ST. JOSEPH’S COLLEGE OF COMMERECE (AUTONOMOUS)

END SEMESTER EXAMINATION – APRIL 2015

B.com – iv sem

C! 12 401: COST AND MANAGEMENT ACCOUNTING -II

Duration: 3 Hours Max. Marks: 100

SECTION – A

Answer ALL the questions. Each carries 2 marks. (10×2=20)

What do you understand by ‘Inter-Process Profit’ in Process Costing?

Briefly explain with examples what is ‘Relevant costing’.

State the procedure and objectives of preparing ‘Cash budget’.

What is the basis for ‘Plant Shut down decisions’?

What is the difference between PV chart and Break Even chart?

PV ratio is 55% and the marginal cost is Rs.90. What will be the selling price?

What is the purpose of calculating ‘Material Yield Variance’? Also give the formula for MYV

Product A requires 20 kgs of material at the rate of Rs. 6 per kg. The actual consumption for manufacture of product A was 24 kgs of material at the rate of Rs. 7.25 per kg. Calculate MCV, MPV and MQV.

Differentiate between Joint Products and By-Products?

What is Standard Costing? Explain its importance

SECTION – B

II)

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

11.

A company manufactured and sold 1,000 mixies last year at a price of Rs.800 each. The cost structure of a mixy is as follows

	Rs.
Materials	200
Labour	100
Variable cost	50
Marginal cost	350

Factory overhead (fixed)	200
Total cost	550

Profit	250
Selling Price	800

Due to heavy competition, price has to be reduced to Rs.750 for the coming year. Assuming no change in costs, state the number of mixies that would have to be sold at the new price to ensure the same amount of total profits as that of last year.

12.

In manufacturing the main product ’A’ a company also produces 2 by-products B&C prepare the comparative profit& Loss statement.

Total cost up to the point of separation was Rs.1, 36,000.

	A	B	C
Sales	3,28,000	32,000	48,000
Cost after separation	—	9,600	14,400
Estimated net profit (% age of sales)	?	20%	30%
Estimated selling expenses	20%	20%	20%

13.

Company A manufactures bicycles. It can produce 1,000 units in a month for a fixed cost of $300,000 and variable cost of $500 per unit. Its current demand is 600 units which it sells at $1,000 per unit. It is approached by Company B for an order of 200 units at $700 per unit.

a)Identify the relevant and irrelevant costs

b) Should the company accept the order?

14.

X company sells 2 products A and B and their variable costs are 45% and 60% of their sales value respectively. Total fixed costs are Rs.12,12,000. Their present sales mix is 50:50.

You are required to find out break even point. Also find out the break even point if sales mix is changed to 70:30

15.

A company submits the following information relating to a production for three months for 2014. Sales target: – April-30,000 units, May-24,000 units, June-36,000 units.

Stock position:- 1^st April 50% of April sales

30^th June 20,000 units

End of April and May 50% of subsequent months sales.

Prepare the Production Budget from April to June

16.

Calculate fixed overhead variance

Actual Budget

Output 30,000 32,000

No. of . 25 28

working days

Fixed overheads 60,000 61,000

There was an increase of 4.5% in capacity.

SECTION – C

III)

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

17.

A Company has a production capacity of 2,00,000 units per year. Normal capacity utilization is reckoned as 90%. Standard Variable production costs are Rs.11 per unit. The fixed costs are Rs.3,60,000 per year. Variable selling costs are Rs.3 per unit and fixed selling costs are Rs.2,70,000 per year. The unit selling price is Rs.20. In the year just ended on 30^th June 2014, the production was 1,60,000 units and sales were 1,50,000 units. The closing inventory on 30-6-2014 was 20,000 units. The actual variable production costs for the year were Rs.35,000 higher than standard.

i. Calculate the profit for the year

(a) By absorption costing method and (b) marginal costing method

ii. Explain the difference in the profits.

18.

