- JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATIONS –APRIL 2014
BBM – IV SEMESTER
COST ACCOUNTING
Duration: 3 Hrs Max. Marks: 100
Section – A
- Answer ALL the Each carries 2 marks. (10×2=20)
- Define the term ‘cost center’.
- What is single output or unit costing?
- Distinguish between allocation and apportionment of overhead?
- State what is meant by ‘Uncertified’ work?
- What is ‘Retention money’? Why is it retained?
- What is inter-process profit?
- Explain what is meant by abnormal process loss? Give examples.
- Calculate the total earnings and the effective wage rate per hour of a worker under Halsey plan:
Time allowed: 50 hours
Time taken : 40 hours
Rate per hour: Rs 10
- A transport company maintains a fleet of Lorries for carrying goods from Bangalore to Mysore, 100 kms off. Each lorry which operates 25 days on an average in a month, starts every day from Bangalore with a load of 4 tons and returns from Mysore with a load of 2 tons
- (a) Compute the total commercial ton kms.
- (b) What would be the cost per commercial ton –km when the total monthly charges for a lorry are Rs 27,000?
- From the following particulars ascertain the labour cost per day of 8 hours:
- Basic pay – Rs 200 per month
- Leave pay – 5%
- Employers contribution to provident fund – 10.5% of (a) and (b)
- Other amenities – Rs 17.95 per head per month.
- Working hours in a month – 200
Section – B
- II) Answer any FOUR Each carries 5 marks. (4×5=20)
11) A Company manufactures a special product which requires a component ‘Alpha’.
The following particulars are collected for the year 2013:
- Annual demand of Alpha 8,000 units
- Cost of placing an order Rs 200 per order
- Cost per unit of Alpha Rs 400
- Carrying cost % p.a 20 %
The company has been offered a quantity discount of 4% on the purchase of Alpha provided the order size is 4,000 components at a time
You are required to :
- Compute the EOQ.
- Advise whether the quantity discount offered can be accepted.
12) A machine is purchased for cash at Rs. 9,200. Its working life is estimated to be
18,000 hours after which its scrap value is estimated at Rs. 200. It is assumed from
past experience that :
(a) The machine will work for 1,800 hours annually.
(b) The repair charges will be Rs. 1,080 during the whole period of life of the machine.
(c) The power consumption will be 5 units per hour at 6 paisa per unit.
(d) Other annual standing charges are estimated to be:
Rs.
- Rent of department (machine occupies 1/5th of total space) 780
- Lighting (12 points in the department – 2 points engaged in the machine) 288
- Foreman’s salary (1/4th of his time is occupied in the Machine) 6,000
- Insurance premium (fire) for machinery 36
- Cotton waste 60
Find out the machine hour rate on the basis of above data for allocation of the work expenses to all the jobs for which the machine is used
13) A manufacturing company runs its boiler on furnace oil obtained from X oil company and Y oil company whose depots are situated at a distance of 24 kms and 16 kms from the factory site respectively.
Transportation of furnace oil is made by company’s own tank lorries of 8 ton capacity each. Onward trips are made only with full load and the lorries return empty. The filling time takes an average of 40 minutes for X Oil Company and 30 minutes for Y oil company. The empty time in the factory is only 40 minutes for each. The average speed of the lorries is 24 kms per hour. The varying operating charges average 80 paise per km covered and fixed charges gives an incidence of Rs 7.50 per hour of operation.
Calculate the transportation cost per ton km for each source of furnace oil.
14) Using Taylor’s differential piece rate system, find the earnings of Amar, Akbar and Ali from the following particulars
Normal rate per hour Rs. 9.00
Standard time per unit 20 minutes
Output per day is as follows:
Amar : 23 units
Akbar : 24 units
Ali : 30 units
Working hours per day are 8.
Differentials to be applied : 83% of piece rate below standard
: 125% of piece rate above standard
15) Two components, A and B, are used as follows:
Normal Usage: 350 units per week each
Minimum Usage: 175 units per week each
Maximum Usage: 525 units per week each
Re-Order Quantity: A- 2100 units
B- 3500 units
Re-Order Period: A- 6 to 8 weeks
B- 3 to 5 weeks
Calculate for each component:
(a) Order level (b) Minimum Level
(c) Maximum Level (d) Average Stock level
16) XYZ Co. employs its workers for a single shift of 8 hours per day for 25 days
In a month. The company has recently fixed the standard output of 40 units per day per worker for a mass production item and introduced an incentive scheme to boost output. Details of wages payable to the worker are as follows :
- Basic wages : Rs 3 per unit subject to a guaranteed minimum wages of
Rs 80 per day worked
- Dearness allowance : Rs 40 per day worked
Incentive Bonus:
- For efficiency upto 80% : Nil
- For efficiency above 80% : Rs. 50 for every 1% increase above 80%
The details of performance of 2 workers for a particular month are as follows:
Workers No of days worked Output (units)
A 25 820
B 18 500
Calculate the total earnings of both the workers for the month.
Section – C
III) Answer any THREE questions. Each carries 15 marks. (3×15=45)
17) In respect of a factory the following particulars have been extracted for the year 2013:
Rs.
Cost of materials 3,00,000
Wages 2,50,000
Factory overheads 1,50,000
Administration charges 1,68,000
Selling charges 1,12,000
Distribution charges 70,000
Profit 2,10,000
A work order has to be executed in 2014 and the estimated expenses are :
Materials Rs 16,000, Wages Rs 10,000.
