LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com.
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DEGREE EXAMINATION –COMMERCE
FIFTH SEMESTER – APRIL 2007
CO 5501 – COST ACCOUNTING
Date & Time: 28/04/2007 / 1:00 – 4:00 Dept. No. Max. : 100 Marks
Answer all questions: 10 x 2 = 20
- State the objectives of Cost Accounting.
- State any three essentials of a good wage system.
- State whether the following statements are true or false:
- Bad Debts are excluded from cost accounts.
- Sale of factory scrap is reduced from works cost.
- Calculate the total earnings from the following data under Halsey plan and under Halsey-weir plan. Standard Time: 10 hours; Time taken: 8 hours; Time rate: Rs.2.50 per hour.
- What are the bases for apportionment of expenses given below to the different departments? 1) Depreciation, 2) Canteen expense, 3) Factory cleaning, 4) Crèche expenses, 5) Power.
- Write short note on equivalent production units.
- What is escalation clause?
- A transport service company is running four buses between two towns which are 50kms. Apart. Seating capacity of each bus is 40 passengers. Actual passengers carried were 75% of the seating capacity. All the four buses ran on all the days and of the month if April 2005. Each bus made one round trip per day. Calculate the total kilometers and total passenger kilometers for the month.
- Calculate margin of safety and the amount of actual sales from the following:
Profit Rs.10, 000; P/V ratio – 50%; BEP Sales Rs.20, 000.
- A factory consumes 60 units of material per day which is supplied by a vendor in lots of 240 units each at Rs.2, 400 per lot. The factory works for 300 days per annum. Each order involves handling charges of Rs.120 and Freight charges of Rs.380. The storage cost is Re. 0.50 per unit per annum. The interest cost of carry inventory works out at 1.25% per month. Calculate the EOQ.
Section – B
Answer any five only: 5 x 8 = 40
11) Distinguish between Financial accounting and Cost accounting.
- Briefly explain various inventory control techniques.
- What is Labour Turnover? Explain its causes and effect. And also suggest the steps to reduce labour turnover.
- A company produces three products A, B and C with standard costs and quantities per unit are as follows:
Particulars A B C
Quantity produced 10, 000 20, 000 30, 000
Direct material per unit (RS) 50 40 30
Direct labour per unit (RS) 30 40 50
Labour hours required per unit 3 4 5
Machine hours required per unit 4 4 7
Number of purchase requisitions 1, 200 1, 800 2, 000
Number of set ups 240 260 300
Production overhead spilt by departments:
Department 1 = Rs.11, 00, 000 and Department 2 = Rs.15, 00,000.
Department 1 is labour intensive and Department 2 is machine intensive.
Total labour hours in department 1 – 1, 83,333 while
Total machine hours in department 2 – 5, 00,000.
Production overhead spilt by activity:
Receiving/inspecting = Rs.14, 00,000
Production scheduling /machine set up = Rs.12, 00,000.
Number of batches received/inspected = 5, 000;
Number of batches for scheduling and set-up = 800. You are required to prepare product cost statement under traditional absorption costing and Activity Based Costing method.
- A product passes through three processes, A, B and C. The normal wastage if each process is as follows; Process A- 3%; B- 5%; C- 8%. The wastage of process A was sold at Rs.0.25 per unit, B at Rs.0.50 per unit and C at Re.1 per unit. 10,000 units were introduced in process A at a cost of Re.1 per unit. The other expenses are:
Process-A Process-B Process-C
Rs. Rs. Rs.
Sundry materials 1,000 1,500 500
Labour 5,000 8,000 6,500
Direct expenses 1,050 1,188 2,009
Actual output (units) 9,500 9,100 8,100
Prepare the process accounts, assuming that there were not opening or closing stocks. Also give the abnormal loss and abnormal gain account, normal loss account.
- The records of a company show the following:
Period Sales Profit
I Rs.1, 20,000 Rs. 9, 000
II Rs.1, 40,000 Rs. 13, 000
Find out: a) P/V ratio. b) Break even point, c) Fixed cost, d) Profit when sales are
Rs.1, 00, 000, e) Sales required to earn a profit of Rs.20,000, f) Margin of safety,
- g) variable cost for period II.
- A) From the following information calculate: a) Economic order quantity,
- b) Reorder level, c) Maximum level, d) Minimum level.
Normal usage is 150 units per day. Minimum usage is 100 units per day. Maximum usage is 200 units per day. Reorder period 50 to 60 days. The annual usage is 50, 000 units. The cost of purchase is Rs.100 per order. Cost per unit is Re.1 carrying cost is 10%per annum.
