010 will be 2,000 machines. Prepare a statement showing the estimated cost for 2,000 machines and the price per machine to earn 20% profit on selling price.

The following changes have been anticipated:

Rise in price of raw materials by 20%:
Wages will be up by 5%.
Factory expenses will rise in proportion to the combined cost of materials and wages.
Selling expenses per unit will remain the same.
Other expenses will remain unaffected by the rise in output.

A) The following were the receipts and issues of material ‘A’ during April 2012.

Apr. 1 Opening balance 2200 units @Rs.6/unit.

2 Issued 280 units

3 Issued 500 units

7 Issued 420 units

10 Received 800 units @ Rs.5/unit

14 Return of surplus from work order 60 units @ Rs.6.00/unit

18 Issued 700 units

22 Received 960 units @ Rs.5.50/unit

24 Issued 1000 units

27 Received 200 units @ Rs.6/unit

29 Return of surplus from work order 24 units (Issued on 2^nd April 2012)

30 Received 300 units Rs.6.50 / unit.

From the above write up stores Ledger Account on Simple Average Basis. The stock verification on 30^th April revelaed a shortage of 20 units. (12 marks)

B) Calculate the Economic Order Quantity from the following information. Also state the number of orders to be placed in a year.

Consumption of materials per annum : 10,000 kgs.

Order placing cost per order : Rs. 50

Cost per kg. of raw materials : Rs.2

Storage costs : 8% on average inventory

(3 marks)

Shankar has been provided a contract to run a tourist car on 20km. long route for the chief executive of a multinational firm. He buys a car costing Rs.3,50,000. The annual cost of insurance & taxes are Rs.4,500 & Rs.1,000 respectively. He has to pay Rs.500 per month for a garage where he keeps the car when it is not in use. The annual repair cost is estimated to be Rs.4,000. The car is estimated to have a life of 10 years at the end of which the scrap value is likely to be Rs.50,000.

He hires a driver who is to be paid Rs.3,000 per month plus 10% of the taking as commission. Other incidental expenses are estimated at Rs.200 per month.

Petrol & oil will cost Rs.200 per 100kms. The car will make 4 round trips each day. Assuming that a profit of 15% on takings is desired, & that the car will be on the road for 25 days on an average per month, what should be charged per round trip?

M/s Bansala Construction Ltd. took a contract for Rs.60,00,000 expected to be completed in three years. The following particulars relating to the contract are available:

	2003 Rs.	2004 Rs.	2005 Rs.
Materials	6,75,000	10,50,000	9,00,000
Wages	6,20,000	9,00,000	7,50,000
Cartage	30,000	90,000	75,000
Other expenses	30,000	75,000	24,000
Cumulative work certified	13,50,000	45,00,000	60,00,000
Cumulative work uncertified	15,000	75,000	–

Plant costing Rs.3,00,000 was bought at the commencement of the contract. Depreciation was to be charged at 25% per annum, on the written down value method. The contractee pays 75% of the value of work certified as and when certified, and makes the final payment on completion of the contract.

You are required to make a contract account and contractee account as they would appear in each of the three years.

A) What is meant by idle time? What are the causes of idle time? Explain how is it treated and how is it controlled? (8 marks)

B) Using Taylor’s differential piece rate system, find the earnings of the Amar, Akbar and Ali from the following particulars;

Standard time per piece : 20 minutes

Normal rate per hour : Rs.9.00

In a 8 hour day

Amar produced : 23 units

Akbar Produced : 24 units

Ali produced : 30 units.

(7 marks)

Section – D

Compulsory question (15 marks)

22) Product A is obtained after it passes through three distinct processes, I, II and III. The following information is obtained from the accounts for the month of March 2012.

Items	Total Rs.	Process I	Process II	Process III
	Total Rs.	Rs.	Rs.	Rs.
Direct material	15,084	5,200	3,960	5,924
Direct wages	18,000	4,000	6,000	8,000
Production overhead	18,000

1,000 units at Rs.6 each were introduced into process I. There was no stock of material or work-in-progress at the beginning or at the end. The output of each process passes directly to the next process and finally to the finished stock. Production overhead is recovered at 100% of direct wages. The following additional data are obtained.

Output during Percentage of Value of

Process the Month Normal Loss to Scrap per

Units Input Unit

I 950 5% 4

II 840 10% 8

III 750 15% 10

Prepare Process Accounts and Abnormal Loss or Gain Accounts.

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