Loyola College B.B.A. Business Administration April 2009 Adv. Cost Management Accounts Question Paper PDF Download

LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.B.A. DEGREE EXAMINATION – BUSINESS ADMINISTRATION

JQ 16

SIXTH SEMESTER – April 2009

BU 6600 – ADV. COST MANAGEMENT ACCOUNTS

 

 

 

Date & Time: 25/04/2009 / 9:00 – 12:00        Dept. No.                                                           Max. : 100 Marks

 

 

PART A

Answer ALL questions                                                                                               (10×2=20)

  1. Idle time variance
  2. Master budget
  3. Limiting factor
  4. Economic batch quantity
  5. Internal rate of return
  6. Joint and by-products
  7. A Ltd plans to purchase a machine costing Rs.5,00,000. It has a life of 5 years and no salvage value. If the company expects to earn a profit of Rs.2,50,000 per annum, before depreciation and tax, calculate the pay back period. Tax rate is 50%. Provide depreciation under Straight Line Method.
  8. X ltd expects to sell 1,00,000 units of product A in the month of July 2009. Each unit of product A requires 2 kgs of material X. calculate the quantity of X to be purchased, from the following data.

A  (units)                     X (kgs)

Estimated stock on 1/7/09                        30,000                         25,000

Desired stock on 31/7/09             50,000                         45,000

  1. 100 units are introduced in Process 1. The total expenses for the process if RS.9,000. 80 units are completed and transferred to Process 2. 20 units, 50% complete remained as closing work in progress. Prepare Process 1 account.
  2. A owns a lorry of 6 ton capacity. During the month it made 20 trips covering a distance of 200 kms every trip. 40% of the time it ran empty. It carried an average load of 80% of capacity during the period. Calculate the total ton kilometers for the month.

PART  B

 

Answer FIVE questions choosing at least TWO from each section.                                  (5×8=40)

 

Section 1

 

  1. Distinguish between ‘Job costing” and “Process costing”

 

  1. R Ltd gives you the following data. In respect of a truck of 5 ton capacity.

Cost of truck                    Rs.90,000

Estimated life                   10 years

Diesel, oil etc.                  Rs.15 per trip each way

Repairs and Maintenance Rs.500 per month

Driver’s wages                 Rs.500 per month

Cleaner’s wages               Rs.250 per month

Insurance                         Rs.4,800 per annum

Tax                                   Rs.2,400 per annum

Supervision                      Rs.4,800 per annum

The truck carries goods to and from the city, covering a distance of 50 kms each way. While going to the city it runs with full capacity, but on the return journey, it carries only 20% of its capacity.  The truck runs on an average 25 days a month. Calculate the operating cost per ton kilometer.

  1. R Ltd gives you the following data in respect of a contract for Rs. 8,00,000, for the year ending 31st December 2008:

Rs.

Materials issued from stores                                             1,50,000

Wages paid                                                                       2,20,000

General charges                                                                     8,000

Plant installed at site on 1st July 2008                                  40,000

Materials on hand on 31st December 2008                                         8,000

Wages accrued on 31st December 2008                                8,000

Cash received being 75% of works certified                                      3,000

Works uncertified                                                                            12,000

Materials transferred to other contracts                                8,000

Materials received from other contracts                               2,000

Depreciate Plant at 10% per annum.

Prepare Contract account for the year ending 31st December 2008.

 

  1. While manufacturing Product X, a by-product Y is obtained, which after further processing is sold. The joint expenses incurred is Rs.39,000. Expenses after split off were Rs.25,000 for X and Rs.6,200 for Y. 400 kgs of X and 100 kgs of Y are produced. Y is sold at Rs.240 per kg on which the profit earned is estimated at 30% of the selling price.

Calculate the profit made on product X, if X is sold at Rs.300 per kg.

