LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.Com. DEGREE EXAMINATION – CORPORATE SECRETARYSHIP

LA 06

FIFTH SEMESTER – November 2008

BC 5501 – COST ACCOUNTING

 

 

 

Date : 05-11-08                     Dept. No.                                        Max. : 100 Marks

Time : 9:00 – 12:00

 

SECTION – A

Answer ALL questions                                                                                               (10 x 2 = 20 marks)

 

1. What is perpetual inventory system?
2. Explain EOQ.
3. Give reasons as to why it is necessary to reconcile cost accounts and financial

accounts.

4. Explain with example ‘first-in- first-out’ (FIFO) method of stock valuation.
5. Differentiate between job costing and process costing.
6. How much of profit would you allow to be considered in the following case ?

Rs.

Cost incurred so far for contract      :    2,80,000

Contract price                                   :    5,00,000

Cash received                                   :    2,70,000

Uncertified work                              :       30,000

Retention money 10%

7. Mr. X runs a tempo service and has 5 vehicles. Distance traveled by each vehicle per

day – 200 kms.  Normal loading capacity – 100 quintals.  Wastage in loading capacity

–  10%.  Percentage of vehicle laid-up for repairs – 5%.  Effective days in a month –

25. Calculate quintal kms of the vehicles.
26. Calculate direct labour hour rate from the following:

Total number of workers-100; Working days in a year-300; No. of hours per day

worked -8; Idle time -5%; Factory overheads-Rs. 11,400.

9. The records of Anand Company present the following data for the month of

August 2008. Direct labour cost-Rs.16,000(160% of factory overheads); cost

of production-Rs. 56,000;  administration expenses-2,600; opening stock of raw

materials-Rs. 8,000 and closing stock of raw materials-Rs. 8,600; sales for the

month-Rs. 75,000. Prepare statement of cost.

10. Calculate earnings of Worker ‘A’ under straight piece system and Taylor’s

differential piece rate system.  Normal rate per hour Rs. 2.40;standard time per

unit-30 seconds; Worker ’A’ produced 800 units per day.

                                                             

                                                             SECTION – B

      Answer any FIVE questions                                                                                             (5 x 8 = 40 marks)

11. What do you mean by elements of costs? Discuss the various elements of costs.
12. What is labour turn-over? Explain its causes and effects and also suggest the steps to

reduce labour turn-over.

 

 

 

13. Production sections of a factory working on the job order system pay their workers

      under the Rowan Premium  Bonus Scheme.  Workers also get a Dearness allowance

of Rs. 12 per week of 55 hours.

A  worker’s basic wage is Rs. 2 per day of 8 hours and his time sheet for a week is

summarised below:

Job No.                  Time allowed                      Time taken

1844                             25 hrs                               20 hrs

1926                             30 hrs                               20 hrs

Idle time(waiting)                                                                 8 hrs

48 hrs

Calculate the gross wages he has earned for the week and indicate the accounts

to which the wages amounts will be debited.

 

14. In a factory, there are two service departments S1 and S2 and three production

departments P1, P2, and P3.  In April 1998, the departmental expenses were:

Departments       P1                    P2                  P3                  S1                   S2

Rs.           6.50,000         6,00,000        5,00,000         1,20,000        1,00,000

The service department expenses are allotted on a percentage basis as follows:

Service Departments               Production Deptts.                         Service Deptts.

P1           P2            P3                    S1                  S2

S1                           30           40             15                    —                   15

S2                           40           30             25                     5                    —

Prepare a statement showing the distribution of the two service departments

expenses to the three departments.

 

15. Utkal Construction Ltd. took a contract in 2007 for road construction. The contract

price was Rs. 10,00,000 and its estimated cost of completion would be Rs. 9,20,000.

at the end of 2007, the Company has received Rs. 3,60,000 representing 90% of

work certified.  Work not yet certified had cost Rs. 10,000.

Expenditure incurred on the contract during 2007 was as follows: Materials

Rs. 50,000; Labour Rs. 3,00,000; Plant Rs. 20,000.

