St. Joseph’s College of Commerce (Autonomous)
End Semester Examination – March/April 2013
B.B.M. – IV Semester
COST ACCOUNTING
Duration: 3 hours Max. Marks: 100
SECTION – A
- Answer ALL the following questions. (10×2=20)
- What is target costing?
- What is a cost centre?
- State any 4 items which are excluded from the cost sheet.
- What is Bill of Material?
- What is EOQ? Give its utility?
- What are the methods of time keeping?
- What are fringe benefits? Give examples.
- Differentiate between normal and abnormal process loss.
- What is meant by uncertified work in contract?
- What is ‘operating costing? In which industry do you apply? Give 2 examples.
SECTION – B
- Answer any FOUR questions. Each carries 5 marks. (4×5=20)
- Sagar Private Limited has three production departments A, B, C and two service departments D.E. The expenses incurred for the year ended 31-3-2004 are as follows:
Rs. | |
Rent | 50000 |
Repairs to plant | 7000 |
Supervisor’s salary | 28000 |
Insurance on machinery | 17500 |
Power | 18000 |
Lighting | 4000 |
Staff welfare | 21000 |
General Expenses | 12000 |
The following additional information is also supplied.
Dept.
A |
Dept.
B |
Dept.
C |
Dept.
D |
Dept.
E |
|
Area in sq.mts. | 140 | 120 | 110 | 90 | 40 |
Value of plant (Rs) | 40000 | 36000 | 32000 | 20000 | 12000 |
No. of workers | 30 | 20 | 10 | 5 | 5 |
H.P. Machines | 30 | 25 | 25 | 10 | – |
Light points | 8 | 6 | 3 | 2 | 1 |
Total wages | 20000 | 16000 | 10000 | 10000 | 4000 |
Apportion the costs to the various departments on the most equitable basis.
- From the following details compute total wages, labour cost per hour and labour cost per unit:
- Name: Abdul Carrim
- Ticket No: 786
- Job commenced : Monday, 23rd February, 8 A.M.
- Job finished: Saturday, 28th February, 12 noon.
- Quantity produced and approved: 400 units.
- Wage rate: Rs.2 per hour.
- Time allowed: 8 units per hour.
- Bonus: 50% of time saved.
- Shift timings: 8 A.M. to 4 P.M.
- Overtime worked: Nil.
- A company has three production departments and two service departments, and for a period the departmental distribution summary has the following totals:
Rs.
Production Departments:
P1 —Rs.800; P2 —700 and P3—Rs.500 2,000
Service Departments:
S1 —Rs.234 and S2 —Rs.300 534
2,534
The expenses of the service departments are charged out on percentage basis as follows:
P1 P2 P3 S1 S2
Service Department S1 20% 40% 30% – 10%
Service Department S2 40% 20% 20% 20% –
Prepare a statement showing the apportionment of two service departments expenses to Production Departments by Simultaneous Equation Method.
- A company manufactures a standard product. From the following data, prepare a statement of Cost and Profit:
Raw materials consumed —–Rs.45,000
Direct labour —–Rs.27,000
Machine hours worked —– 900.
Machine hour rate ——- Rs.15
Administration overhead—20%on works cost.
Selling cost —Rs.1.50 per unit
Units produced —–Rs.15,000
Units sold —14,000 at Rs.12 per unit.
- Explain in detail the various techniques of costing?
- Differentiate between job costing and process costing.
SECTION – C
- Answer any THREE questions. Each carries 15 marks. (3×15=45)
- Following are the particulars of production of 1,500 machines of ABC Company Ltd. for the year 2009:
Rs.
Cost of materials .. 1,20,000
Salaries .. 90,000
Wages .. 1,80,000
Factory expenses .. 75,000
Rent, rates and insurance .. 15,000
Sales expenses .. 45,000
General expenses .. 30,000
Sales revenue .. 6,00,000
The Sales Manger of the company estimates that the sales during 2010 will be 2,000 machines. Prepare a statement showing the estimated cost for 2,000 machines and the price per machine to earn 20% profit on selling price.
The following changes have been anticipated:
- Rise in price of raw materials by 20%:
- Wages will be up by 5%.
- Factory expenses will rise in proportion to the combined cost of materials and wages.
- Selling expenses per unit will remain the same.
