LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
DEGREE EXAMINATION – CORPORATE
FIFTH SEMESTER – APRIL 2007
CR 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.
2) a) Imputed Cost is a ———- Cost.
- b) Operating Costing is suitable for ———— Industries.
- What is a Cost Sheet?
- From the following figures calculate Economic Order Quantity and the number of orders to be placed in each year.
Annual consumption of materials – 4,000 units.
Cost of buying per order – Rs.5
Cost per unit- Rs.2 per unit.
Storage and carrying cost – 8% on average inventory.
- Find out the value of closing stock under LIFO:
Purchases of material on 1-2-04: 1000 units’ @Rs.12 per unit.
Purchases of material on 5-2-04: 1500 units @Rs.14 per unit
Issue on 15-2-04: 2100 units.
- 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.
8) Write short note on a) Work Certified, b) retention money.
- Answer the following questions in a sentence or two: A) How the normal loss treated in process costing? B) How is abnormal loss valued in process costing?
- A transport service company is running four buses between two towns which are Apart. Seating capacity of each bus is 50 passengers. Actual passengers carried were 80% 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.
Section – B
Answer any five only: 5 x 8 = 40
- 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) Compute machine hour rate from the information given below;
Cost of machine X Rs.13, 500.
Life of the machine – 10 years.
Estimated scrap value after 10 years Rs.1, 980.
Working hours 1800.
Insurance per annum Rs.45
Cotton wastes per annum Rs.75
Rent of dept. per annum Rs.975
Foreman’s salary per annum Rs.7500
Lighting for dept. per annum Rs.360
Repairs for entire life Rs.1440
Power: 10 units @ 7.5 paise per unit.
Machine X occupied 1/5 of the area and foreman devotes ¼ of his time to the machine. The machine has two light points out of the total 12 for lighting in the department.
- B) Distinguish between allocation and apportionment.
- The following details are available from the books of accounts of accounts of a contractor for the year ended 31st March, 2004 with respect top particular contract No.113. 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, 2004 12,220
Accrued wages as on 31st March, 2004 11,160
Accrued Direct expenses 1,330
Value of plant as revealed on 31st March, 2004 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, 2004.
16) 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.0.50 per unit, B at Re.1 per unit and C at Rs.2 per unit. 20,000 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 2,000 3,000 1,000
Labour 10,000 16,000 13,000
Direct expenses 2,100 2,367 4,018
Actual output (units) 19,000 18,200 16,200
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.
- 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) Draw a stores ledger card recording the following transaction under FIFO method.
2000 July. 1 Opening stock 2,000 units at Rs.10 each.
5 Received 1,000 units at Rs.11 each.
6 Issued 500 units
10 Received 5,000 units at Rs.12 each.
12 Received back 50 units out of the issue made on 6th July.
14 issued 600 units.
18 Returned to supplier 10o units out of goods received on 5th July.
19 Received back 100 units out of the issue made on 14th July.
20 Issued 150 units.
25 Received 500 units at RS.14 each.
28 Issued 300 units.
The stock verification report reveals that there was a shortage of 10 units on 18th July and another shortage of 15 units on 26th July.
- A manufacturer of product X finds that in 2005 it cost him Rs.7,20,060 to manufacture 175 products of X, which he sold for Rs.5,400 each. The cost made up of:
Materials Rs.2, 82,000
Direct wages. Rs.3, 24,000
Factory Overhead. Rs. 48, 600
Office Overhead. Rs. 65, 460
For the next year he estimates that:
- Each product will require materials of Rs.1, 600 and labour Rs.1, 800.
- The factory overhead will bear the same relation to wages as in the previous year.
- The office overhead percentage on factory cost will be the same as in the past. Prepare a statement showing the profit he would make per unit, if he reduces the price of the product by Rs.200.
Section – C
Answer any two only. 2 x 20 = 40
- 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.5, 000. Power Rs. 1, 500
General lighting Rs. 600 Depreciation on Machinery Rs.10, 000
Indirect wages Rs. 1500 Sundries Rs.10, 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) 3000 2000 3000 1500 500
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.50. Labour cost Rs.30, and it passes through departments A, B and C for 4, 5 and 3 hours respectively?
- The following data are available is respect of Process I for a month.
Opening work in-progress: 900 units at Rs.4500
Degree of completion: Materials 100%, Labour 60%, Overhead 60%
Input of Materials: 9100 units at Rs.27, 300
Direct wages: Rs.8, 200
Production overhead: Rs.16, 400
Units Scrapped: 1,200 units
Degree of completion: Materials 100%, Labour 70%, Overhead 70%
Closing work in progress: 1000 units
Degree of completion: Materials 100%, Labour 80%, Overhaead 80%
Units transferred to next
Process: 7, 800 units.
Normal process loss in 10% of total input (opening stock plus units put in); Scrap value is Rs.3 per unit.
- Compute equivalent production
- Compute cost per equivalent unit for each element and cost of abnormal loss or gain, closing WIP and units transferred to the next process; and
- Prepare necessary accounts.
- From the following particulars prepare:
- A statement of cost of manufacture for the year 2005
- A statement of profit as per cost accounts and
- Profit and loss account in the financial books
- Prepare also a reconciliation between cost and financial records
Opening stock of raw materials 30, 000
Opening stock of finished goods 60, 000
Purchase if raw materials 1, 80,000
Stock of raw materials at end 45, 000
Stock of finished goods at end 15, 000
Wages 75, 000
Calculate the factory expenses at 25% on prime cost and Office expenses at 75% on factory expenses.
Actual works expenses amounted to Rs.58, 125 and actual office expense amounted to Rs.45, 750. The selling price is fixed at a profit of 25% on cost.
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