Materials costing Rs. 5,000  were damaged and had to be disposed of for Rs. 1,000

Plant is considered as having depreciated by 25%.

Prepare Contract Account for 2007 in the books of Utkal Construction Ltd.

 

16.Union Transport Company supplies the following details in respect of a truck of 5

tonne capacity:

Cost of truck                            Rs. 4,50,000

Estimated life                           10 years

Diesel, oil, grease                     Rs. 150 per trip each way

Repairs & maintenance            5,000 per month

Drivers’ wages                         5,000 per month

Cleaners’ wages                       2,500 per month

Insurance                                  4,800 per year

Tax                                           2,400 per year

General supervision charges    4,800 per year

The truck carries goods to and from the city covering a distance of 50 km. each way.

In outward trip, freight is available to the extent of full capacity and on return 20%

of capacity.  Assuming that the truck runs on an average of 25 days a month, work

out: (a) Operating cost per tonne-km (b) Rate per tonne per trip that the company

should charges if a profit of 50% on freight is to be earned.

 

 

 

17.Ace Ltd. manufactures a product and the following particulars are collected for

the year ended March, 2000.

—Monthly demand(units)                 1,000

—Cost of placing an order(Rs.)            100

—Annual carrying cost(Rs. per unit)      15

—Normal usage(units per week)             50

—Minimum usage(units per week)         25

—Maximum usage(units per week)        75

—Re-order period(weeks)                      4-6

Your are required to calcultate (i) Re-order quantity, (ii) Re-order level,

(iii) Minimum level, (iv) Maximum level, (v) Average stock level.

 

18. 10,000 units of raw materials are introduced into a process at cost of Rs. 20,000. Wages

and overheads for the process are Rs. 5,100 and Rs. 3,400 respectively.  7,500 units

were completed; of the remaining 2,500 units on the average 40% work has been done

in respect of labour and overheads.  Ascertain the cost of completed units and

work-in-progress at the end. 

 

 

SECTION – C

Answer any TWO questions                                                                               (2 x 20 = 40 marks)

 

19. South Viscose Ltd. has furnished you the following information from the financial

books for the year ended 31^st March 2008.

Profit and Loss Account

For the year ended 31^st March 2008

Opening Stock 500 units at Rs. 35 each Materials consumed Wages Gross Profit c/d   Factory overheads Administration overhead Selling expenses Bad debts Preliminary expenses Net Profit

Rs.   17,500 2,60,000 1,50,000  3,02,500  7,30,000 94,750 1,06,000 55,000 4,000 5,000     48,000 3,12,750

Sales: 10,250 units Closing stock: 250 units @ Rs. 50 each     Gross Profit b/d Interest Rent Received

Rs.   7,17,500   12,500 ________  7,30,000 3,02,500 250 10,000     ________ 3,12,750

The cost sheet shows the cost of materials as Rs. 26 per unit and the labour cost as

Rs. 15 per unit.  The factory overheads are absorbed at 60% of labour cost and

administration overheads at 20% of factory cost.  Selling expenses are charged at

Rs. 6 unit.  The opening stock of finished goods is valued at Rs. 45 per unit.

You are required to prepare:

(i) a statement showing profit as per cost accounts for the year ended 31^st March

2008.

(ii) a statement showing the reconciliation of profit disclosed in cost accounts

with the profits shown in the financial accounts.

 

 

 

 

 

20. From the following details of stores receipts and issues of materials “EXE” in a

manufacturing unit, prepare the Stock Ledger using Weighted Average Method of

valuing the issues.

 

2005

       Nov.    1 Opening stock 2,000 units @ Rs. 5.00 each

3  Issued 1,500 units to production

4  Received 4,500 units @ Rs. 6.00 each

8  Issued 1,600 units to production

9  Returned to stores 100 units by Production Department(from the issues

of Nov. 3)

16  Received 2,400 units @ 6.50 each

19  Returned to supplier 200 units out of the quantity receive on Nov. 4

20  Received 1,000 units @ Rs. 7.00 each

24  Issued to production 2,100 units

27  Received 1,200 units @ Rs. 7.50 each

29  Issued to production 2,800 units.

(Use rates upto two decimal places)

 

21. Product ‘Z’ is obtained after it passes three distinct processes. The following

information is obtained from the accounts for the month ending March, 2005:

Process

Items                                                   Total               I             II             III

Rs.               Rs.          Rs.           Rs.

