LOYOLA COLLEGE (AUTONOMOUS), CHENNAI –600 034

B.com., DEGREE EXAMINATION – COMMERCE

FIFTH SEMESTER – APRIL 2004

CO 5501/COM 506 – COST ACCOUNTING

06.04.2004                                                                                                           Max:100 marks

1.00 – 4.00

 

SECTION – A

 

Answer ALL questions                                                                                (10 ´ 2 = 20 marks)

 

1. State whether the following statements are true or false.
2. Cost Accounting is a branch of financial Accounting.
3. Bin card is the same as stores ledger.
4. Valuation of closing stock is same under FIFO and LIFO.
5. Abnormal idle time wages are included in the cost of production.
6. Distinguish between idle time and idle capacity.
7. Distinguish between time-keeping and time-booking
8. What is machine hour rate?
9. What is the relevance of ‘escalation clauses’ provided in contracts?
10. What is Economic Batch Quantity.
11. Distinguish between joint product and by – products.
12. What is operation costing?
13. What is just in time of inventory management?
14. Explain Halsey incentive plan.

 

SECTION – B

 

Answer any FIVE questions                                                                        (5 ´ 8 = 20 marks)

 

11. What is labour Turnover? What are its causes and Explain the effects of labour Turnover.
12. What is ABC Analysis? Describe its advantages.
13. “Cost Accounting is an unnecessary Luxury for business establishments”. Do you agree with the statement.
14. A consignment consisted of two chemicals A and B.

The invoice gave the following data:

Rs.

Chemical A 4000 1bs.  @ Rs.2.5 per lb          10,000

Chemical B 3200 1bs. @ Rs.3.25 per lb         10,400

Sales Tax                                                              816

Railway freight                                                    384

———

21,600

———

A shortage of 200 lbs in A and 128 lbs. in B was noticed due to breakage’s.  What

stock rate would you adopt for pricing issue assuming a provision of 5% toward

further deterioration?

15. In a factory group Bonus system is in use which is calculate on the basis of earnings under time rate. The following particulars are available for a group of 4 workers P,Q, R, and S.
16. Output of the Group 16000 units
17. Price rate per 100 units Rs.2.50
18. No of hours worked by P-90; Q-70;      R-80;   S-100
19. Time rate per hour for P – Re. 0.80, A-Re. 1.00,  R- Rs. 1.20,  S – Re. 0.80

Calculate total wages and bonus earned by each worker.

16. The following particulars related to a contract undertaken by Ajit; Material sent to site Rs.85,349; labour engaged on site Rs.74,375; plant installed at cost Rs.15,000; Direct expenditure Rs.3,167; Establishment charges Rs. 4,126; Materials returned to stores Rs.549; work certified Rs.1,95,000; cost of work not certified Rs.4,500; Materials in hand at the end of the year Rs.1,883; wages accrued due at the end Rs.2,400; Direct expenditure accrued due at the end Rs.240; Value of plant at the end of the year Rs.11,000; The contract price has been agreed at Rs.2,50,000; cash received from the contractor was Rs.1,80,000.

You are required to prepare contract A/c showing profit.

17. Ahuja runs a tempo service in the town and has two vehicle. He furnishes you the following data and want’s you to compute the cost per running mile:

vehicle A         Vehicle B

Rs.                    Rs.

Cost of vehicle                                    25000              15000

Licensee per year                                    750                  750

Salary p.a                                               1800               1200

Drivers wages per hour                               4                     4

Cost of fuel per litre                               1.50                 1.50

Repair and maintenance per mile           1.50                 2.00

Tyre cost per mile                                    1.00                0.80

Garage rent p.a                                       1600                 550

Insurance premium p.a                             850                 500

Miles run per litre                                         6                     5

Mileage run during the year                  15000               6000

Estimated life of vehicles                   100000 miles   75000 miles

Charge interest at 10% p.a on the cost of vehicle.  The vehicles run 20 miles per hour

on an average.

18. Following information to the manufacturing of a component X – 101 is a cost centre:

Cost of materials                                 6 paise per component

Operator’s wages                                 72 paise an hour

Machine hour rate                               Rs.1.50

Setting up time of the machine           2 hours 20 MINUTES

Manufacturing time                            10 minutes per component.

Prepare cost sheet showing both products and setting up cost, total and per unit when a batch consist of ;      a) 100 components   b) 1000 components.

 

SECTION – C

 

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

 

19. From the following particulars extracted from the books of r ltd for the month of June 1998, prepare the following,
20. Statement of Equivalent Production
21. Statement of cost
22. Process Account

• Opening stock as on 1^st June 200 units @ Rs.4.00 per unit.

Degree of completion Materials 100%

Labour and overheads 40%

• Inputs introduced during the month 1050 units.
• Output transferred to the next process 1100 units
• Closing stock 150 units

Degree of completion Materials 100%

Labour and overhead 70%

• Other relevant information.

Materials – Rs.3150;  Labour – Rs.4500;  Over head –  Rs.2250.

20. Sympionic Ltd has three production department XYZ and two service department A and B. The following estimated figures for a certain period have been made available:

Rs.                                                                                   Rs.

Rent and Rates                 10,000                         Power                                      3,000

Lighting and electricity        1,200                        Depreciation of machinery      20,000

Indirect wages                     3,000                        other expense                          20,000

following are the further details available.

X        Y          Z          A      B

Floor space (Sq.fts)                       2000    2500    3000    2000    500

light points (Nos)                             20         30        40        20      10

Direct wages (Rs)                         6000    4000    6000    3000    1000

Hours power of machine                 120         60     100        20       –

cost of machinery (Rs.)                 24000  32000  40000  2000    2000

working hours                                 4670     3020   3050     –           –

The expense of the service department A and B are to be allocated as follows:

X         Y         Z          A         B

A                     20%     30%     40%     –           10%

B                     40%     20%     30%     10%     –

you are required to calculate the overhead absorption rate per hour in respect of three production departments.  What will be the total cost of an article with material cost of Rs.80 and labour cost of Rs.40 which passes through X, Y and Z for 2,3 and 4 hours respectively?

 

21. The following figures have been extracted form the financial accounts of V ltd for the first year of its operation:

Rs.

Direct material consumption                           50,000

Productive wages                                            30,000

Factory overheads                                           16,000

Administrative overheads                                 7,000

selling and distribution overhead                      9,600

Bad debts written off                                         800

Preliminary expenses written off                        400

legal charges                                                        100

dividend received                                             1000

interest received on bank deposits                      200

Sales    (12000 units)                                   1,20,000

Closing stock:

Finished goods (400 units)                                      3200

work in progress                                          2400

The cost accounts for the same period reveal that direct material consumption was Rs.56,000.  Factory overhead is recovered at 20% on prime cost.  Administration overhead is recovered at 60 paise per unit of production, selling and distribution overheads at 80 paise per units sold.

Prepare profit and loss A/c to find out profit as per financial records and ascertain profit as per cost accounts.  Also reconcile the profits as per the two records.

 

 

 

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