- JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION – APRIL 2013
B.COM – IV SEMESTER
COST ACCOUNTING
Duration::3 HOURS Max. Marks:100
SECTION –A
- Answer ALL the following questions. (10×2=20)
- Define the term Cost. How does it differ from expense?
- Explain the following costs: a) sunk cost, b) opportunity cost.
- What is the difference between Abnormal Idle Time and Normal Idle Time?
- What is the meant by ABC Analysis?
- Calculate economic order quantity from the following :
Annual consumption – 12,000 units.
Cost of ordering – Rs.15 per order.
Cost of material – Rs.1.25 per unit.
Storage cost – 20% of average inventory
- What are overheads? How do they differ from Prime Cost?
- Explain the term Escalation Clause?
- What is meant by Inter-Process Profits?
- What is the objective of Reconciliation of Cost and Financial Accounts?
- What is meant by Profit on incomplete contracts?
SECTION-B
- Answer any FOUR out of the following six questions. (4×5=20)
- In a manufacturing company, a material is used as follows :
Maximum comsumption-12.000 units per week
Minimum comsumption-4,000 units per week
Normal consumption – 8.000 unit per week
Reorder quantity-48.000 units
Time required for delivery
Minimum : 4 weeks
Maximum : 6 weeks.
Calculate: a, Re-order Level; b, Minimum Level ; c, Maximum level ; d, Danger level ; e, Average stock level.
- In a factory, the standard time allowed for producing 25 units of a product is 1 hour. The hourly rate is Rs.11. Workers A, B and C produced 275 units, 200 units and 325 units respectively in a day.
Calculate (i) wages for each worker on that day (ii) Effective rate of earnings per hour for each worker under (a) Halsey premium Bonus (bonus @ 50% of time saved) Plan (b) Rowan premium method (c) Straight piece rate method.
- A manufacturing unit has added a new machine to its fleet of five existing machines. The total cost of purchase and installation of the machine is Rs.7,50,000. The machine has an estimated life of 15 years and is expected to realize Rs.30,000 as scrap at the end of its working life.
Other relevant data are as under:-
- Budgeted working hours are 2,400 based on 8 hours per day for 300 days. This includes 400 hours for plant maintenance.
- Electricity used by the machine is 15 units per hour at a cost of Rs.2 per unit. No current is drawn during maintenance.
- The machine requires special oil for heating, which is replaced once every month at the cost of Rs.2,500 on each occasion.
(iv) Estimated cost of machine maintenance is Rs.500 per week of 6
working days
- Three operators control the operations of the entire battery of six machines and the average wages per person are Rs.450 per week plus 40% fringe benefits.
- Departmental and general works overheads allocated to the operation during the last year was Rs.60,000. During the current year, it is estimated that there will be an increase of 12.5 % of this amount. No incremental overhead is envisaged of the installation of the new machine.
You are required to compute the machine hour rate of recovery of the running cost of the machine.
- Write short notes on:
- a) Kaizen costing (b) Balance Score Card
- What are the practical difficulties in installing the Costing System in an organization ?
- From the following information, Prepare a Process Account, Abnormal Gain Account .
Input of raw material 840 units @ Rs.40 per unit.
Direct Material Rs. 5,924
Direct Wages Rs. 8,000
Overheads Rs. 8,000
Actual Output 750 units
Normal loss 15%
Value of scrap per unit Rs.10 per unit
SECTION – C
- Answer any THREE out of the following questions. (3×15=45)
- The following is the summarized Trading and Profit and Loss account for the year ending 31st 2008 in which year 800 waterproofs were sold by the said company.-
Trading and Profit and Loss Account
| To cost of materials | 32,000 | By sales | 1,60,000
|
| To Direct wages | 48,000
|
||
| To Manufacturing charges | 20,000 | ||
| To Gross profit c/d | 60,000 | ||
| 1,60,000 | 1,60,000 | ||
| To Office salaries | 24,000 | By gross profit b/d | 60,000
|
| To Rent and taxes | 4,000 | ||
| To Selling expenses | 8,000 | ||
| To General expenses | 12,000 | ||
| To Net profit | 12,000 | ||
| 60,000 | 60,000 |
Following estimates were made by the costing department of the company of the year ending 31st March 2009 :
- The output and the sales will be 1,000 waterproofs.
- The price of materials will rise by 25% on the previous year’s level.
- Wages during the year will rise by 12.5%.
- Manufacturing cost will rise in proportion to the combined cost of materials and wages
- Selling cost per unit will remain unchanged
- Other expenses will remain unaffected by the rise in output.
From the above information, prepare a cost statement showing the price at which the waterproofs would be marketed so as to show a profit of 10% on the selling price.