Direct material                                    7,542            2,600      1,980        2,962

Direct wages                                       9,000            2,000       3,000        4,000

Production overheads                         9,000               —              —              —

% of Normal Loss to input                                         5%         10%          15%

Output(in units) during the month                              950          840          750

Value of scrap per unit(Rs.)                                          2              4              5

1,000 units at Rs. 3 each were introduced to process I.  There was no stock of

material or work-in-progress at the beginning or end of the period.  The output of

each process passess direct to the next process and finally to finished stores.

Production overhead is recovered on 100 per cent of direct wages.

Prepare process cost accounts and other related accounts. 

 

 

 

 

        LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

IR 13

B.Com. DEGREE EXAMINATION – CORPORATE SECRETARYSHIP

FIFTH SEMESTER – April 2009

BC 5501 – COST ACCOUNTING

 

 

 

Date & Time: 17/04/2009 / 9:00 – 12:00            Dept. No.                                                           Max. : 100 Marks

 

 

PART  A

Answer ALL questions                                                                                    (10 x 2 = 20 marks)

1. ABC stock control.
2. Distinguish between ‘Fixed’ and ‘Variable’ cost.
3. Labour Turnover
4. Rowen plan
5. Machine Hour Rate
6. ‘Joint products’ and ‘By products’
7. Economic batch quantity
8. From the following calculate Reorder Level and Minimum Level:

Usage 200 to 300 units per day; reorder period 8 to 10 days

9. Standard time allowed for a job is 20 hours. X completes the job in 15 hours. Rate per hour is Rs.10. Calculate his earnings under Rowan Plan.
10. Find out the economic ordering quantity (E.O.Q) from the following particulars.

Annual usage : 6,000 units

Cost of material per unit : Rs.20

Cost of placing and receiving one order : Rs.60

Carrying cost 10% per unit per annum

 

                                                                                     PART  B

Answer ANY FIVE questions                                                                                                                             (5 x 8 = 40 marks)

 

11. Distinguish between:
12. Bin card and Stores Ledger
13. Allocation, Apportionment and Absorption of overheads

 

12. Distinguish between ‘idle time’ and ‘overtime’. Explain their treatment in Cost Accounts.

 

13. From the following particulars, calculate the earnings of workers, A,B and C, under Taylors differential piece rate system:

Standard time per unit 6 minutes

Normal rate Rs.5 per hour

Differential piece rates:

80% of piece rate below the standard

120% of piece rate at or above the standard

In a day of 8 hours, A produced 70 units, B produced 80 units and C produced 100 units.

 

14. A purchased and issued materials in the following order:

March 1^st – purchased 300 units at Rs.3 per unit

5^th  purchased 500 units at Rs.4 per unit

10^th issued 500 units

12^th purchased 700 units at Rs.4.50 per unit

15^th issued 700 units

20^th purchased 300 units at Rs.5 per unit

21^st issued 200 units

On 31^st a stock shortage of 20 units was noticed.

Prepare stores ledger under Weighted Average Method

 

15. From the following data prepare a reconciliation statement:

Rs.