- Other expenses will remain unaffected by the rise in output.
- A) The following were the receipts and issues of material ‘A’ during April 2012.
Apr. 1 Opening balance 2200 units @Rs.6/unit.
2 Issued 280 units
3 Issued 500 units
7 Issued 420 units
10 Received 800 units @ Rs.5/unit
14 Return of surplus from work order 60 units @ Rs.6.00/unit
18 Issued 700 units
22 Received 960 units @ Rs.5.50/unit
24 Issued 1000 units
27 Received 200 units @ Rs.6/unit
29 Return of surplus from work order 24 units (Issued on 2nd April 2012)
30 Received 300 units Rs.6.50 / unit.
From the above write up stores Ledger Account on Simple Average Basis. The stock verification on 30th April revelaed a shortage of 20 units. (12 marks)
- B) Calculate the Economic Order Quantity from the following information. Also state the number of orders to be placed in a year.
Consumption of materials per annum : 10,000 kgs.
Order placing cost per order : Rs. 50
Cost per kg. of raw materials : Rs.2
Storage costs : 8% on average inventory
(3 marks)
- Shankar has been provided a contract to run a tourist car on 20km. long route for the chief executive of a multinational firm. He buys a car costing Rs.3,50,000. The annual cost of insurance & taxes are Rs.4,500 & Rs.1,000 respectively. He has to pay Rs.500 per month for a garage where he keeps the car when it is not in use. The annual repair cost is estimated to be Rs.4,000. The car is estimated to have a life of 10 years at the end of which the scrap value is likely to be Rs.50,000.
He hires a driver who is to be paid Rs.3,000 per month plus 10% of the taking as commission. Other incidental expenses are estimated at Rs.200 per month.
Petrol & oil will cost Rs.200 per 100kms. The car will make 4 round trips each day. Assuming that a profit of 15% on takings is desired, & that the car will be on the road for 25 days on an average per month, what should be charged per round trip?
- M/s Bansala Construction Ltd. took a contract for Rs.60,00,000 expected to be completed in three years. The following particulars relating to the contract are available:
2003
Rs. |
2004
Rs. |
2005
Rs. |
|
Materials | 6,75,000 | 10,50,000 | 9,00,000 |
Wages | 6,20,000 | 9,00,000 | 7,50,000 |
Cartage | 30,000 | 90,000 | 75,000 |
Other expenses | 30,000 | 75,000 | 24,000 |
Cumulative work certified | 13,50,000 | 45,00,000 | 60,00,000 |
Cumulative work uncertified | 15,000 | 75,000 | – |
Plant costing Rs.3,00,000 was bought at the commencement of the contract. Depreciation was to be charged at 25% per annum, on the written down value method. The contractee pays 75% of the value of work certified as and when certified, and makes the final payment on completion of the contract.
You are required to make a contract account and contractee account as they would appear in each of the three years.
- A) What is meant by idle time? What are the causes of idle time? Explain how is it treated and how is it controlled? (8 marks)
- B) Using Taylor’s differential piece rate system, find the earnings of the Amar, Akbar and Ali from the following particulars;
Standard time per piece : 20 minutes
Normal rate per hour : Rs.9.00
In a 8 hour day
Amar produced : 23 units
Akbar Produced : 24 units
Ali produced : 30 units.
(7 marks)
Section – D
- Compulsory question (15 marks)
22) Product A is obtained after it passes through three distinct processes, I, II and III. The following information is obtained from the accounts for the month of March 2012.
Items |
Total Rs. |
Process
I |
Process
II |
Process
III |
Rs. | Rs. | Rs. | ||
Direct material | 15,084 | 5,200 | 3,960 | 5,924 |
Direct wages | 18,000 | 4,000 | 6,000 | 8,000 |
Production overhead | 18,000 |
1,000 units at Rs.6 each were introduced into process I. There was no stock of material or work-in-progress at the beginning or at the end. The output of each process passes directly to the next process and finally to the finished stock. Production overhead is recovered at 100% of direct wages. The following additional data are obtained.
Output during Percentage of Value of
Process the Month Normal Loss to Scrap per
Units Input Unit
I 950 5% 4
II 840 10% 8
III 750 15% 10
Prepare Process Accounts and Abnormal Loss or Gain Accounts.