- B) From the following particulars, prepare stores ledger by adopting Weighted Average Method of pricing of material issues:
Date Receipts Issues
01.01.99 600 units at Rs.20 per unit
10.01.99 400 units at Rs.24 per unit
12.01.99 800 units at Rs.22 per unit
15.01.99 500 units
16.01.99 300 units
18.01.99 400 units at Rs.28 per unit
20.01.99 300 units
22.01.99 600 units at Rs.30 per unit
25.01.99 200 units at Rs.32 per unit
27.01.99 400 units
31.01.99 200 units.
- The following details are available from the books of accounts of accounts of a contractor for the year ended 31st March, 2003 with respect top particular contract No.313. He has undertaken for a manufacturing organization:
Materials sent to site 5, 11,800
Labour engaged in site 4, 66,100
Cost of plant installed at site 1, 00,000
Direct expenses 24,000
Establishment expenses 29,000
Materials returned to stores 2,120
Work certified 10, 70,000
Cost of work not certified 31,000
Materials in hand as on 31st March, 2003 12,220
Accrued wages as on 31st March, 2003 11,160
Accrued Direct expenses 1,330
Value of plant as revealed on 31st March,2003 88,000
The contractor price agreed upon with the Contractee is Rs.13, 00,000 payment of Rs.9,90,000 has been received from the Contractee. You are required to prepare the contract account, computing and incorporating the said account the profit to be taken to the profit and loss account for the year ended 31st March, 2003.
Section – C
Answer any two only. 2 x 20 = 40
19) The following figures are available from financial accounts for the year 2005.
Direct Material consumed Rs. 2, 00,000
Direct Wages 1, 00,000
Factory Overheads 75, 000
Administrative Overheads 2, 25,000
Selling and distribution overheads 2, 40,000
Bad debts 30,000
Preliminary expenses written off 40,000
Legal charges 20,000
Dividend received 50,000
Interest on bank deposit received 20,000
Sales (1, 20,000 units) 18, 00,000
Closing stock (30,000 units) 1, 60,000
The cost accounts reveal the following:
Direct material consumed Rs.2, 20,000. Direct wages Rs.80, 000. Factory Overheads at 20% on prime cost. Administration overheads at Rs.2 per unit produced and selling overheads at Rs.2 per unit sold.
Prepare: (1) Statement showing cost and profit; (2) Financial profit and loss account; (3) Reconciliation statement.
- Electronics Ltd., furnish the following information. It has three production departments A,B and C and two service departments D and E. The following figures are extracted from the records of the company:
Rent and Rates. Rs.10, 000. Power Rs. 3, 000
General lighting Rs. 1,200 Depreciation on Machinery Rs.20, 000
Indirect wages Rs. 3,000 Sundries Rs.20, 000
The following further details are available:
Particulars A B C D E
Floor Area (Sq.mts.) 2000 2500 3000 2000 500
Light points 10 15 20 10 5
Direct wages (Rs) 6000 4000 6000 3000 1000
H.P.of Machine 60 30 50 10 —-
Value of Machine.Rs.60000 80000 100000 5000 5000
Working hours 6226 4208 4066
The expenses of D and E are allocated as follows:
A B C D E
D 20% 30% 40% — 10%
E 40% 20% 30% 10% —
What is the total cost of an article if its raw material cost is Rs.60. Labour cost Rs.40, and it passes through departments A, B and C for 4, 5 and 3 hours respectively?
- The following data are available in respect of process I for the month of October:
Opening work in progress: 2250 units at Rs.11, 250
Degree of Completion Materials – 100%; Labour – 60%; Overheads – 60%
Input of materials: 22,750 units at Rs.88, 500
Direct wages: Rs.20, 500
Production overheads: Rs.41, 000
Units scrapped: 3,000 units.
Degree of Completion: Materials – 1005; Labour – 70%; Overheads – 70%
Closing work in progress: 2, 500 units.
Degree of Completion: Materials – 100%; Labour – 80%; Overheads – 80%.
Units transferred to the next process: 19,500 units.
Normal process loss in 10% of total input (opening stock plus units put in). Scrap value is Rs.3.00 per unit. The company follows FIFO method of inventory valuation.
You are required to: 1) Prepare statement of equivalent production; 2) Statement of cost per equivalent unit for each element and cost of abnormal loss, closing work in progress and units transferred to next process; and Prepare process I account.
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