The expenses budgeted for the production of 20,000 units in a factory are given below:

Particulars- Per Unit(Rs.)

Materials 80

Labour 25

Variable factory overheads 25

Fixed factory overheads (2,00,000) 10

Variable expenses (Direct) 5

Selling expenses (10% fixed) 13

Distribution expenses (20% fixed) 7

Administration expenses (fixed-1,00,000) 5

Cost of Sales per unit 170

Prepare a budget for the production of 12,000 and 16,000 units.

19.

A Company sells 4 products, some of them are unprofitable, proposes discontinuing sales of one of them. The following information is available regarding the income, costs and activities for a year.

Particulars	Product-A	Product-B	Product-C	Product-D
Sales (Rs)	3,00,000	5,00,000	2,50,000	4,50,000
Cost of sales at Purchase price (Rs)	2,00,000	4,50,000	2,10,000	2,25,000

Area of storage (sq.ft)	50,000	40,000	80,000	30,000
No. of parcels sent	1,00,000	1,50,000	75,000	1,75,000
No. of invoices sent	80,000	1,40,000	60,000	1,20,000

Fixed overhead costs and basis of allocation are

	Rs.	Basis of allocation
Rent & Insurance	30,000	Sq.ft
Depreciation	10,000	Parcel
Salesmen salaries & expenses	60,000	Sales volume
Administrative salaries	50,000	No. of invoices

Variable costs

Packing, wages and materials	20 paise per parcel
Commissions	4% of sales
Stationery	10 paise per invoice

You are required to

a. Prepare a profit and loss statement showing percentage profit or loss to sales of each product

b. Compare the profit if the company discontinues sales of Product B with the profit of discontinued Product C.

20.

Prepare statement of Equivalent production Statement of cost and Process a/c from the following information using FIFO method.

Units introduced 3,800

Output (units) 3,000

Process cost

Materials Rs. 7,280

Labour Rs. 10680

Overheads Rs. 7120

Degree of completion for closing work-in-process

Materials 85%

Labour 75%

Overheads 75%

21.

A company is expected to have Rs.50,000 cash in hand on 1^st April 2014 and it requires you to prepare an estimate of cash position during the three months. April to June 2014. The following information is supplied to you

Month	Sales (Rs.)	Purchases (Rs.)	Wages (Rs.)	Expenses (Rs.)
Feb	1,40,000	80,000	18,000	16,000
March	1,60,000	1,00,000	18,000	17,000
April	1,84,000	1,04,000	19,000	17,000
May	2,00,000	1,20,000	20,000	18,000
June	2,40,000	1,10,000	22,000	19,000

Other information (a) 10% of Sales of each month is for Cash, 50% of credit Sales is collected in the next month and 50% in the following month (b) Suppliers allow credit of half a month (c) Delay in payment of wages and expenses – ½ month (d) Income tax of Rs.55,000 to be paid in June 2004.

SECTION – D

Case Study (1×15=15)

A leading University conducts an entrance test for admitting students to its B.Tech course. The final selection is based on this examination. The examination consists of 4 objective type papers and is spread over 4 days. Each candidate is charged a fee of Rs.500 for taking up this entrance test.

The following data relate to past 2 years.

Statement of net revenue from the Entrance test.

	2013	2014
A)Gross Revenue (fees collected)	10,00,000	15,00,000
B)Costs
Evaluation	4,00,000	6,00,000
Printing of question papers	2,00,000	3,00,000
Examination hall rent (Rs.20000 per day)	80,000	80,000
Honorarium to chief examiner	10,000	10,000
Supervision charges (one supervisor for every 100 candidates@ Rs. 500 per day)	40,000	60,000
General administration charges	60,000	60,000
Total cost	7,90,000	11,10,000
Net Revenue (A-B)	2,10,000	3,90,000

You are required compute

a. The break even number of candidates

b. The number of candidates to be enrolled if desired net income is Rs.1,00,000

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