Profit as per financial accounts                                                                                       2,40,500

Works overhead over-recovered                                                                                       9,500

Administrative overheads under-recovered                                                                20,000

Selling overheads  over-recovered                                                                                                  19,500

Under-valuation of opening stock in cost accounts                                                                   15,000

Overvaluation of closing stock in cost accounts                                                             7,000

Dividend received during the year                                                                                                     5,750

Goodwill  written off during the year                                                                                9,000

Notional interest charged in Cost Accounts                                                                  18,000

 

 

16. From the following data calculate the cost per km. of running a vehicle:

Value of vehicles                                                                  Rs.25,000

Road licence fee per year                                                 Rs.      750

Supervisor’s salary per annum                                       Rs.   1,800

Insurance charges per year                                             Rs.   1,200

Garage rent per year                                                          Rs.   3,200

Driver’s wages per hour                                                    Rs.   4

Cost of petrol per litre                                                       Rs.   6.50

Km. per litre                                                                                           6

Tyre allocation per km  Re. 2.00

Repairs and maintenance per annum                         Rs.18,000

Estimated life                                                                        1,00,000 kms

Estimated annual kilometers                                          12,000

The vehicle runs for 20 km per hour on an average.

 

17. Factory uses job costing. The following cost data are available for the year ending 31^st December 2008:

Direct material Rs.9,00,000

Direct wages Rs.7,50,000

Factory overhead Rs.4,50,000

Administration overheads Rs.4,20,000

Selling overheads Rs.5,25,000

Sales Rs.36,54,000              Prepare:   a)     A cost sheet and ascertain the profit for the year.

1. b) In the year 2009 the company received an order for a job which would required direct material

Rs.12,000 and direct labor Rs.7,500. What price should the company charge for this job, if the

factory intends to earn the same rate of profit on sales as earned in 2007/2008, assuming selling

overheads have increased by 15%. The factory recovers, factory overheads as a percentage on

wages and administration and selling overheads as a percentage of works cost.

 

18. A by-product B is derived in the course of manufacture of product A. From the following data calculate the profit made on Product A:

The total expenses incurred upto the split off point is Rs.19,500. Separate expenses incurred for A and B are Rs.12,500 and Rs.3,100 resp. 100 kgs of A and 50 kgs of B were produced. B was sold at Rs.120 per kg on which the profit earned was 30%.

Selling price of Product A is Rs.400 per kg.

 

PART  C

Answer ANY TWO questions                                                                                                           (2 x 20 = 40 marks)

 

. 19.  A company manufacturing two products A and B gives you the following data:

Product                                                   A                                  B

Production in units                                   6000                             4000

Raw material per unit (Rs.)                           50                                  30

Labour cost per unit (Rs.)                           20                                  10

Labour hours per unit                                    4                                    2

Number of set ups                                      10                                  20

Number of deliveries                                   24                                  14

The Overhead expenses were Rs.128,000 consisting of      Set up costs Rs.90000; Delivery expenses Rs.38000.

Compute the production cost, per unit, of the two products A and B, if overheads are recovered using:

1. Rate per labor hour         b)Activity based costing

 

20. From the following prepare a Contract Account and Contractee’s account for the three years 2007, 2008 and 2009:

2007(Rs.)             2008(Rs.)             Rs.2009(Rs.)

Material issued                                                     1,10,000               1,20,000                   80,000

Wages                                                                      2,30,000                   68,000               2,20,000

Machinery issued                                                                    50,000               –                              –

Value of machinery at the end                           45,000                   40,000                   36,000

Materials returned to stores                                 1,000                        500                –

Material at site                                                            3,000                     4,000                     2,000

Work uncertified                                                        2,000                     6,000               –

Work certified                                                       4,00,000               10,00,000             12,00,000

The contract price was for Rs.12,00,000.          Cash received was 80% of the works certified.

 

21. A company produces a product which passes through three processes A, B and C. 1000 units are introduced at Rs.5 each in process 1. Other details are as follows:

A                     B                     C

Materials consumed (Rs.)                                                                2,000                     3,020                     3,462

Direct wages                                                                          3,000                     4,000                     5,000

Direct  expenses                                                                     500                         226                      –

Normal loss (%age on input)                                              10%                         5%                         10%

Sale value of normal loss per unit (Rs)                             3                              5                              6

Output in units                                                                         940                          870                         810

Production overheads amounted to Rs.6,000, which is to be allocated to each process in the ratio of direct labor.

Prepare Process Accounts, Normal Loss account, Abnormal Gain account and Abnormal Loss account.

 

 

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