LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com. DEGREE EXAMINATION – CORPORATE SEC.
FIFTH SEMESTER – NOVEMBER 2010
BC 5501/CR 5501 – COST ACCOUNTING
Date : 01-11-10 Dept. No. Max. : 100 Marks
Time : 9:00 – 12:00
SECTION – A
Answer ALL the questions: (10 x 2 = 20 marks)
- Define Cost Accounting.
- a) The method of costing used in a refinery is —————.
- b) Cost Accounting records both monetary and ————– units.
- Prepare a chart showing the different elements of cost.
- From the following calculate the cost of goods sold: Cost of production `. 1,83,500;
Opening stock of finished goods `71,500; Closing stock of finished goods `.42,000.
- A publishing house purchases 10,000units of a particular item per year at a unit cost
of ` 40. The ordering cost per order is Rs.100 and the inventory carrying cost is 25%
- The worker completes a job in a certain number of hours. The standard time allowed
for the job is 8 hrs and the hourly rate of wages is` 10. The worker earns at the 50%
rate a bonus of ` 20 under Halsey plan. Ascertain his total wages under the Rowan
Premium Plan.
- What do you mean by a ‘Machine Hour Rate’?
- What is Idle time
- Mention the bases of apportionment of the following expenses of departments:
- a) Plant depreciation b) Lighting c) Power d) Consumable stores
- Record the following transaction in stores ledger, price the issues at weighted average
rate: 200 units received at` 2.00 per unit on 2nd September, 300 units received at
` 2.40 per unit during 15th September and 250 units issued on 20th September.
SECTION B ANSWER ANY FIVE (5 x 8 =40)
- “While Financial Accounting is external, Cost Accounting is internal to the business”-
Explain this statement by bringing out the difference between Cost and Financial
Accounting.
- Discuss the Secondary distribution of Overheads with illustrations.
- Write short notes on a) Retention money b) Escalation clause c) Work in progress d) Target
costing.
- A) Compute the (i) re-order level ; (ii) minimum level ; (iii) maximum level ; and (5)
(iv) average stock level for components A and B based on the following data:
Components
A B
Maximum consumption per week (in units) 250 200
Average consumption per week (in units) 150 100
Minimum consumption per week (in units) 100 50
Re-order period (in weeks) 6 to 10 5 to 9
Re-order quantity (in units) 500 700
- B) Discuss the methods of pricing issue of materials. (3)
- From the following figures prepare a Reconciliation Statement:
`
Net loss as per costing records 1,72,400
Works overhead under-recovered in costing 3,120
Administrative overhead recovered in excess 1,700
Depreciation charged in financial records 11,200
Depreciation recovered in costing 12,500
Interest received not included in costing 8,000
Obsolescence loss charged in financial records 5,700
Income-tax provided in financial books 40,300
Bank interest credited in financial books 750
Stores adjustments (credit) in financial books 475
Value of opening stock in : Cost Accounts 52,600
Financial Accounts 54,000
Value of closing stock in : Cost Accounts 52,000
Financial Accounts 49,600
Interest charged in cost accounts but not in financial accounts 6,000
Preliminary expenses written off in financial accounts 800
Provision for doubtful debts in financial accounts 150
- Construction Ltd. Is engaged on two contracts A and B during the year.
The following particulars are obtained at the year end (Dec. 31) :
Contract A Contract B
Date of Commencement April 1 September 1
`. `.
Contract price 6,00,000 5,00,000
Materials issued 1,60,000 60,000
Materials returned 4,000 2,000
Materials at site (Dec. 31) 22,000 8,000
Direct Labour 1,50,000 42,000
Site Expenses 66,000 35,000
Establishment Expenses 25,000 7,000
Plant installed at site 80,000 70,000
Value of plant (Dec. 31) 65,000 64,000
Cost of contract not yet certified 23,000 10,000
Value of contract certified 4,20,000 1,35,000
Cash received from contractee 3,78,000 1,25,000
Architect’s Fees 2,000 1,000
During the period materials amounting to Rs. 9,000 have been transferred from contract A to contract B. you are required to show : (a) Contract accounts, (b) Contractees’ accounts, and (c) Extract from Balance Sheet as on December 31, clearly showing the calculation of work- in-progress.