- Enter the following transactions in the stores ledger of Y material for the month of July, 2011 using (1) the FIFO method and (2) the LIFO method.
| 1st July | Balance 200 units @ Re. 1 per unit. |
| 3rd July | Issued 50 units |
| 6th July | Received 800 units @ Rs.1.10 per unit |
| 7th July | Issued 300 units |
| 8th July | Returned to stores 20 units issued on 3rd July |
| 12th July | Received 300 units @ Rs.1.20 per unit |
| 15th July | Issued 320 units |
| 18th July | Received 100 units @ Rs.1.20 per unit |
| 20rd July | Issued 120 units |
| 23rd July | Returned to vendors 40 units received on 18th July |
| 26th July | Received 200 units @ Re1 per unit |
| 28th July | Freight paid on purchase Rs.50 |
| 30th July | Issued 250 units |
- Indian Manufacturing Company has 3 products A, B and C and 2 Service Departments X and Y. The following is the budget for Feb 2004:
| Particulars | Total | A | B | C | X | Y |
| Direct Materials | –
|
1,000 | 2,000 | 4,000 | 2,000 | 1,000 |
| Direct Wages | – | 5,000 | 2,000 | 8,000 | 1,000 | 2,000 |
| Factory Rent | 4,000 | |||||
| Power | 2,500 | |||||
| Depreciation | 1,000 | |||||
| Other Overhead | 9,000 |
Additional information is given as under:-
| Particulars | A | B | C | X | Y |
| Area sq. ft. | 500 | 250 | 500 | 250 | 500 |
| Capital value of
Assets (Rs.lakhs) |
20 | 40 | 20 | 10 | 10 |
| Machine hours | 1,000 | 2,000 | 4,000 | 1,000 | 1,000 |
| HP of machines | 50 | 40 | 20 | 15 | 25 |
A technical assessment for apportionment of the costs of service departments is as under:
A B C X Y
Service Department X 45% 15% 30% – 10%
Service Department Y 60% 35% – 5% –
You are required to distribute overheads to various departments and re-distribute service department costs to production department.
- AKP Builders Ltd. Commenced a contract on April 1, 2010. The total contract was for Rs. 5,00,000. Actual expenditure for the period April 1, 2010 to March 31, 2011 and estimated expenditure for April 1,2011 to December 31,2011 are given below :
Particulars 2010-11 2011-12
(actual) (9 months
Estimated)
Materials issued 90,000 85,750
Labour : Paid 75,000 87,325
Outstanding at the end 6,250 8,300
Plant 25,000 –
Sundry expenses: Paid 7,250 6,875
Pre-paid at the end 625 –
Establishment charges 14,625 –
A part of the material was unsuitable and was sold for Rs. 18,125 (cost being Rs. 15,000) and a part of plant was scrapped and disposed of for Rs. 2,875. The value of plant at site on 31st March, 2011 was Rs.7,750 and the value of material at site was Rs. 4,250. Cash received on account to date was Rs.1,75,000, representing 80% of the work certified. The cost of work uncertified was valued at Rs.27,375.
The contractor estimated further expenditure that would be incurred in completion of the contract:-
- The contract would be completed by 31st December, 2012
- A further sum of Rs. 31,250 would have to be spent on the plant and the residual value of the plant on the completion of the contract would be Rs.3,750.
- Establishment charges would cost the same amount per month as in the previous year.
- 10,800 would be sufficient to provide for contingencies.
You are required to prepare Contract Account and calculate estimated total profit on this contract. Profit transferable to Profit and Loss Account is to be calculated by reducing estimated profit in proportion of work certified and contract price.
- A transistor manufacturer who commenced his business on 01.04.2011 supplies you with the following information and asks you to prepare a statement showing the profit per transistor sold.
Wages and materials are to be charged at actual cost, works overheads at 75% of wages and office overhead at 30% of works cost. Number of transistors manufactured and sold during the year was 540.
Other particulars are: materials per set Rs.240, Wages per set Rs.80, Selling price per set Rs.600.
If the actual Works Expenses were Rs.32,160 and Office Expenses were Rs. 61,800, Prepare a Reconciliation Statement.
SECTION-D
- Answer the following compulsory question. (1×15=15)
- A product passes through three processes A, B and C. 10,000 units at a cost of Re. 1 were issued to process A. The other direct expenses were:
| Process A | Process B | Process C | |
| Sundry materials | 1,000 | 1,500 | 1,480 |
| Direct Labour | 5,000 | 8,000 | 6,500 |
| Direct Expenses | 1,050 | 1,188 | 1,605 |
The wastage of Process A was 5% and Process B was 4%. The wastage of Process A was sold at Rs.0.25 per unit and that of B at Rs.0.50 per unit and that of C at Rs.1.00 per unit. The overhead charges were 168% of direct labour. The final product was sold at Rs.10 per unit fetching a profit of 20% on sales. Find the percentage of wastage in Process C.
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