Section 2

 

  1. Marginal costing is an invaluable aid for managerial decision making. Explain.

 

  1. Prepare a flexible budget for overheads on the basis of the following data, at 50% and 70% of operating capacity. Also calculate the overhead rate per labor hour:

At 60% capacity

(Rs.)

Variable overheads:

     Indirect material                          6,000

Indirect labour                         18,000

Semi variable overheads:

Electricity (40% fixed)                        30,000

Repairs (20% variable)                           3,000

Fixed overheads:

Depreciation                            16,500

Insurance                                    4,500

Salaries                                                15,000

———-

Total overheads                            93,000

Estimated direct labor hours          1,86,000

 

  1. 100 workers are employed in a factory. The standard wage rate is Re.1 per hour. The standard working time per week is 48 hours. During a week in march, 50 workers were paid at Re.1.10 p per hour, 20 workers at Re.1 per hour and 30 workers at 90 p per hour. The factory did not work for 8 hours due to power failure.  Calculate labor variances.

 

  1. A company manufacturers 3 products A,B and C, all of which use the same raw material. On the basis of the following data, calculate the product mix, which will give the highest profit assuming the company has only 1 lakh kgs of raw material available.

A                     B                      C

Raw material at Rs.10 per kg                    Rs.100             Rs.60               Rs.150

Labor cost per unit                                               Rs.15               Rs.25               Rs.20

Selling price per unit                                Rs.125             Rs.100             Rs.200

Maximum demand in units                                   6,000               4,000               3,000
PART  C

 

Answer any TWO questions choosing at least 1 from each section                                     2×20=40

Section 1

 

  1. The following figures are available from the financial accounts for the year ending 31st March 2008:

Rs.

Direct material consumed                                     2,00,000

Direct wages                                                         1,00,000

Factory overheads                                                               75,000

Administration overheads                                                2,25,000

Selling and distribution overheads                                    2,40,000

Fines paid                                                                 30,000

Preliminary expenses written off                              40,000

Legal charges                                                           20,000

Dividend received                                                                50,000

Interest on bank deposits                                          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                                     2,20,000

Direct wages                                                             80,000

Factory overheads – 20% on prime costs

Administration overheads – Rs.2 per unit produced

Selling and distribution overheads – Rs.2 per unit sold

Ascertain the profits shown as per Cost Accounts and Financial Accounts.

Also prepare a statement reconciling the two profits.

 

  1. A product of a company passes through two processes A and B. 20,000 units are issued to Process A at a cost of Rs.10,000. Other details relating to the process are as follows:

Process A         Process B

Direct labor      (Rs.)                             14,000             10,000

Manufacturing expenses (Rs.)               1,000              1,000

Normal loss (%age of input)                2%                   5%

Sale value of scrap (Rs.)                                  1                      1.20

Output in units                                     19,500             18,800

Prepare Process accounts, Normal Loss A/c, Abnormal Loss A/c and Abnormal Gain A/c.

Section 2

 

  1. A factory produces an article X using two materials A and B, mixed in the ratio of 60% and 40%. The

standard price for material A and B is Rs.4 per kg and Rs. 3 per kg resp. standard loss in production is

estimated at 10%.   During a week 364 kgs of product X were produced, using,  280 kgs of material X at

Rs.3.80 per kg and 120 kgs of material Y at Rs.3.60 per kg.   Calculate material variances.

 

  1. X Ltd is considering the purchase of a machine. Two models A and B are available. The cost of each model is Rs.75,000. Each machine has a life of 5 years. The net profit, before tax but after depreciation for each machine are given below:

Year                                 Machine A                   Machine B       PV of Re.1 at 10%

(Rs.)                             (Rs.)

1                                       18,000                         6,000                          0.91

2                                       21,000                         16,000                         0.83

3                                       28,000                         22,000                         0.75

4                                       20,000                         28,000                         0.68

5                                       13,000                         25,000                         0.62

Calculate for each machine:

  1. Pay back period
  2. Return on investment
  3. Net present value, assuming cost of capital is 10%.

Tax rate is 50%.

 

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