LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com. DEGREE EXAMINATION – CORPORATE SECRETARYSHIP
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)
- What is perpetual inventory system?
- Explain EOQ.
- Give reasons as to why it is necessary to reconcile cost accounts and financial
accounts.
- Explain with example ‘first-in- first-out’ (FIFO) method of stock valuation.
- Differentiate between job costing and process costing.
- 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%
- 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 –
- Calculate quintal kms of the vehicles.
- 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.
- 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.
- 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)
- What do you mean by elements of costs? Discuss the various elements of costs.
- What is labour turn-over? Explain its causes and effects and also suggest the steps to
reduce labour turn-over.
- 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.
- 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.
- 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.
- 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)
- South Viscose Ltd. has furnished you the following information from the financial
books for the year ended 31st March 2008.
Profit and Loss Account
For the year ended 31st 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 31st March
2008.
(ii) a statement showing the reconciliation of profit disclosed in cost accounts
with the profits shown in the financial accounts.
- 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)
- 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.