Assuming that in 2014, the rate of the factory overheads has gone up by 20%, distribution charges have gone down by 10% and the selling and administration charges have each gone up by 12 ½ %, at what price should the product be sold so as to earn the same rate of profit on the selling price as in 2013?
Factory overheads are based on wages and all other overheads are based on factory cost.
18) Prepare the Stores Ledger Account for the month of December from the following transactions relating to the receipts and supplies of the material on the basis of:
(a) Simple Average price (b) Weighted average price
RECEIPTS:
Date Quantity Rate
2 Dec 2000 kgs Rs. 10 per kg
6 Dec 300 kgs Rs. 12 per kg
10 Dec 200 kgs Rs. 14 per kg
22 Dec 300 kgs Rs. 11 per kg
ISSUES:
Date Quantity
9 Dec 1200 kgs
11 Dec 1000 kgs
31 Dec 200 kgs
19) Prestige construction Ltd. With a paid share capital of Rs. 50,00,000 undertook a contract to construct Joseph apartments. The work commenced on the contract on 1st April 2013. The contract price was Rs. 60,00,000. Cash received on account of the contract upto 31st March 2014 was Rs. 18,00,000 (being 90% of the work certified). Work completed but not certified was estimated at Rs. 1,00,000. As on 31st march, 2014 materials at site was estimated at Rs.30,000, machinery at site costing Rs. 2,00,000 was returned to the stores and wages outstanding were Rs.5,000. Plant and machinery at site is to be depreciated at 5%. The following were the ledger balances (Dr.) as per trial balance as on 31st march, 2013.
| Land and building | 23,00,000 |
| Plant and machinery (60% at site) | 25,00,000 |
| Furniture | 60,000 |
| Materials | 14,00,000
|
| Fuel and power | 1,25,000 |
| Site expenses | 5,000 |
| Office expenses | 12,000 |
| Rates and taxes | 15,000 |
| Cash at bank | 1,33,000 |
| Wages | 2,50,000 |
Prepare a contract account and the balance sheet at the end of the year.
20) A product passes through three processes- A ,B and C .The details of expenses incurred on the three processes during the year 2013 were as under:
A B C
Units Issued 20,000
Rs. Rs. Rs.
Cost per unit 0.50
Materials consumed 6,000 4,000 2,000
Direct Labour 8,000 6,000 3,000
Manufacturing expenses 1,000 1,000 1,500
Actual output of the three processes was: Process A-19,500 units; Process B-18,800 units; Process C-16,000 units. There is no work in progress in any process.
The normal loss of the three processes, calculated on the input of every process was: Process A-2%, Process B-5%, Process C-10%.
The loss of Process A and B was sold at Rs.5 per 100 units and that of Process C at Rs.20 per 100 units.
Prepare:
- Process A,B and C accounts
- Abnormal loss account
- Normal loss account
- Abnormal gain account.
Calculations should be made to the nearest rupee.
21) Mr Furqan has been promised a contract to run a tourist car on a 20 km long route for the chief executive of a multinational firm. He buys a car costing Rs. 1,50,000. It has been insured at 3%p.a and the annual tax will amount to Rs. 900. He has to pay Rs 500 per month for a garage where he keeps the car when not in use. The annual repair costs are estimated at Rs 4,000. The car is estimated to have a life of 10 years at the end of which the sale value is likely to be Rs 50,000.
He hires a driver who is to be paid Rs 300 p.m in addition to 10% of the takings as commission. Other incidential expenses are estimated at Rs 200 p.m.
Petrol and oil will be Rs.100 per 100 kms. The car will make 4 round trips each day. Assuming 15% profit on takings is desired and that the car will be on the road on an average of 25 days in a month ,what should be the charge per round trip? Show all working clearly.
Section – D
- IV) Compulsory question (1×15=15)
22) Modern Manufactures Ltd have three Production Departments P1 ,P2, P3 and two Service Departments S1 and S2 details pertaining to which are as under:
| P1 | P2 | P3 | S1 | S2 | |
| Direct wages (Rs) | 3,000 | 2,000 | 3,000 | 1,500 | 195 |
| Working hours | 3,070 | 4,475 | 2,419 | – | – |
| Value of machines (Rs) | 60,000 | 80,000 | 1,00,000 | 5,000 | 5,000 |
| H.P. of machines | 60 | 30 | 50 | 10 | – |
| Light points | 10 | 15 | 20 | 10 | 5 |
| Floor space (sq.ft) | 2,000 | 2,500 | 3,000 | 2,000 | 500 |
The following figures extracted from the Accounting records are relevant:
| Rent and Rates | 5,000 |
| General Lighting | 600 |
| Indirect Wages | 1,939 |
| Power | 1,500 |
| Depreciation on Machines | 10,000 |
| Sundries | 9,695 |
The expenses of the Service Departments are allocated as under
| Particulars | P1 | P2 | P3 | S1 | S2 |
| S1 | 20% | 30% | 40% | – | 10% |
| S2 | 40% | 20% | 30% | 10% | – |
Find out the total cost of product X which is processed for manufacture in Departments P1 ,P2, P3 for 4,5 and 3 hours respectively, given that its Direct Material Cost is Rs. 50 and Direct Labour Cost is Rs. 30.
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