- A) From the following details of stores receipts and issues of material in a manufacturing
unit, prepare the Stock ledger using LIFO method. (5)
April 1 Opening Stock 2000 units @ ` 5.00 each
3 Issued 1,500 units to production
4 Received 4,500 units @ ` 6.00 each
8 Issued 1,600 units to production
- Returned to stores 100 units by production department (from the issue of April 3)
16 Received 2,400 units @ ` 6.50 each
19 Returned to supplier 200 units out of the quantity received on April 4th.
20 Received 1,000 units @ ` 7.00 each
24 Issued to production 2,100 units
27 Received 1,200 units @ ` 7.50 each
29 Issued to production 2,800 units
- B) Discuss the relative merits and demerits of two of the main methods of remunerating
labour. (3)
- Jaidka owns fleet of taxi and the following information is available from the records
maintained by him :
Number of taxis 10
Cost of each taxi `20,000
Salary of manager `600 p.m.
Salary of accountant ` 500 p.m.
Salary of cleaner `. 200 p.m.
Salary of mechanic `400 p.m.
Garage rent ` 600 p.m.
Insurance premium 5% per annum
Annual tax `600 per taxi
Driver’s salary `200 p.m. per taxi
Annual repair `1,000 per taxi
Total life of a taxi is about 2,00,00 kms. A taxi runs in all 3,000 kms. in a month of which 30% it runs empty. Petrol consumption is 1 litre for 10 kms. @ `1.80 per litre. Oil and other sundries are ` 5.00 per 100 kms.
Calculate the cost of running a taxi per km.
SECTION-C
ANSWER ANY TWO ( 2 x 20 = 40 marks)
- Modern Manufacture Ltd., have three production departments P1, P2, P3 and two Service
Departments S1 and S2, the details pertaining to which are as under :
P1 P2 P3 S1 S2
Direct wages (`) 3,000 2,000 3,000 1,500 195
Working Hours 3,070 4,475 2,419 – –
Value of Machines (`) 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 figure 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 and Sundries ` 9,695.
The expenses of the Services Departments are allocated as under :
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 Department P1, P2 and P3 for 4,5 and 3 hours respectively, given that its Direct Material Cost is `50 and Direct Labour Cost ` 30.
20) Product B passes through three processes before it is transferred to finished stock. The following information is obtained for the month of March :
Details Process `Finished Stock
I II III
` ` ` `
Opening Stock 5,000 8,000 10,000 20,000
Direct Material 40,000 12,000 15,000 –
Direct Wages 35,000 40,000 35,000 –
Production Overheads 20,000 24,000 20,000 –
Closing Stock 10,000 4,000 15,000 30,000
Profit % on Transfer price 25% 20% 10% –
(to next process)
Inter-process Profit for
Opening Stock – 1,395 2,690 6,534
Stock in process accounts are valued at Prime cost and finished stock has been valued at the price at which it is received from Process III. Sales during the period were Rs. 4,00,000.
Prepare and compute :
- Process cost accounts showing profit element at each stage ;
- Actual realized profit ; and
- Stock valuation for Balance Sheet purpose.
21) Following information has been obtained from the records of a Manufacturing Company :
1-1-2001 31-12-2001
` `
Stock of raw materials 40,000 50,000
Stock of finished goods 100,000 1,50,000
Stock of work- in-progress 10,000 14,000
`
Indirect Labour 50,000
Lubricants 10,000
Insurance on Plant 3,000
Purchase of Raw Materials 4,00,000
Sales Commission 60,000
Salaries of Salesmen 100,000
Carriage Outward 20,000
Administrative Expenses 1,00,000
Power 30,000
Direct Labour 3,00,000
Depreciation on Machinery 50,000
Factory Rent 60,000
Property Tax on Factory Building 11,000
Sales 12,00,000
Prepare a Statement of Cost and Profit showing
- Cost of Production ;
- Cost of Goods Sold ;
- Cost of Sales ; And
- Profit
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