LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

FIFTH SEMESTER – APRIL 2012

# BU 5504/BU 5501 – COST ACCOUNTING

Date : 30-04-2012              Dept. No.                                        Max. : 100 Marks

Time : 9:00 – 12:00

SECTION – A

ANSWER ALL QUESTIONS:                                                                                   (10×2 = 20marks)

1. What is a cost sheet?
2. What is Bin Card?
3. What is Merit Rating?
4. What is ‘under-absorption’ of overheads?
5. Explain ‘Escalation Cause’.
6. Compute the prime cost:         Rs.

Direct Material used                                         82,000

Productive wages                                              17,000

Royalty paid                                                      11,000

Hire charge of special machines foe the job       13,000

1. Find out the Economic Order Quantity from the following particulars:

Annual usage                                               6,000 units

Cost of placing per unit                                Rs.20

Cost of placing and receiving one order:Rs. 60.  Annual carrying cost of one unit: 10% of Inventory

value.

1. Mr.A a worker in a factory is paid on time basis. During the month of October 2010 he has worked

for 200 hours.  His hourly wage rate is Rs.10 per hour.

Mr.B another employee of the company is paid on the basis of piece wages.  During the month of

January 2010 his output was 1,000 units.  Rate of wages per piece is Rs.3.

Calculate the wages of respective workers for the month of October 2010.

1. The works overheads of a department are Rs.3,00,000.

The direct wages are 3,00,000

The direct material cost is 9,00,000.

Ascertain the prime cost percentage rate of works overhead.

1. A company produces 300 units of product R, 200 units of product ‘S’ and 100 units of product J from

a single process.  The costs upto the point of separation amounted to Rs.30,000.  You are required to

apportion the joint cost of production among the products, using the average unit cost method.

SECTION –B

Answer any FIVE  questions:                                                                              (5 X 8 = 40 marks)

1. Discuss the advantages of Cost Accounting.
2. Explain the causes of labour turnover.
3. Compute the various stock levels from the following data:

Maximum consumption in a month     300 units

Minimum usage in a month                  200 units

Average usage in a month                    225 units

Time-lag for procurement of materials:

Maximum 6 months ;  Minimum  2 months;  Reorder quantity   750 units.

1. The following details pertain to the production department of a factory.

Material consumed                                                                               Rs.60,000

Direct wages                                                                                         Rs.40,000

Machine hours                                                                                      Rs.50,000

Labour hours worked                                                                            Rs.25,000

Factory overhead relating to the department                                         Rs.50,000

Calculate  overhead absorption rates under different possible method from the above detail.

1. Laxmi Travels, a transport company is running a fleet of six buses between two towns 75 kms apart.

The seating capacity of each bus is 40 passengers.  The following particulars are available for the

month of April 2005.

Rs.

Wages of Drivers, Conductors, etc                                                                        3,600

Salaries of office and supervisory staff                                                                  1,500

Diesel oil, etc                                                                                                        10,320

Repairs and maintenance                                                                                       1,200

Taxes and insurance                                                                                               2,400

Depreciation                                                                                                           3,900

Interest and other charges                                                                                       3,000

The actual passengers carried were 80% of the capacity.  All the buses run all the days in the

month.  Each bus made one round trip per day.

Find out the cost per passenger kilometre.

1. The following are the expenses of Balaji & Co., in respect of a contract which commenced on 1st

January 2008.

Rs.

Materials purchased                                                                   50,000

Materials on hand                                                                         2,500

Direct wages                                                                               75,000

Plant issued                                                                                 25,000

Direct Expenses                                                                          40,000

The contract price was Rs.7,50,000 and the same was duly received when the contract was completed in August 2008.  Charge indirect expenses at 15% on wages; provide Rs.5,000 for depreciation on plant and prepare the contract account.

1. From the following particulars calculate the earnings of workers A & B under straight piece rate

system and Taylor’s differential piece rate system.

Standard time allowed 25 units per hour

Normal time rate Rs.50 per hour

Differentials to be applied

80% of piece rate when below standard

120% of piece rate at or above standard

In a day of 8 hours A produced 150 units and B produced 250 units.

1. The cost accounts department of a company has supplied the following data for the supply of 2,000

units of product.

Direct materials:  40,000 tons at Rs.5 per ton.

Direct wages      :   8,000 labour hours at Rs.50 per hour

Variable:               Factory Rs.10 per labour hour

Selling Rs.20 per unit

Fixed:                    Factory Rs.1,00,000

Office   Rs.2,00,000

Prepare a Statement showing the price to be fixed which will fetch a profit of 25% on cost.

SECTION –C

Answer any TWO questions:                                                                                   (2 X 20 = 40 marks)

1. From the following data, prepare a cost and production statement of Popular Stove Manufacturing

Company for the year 2010.

Rs.

Stock of materials on 1-1-2010                                                            35,000

Stock of materials on 31-12-2010                                                          4,900

Purchase of materials                                                                           52,500

Factory wages                                                                                       95,000

Factory expenses                                                                                   17,500

Establishment expenses                                                                         10,000

Completed stock in hand on 1-1-2010                                                      NIL

Completed stock in hand on 31-12-2010                                                35,000

Sales                                                                                                     1,89,000

The number of stoves manufactured during the year was 4,000.

The company wants to quote for a contract for the supply of 1,000 electric stoves during the year 2011.

The stoves to be quoted are of uniform quality and make, and are similar to those manufactured in the

previous year; but the cost of material has increased by 15% and cost of factory labour by 10%.

Prepare a statement showing the price to be quoted to give the same percentage of net profit on

turnover as was realised during the year 2010 assuming that the cost per unit of overhead charges will

be the same as in the previous year.

1. Make out the necessary accounts from the following details:

Process A                            Process B

Rs.                                     Rs.

Materials                                                                       30,000                                 3,000

Labour                                                                           10,000                               12,000

Input (units)                                                                  20,000                               17,500

Normal loss                                                                       10%                                    4%

Sales of waste per unit                                                    Rs.1                                    Rs.2

There was no opening or closing stock or work-in-progress.  Final output from process B was 17,000

units.

1. In a Light Engineering Factory, the following particulars have been collected for the three monthly

period ended 31-12-2008.  Compute the departmental overhead rates for each of the production

departments, assuming that overheads are recovered as a percentage of direct wages.

 Particulars Production Departments Service departments A B C D E Direct wages (Rs.) Direct materials Staff (Nos.) Electricity (Kwh) Light points (Nos.) Assets value  (Rs.) Area occupied (Sq.mts.) 2,000 1,000 100 4,000 10 60,000 150 3,000 2,000 150 3,000 16 40,000 250 4,000 2,000 150 2,000 4 30,000 50 1,000 1,500 50 1,000 6 10,000 50 2,000 1,500 50 1,000 4 10,000 50

The expenses for the period were:

Rs.                                                                                         Rs.

Motive power                                          550                Amenities to staff                                          1,500

Lighting power                                        100                Repairs and maintenance                               3,000

Depreciation                                        15,000               Rent and taxes                                                    275

Apportion the expenses of service department E proportionate to direct wages and that of service department D in the ratio of 5:3:2 to departments A, B and C respectively.

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