LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

KP 25

B.Com. DEGREE EXAMINATION – COMMERCE

FIFTH SEMESTER – April 2009

CO 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)

List out the different methods of costing.
Explain the meaning of prime cost.
What is Inventory Turnover Ratio?
Write a note on ‘Idle Time’.
What is ‘Over Absorption’ of overheads?
Explain the meaning of ‘work certified’.
What do you understand by ‘Normal Loss’?
Find out the selling price: Prime cost per unit Rs.720; works overhead 20% of works cost office overhead: 10% of cost of production; selling over head 20% on sales.
Indicate the basis of apportionment for the overhead expenses mentioned below:-

Rent, Rates and taxes 2) power 3) Factory cleaning 4) Creche expenses.

Ascertain Bonus under Halsey plan:-

Standard time: 15 Hrs; Actual time 10 Hrs; Time rate Rs.2 per Hour.

PART – B

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

Explain the scope and objectives of Cost Accounting?

The accounts of a machine manufacturing company disclose the following information of six months ending 31^st December 2007. Materials used 1,50,00 Direct wages Rs.1,20,000; Factory overheads Rs.30,000 Administrative expenses Rs.15,000

Prepare cost sheet for the half year and calculate the price which the company should quote for the manufacture of a machine requiring materials valued at Rs.1,250 and expenditure in productive wages Rs.750, so that the price might yield a profit of 20% on the selling price.

a) Two components A and B are used as follows:-

Normal usuage : 3,000 units per week each.

Minimum usuage : 1,500 units per week each.

Maximum usuage : 4,500 units per week each.

Re order quantity A: 13,000 units ; B: 14,000 units

Reorder period : A – 4 to 6 weeks ; B – 2 to 4 weeks.

Calculate for each component a) Reorder level b) Minimum level c) Maximum level d) Average stock level.

b) X Y Ltd. Purchased and issued the materials in the following Order.

2005 march 1. Purchased 300 units at Rs.3 per unit.

purchased 500 units at Rs.4 per unit.
Issued 500 units.

12 purchased 700 units at Rs.4.50 per unit

15 Issued 700 units

20 Purchsed 300 units at Rs.5 per unit

30 Issued 150 units

Ascertain the quantity of closing stock as on 31^st march and state its value under ‘weighted average cost’ method.

The following is the data relating to materials received from a supplier as per the invoice.

Material X – 10,000 kgs at Rs.5 per kg 50,000

Material Y – 5,000 kgs at Rs.8 per kg 40,000

Freight 9,000

Excise duty (at 4%) 3,600

———–

1,02,600

————

Shortage due to breakage, considered as normal – Material X 50 kgs. Material Y 40 kgs.

Ascertain the effective cost of the materials per kg. If provision has to be made for a further wastage due to handling in stores of 50 kgs and 60 kgs. Respectively for material X and Y.

Calculate the earning of workders X and Y under (A) Straight piece rate system and (B) Taylor’s differential piece rate system form the following details:

Standard time per unit = 12 minutes, Standard rate per hour = Rs.60, Differentials to be used 80% and 120%.

In a particular day 8 hours, workder ‘X’ produced 30 units and worker ‘Y’ produced 50 units.

Compute Machine hour rate form the information given below:-

Cost of Machine X Rs.13,500

Life of the Machine 10 years

Estimated Scrap value after 10 year Rs.1,980

Working hours 1,800

Insurance (per annum) Rs.45

Cotton wastes (per annum) Rs.75

Rent for dept (per annum) Rs.975

Foreman’s Salary (per annum) Rs.7,500

Lighting for dept (per annum) Rs.360

Repairs for entire life Rs.1,440

Power : 10 units @ 7.5 paise per unit.

Machine X occupies 1/5 of the area and foreman devotes 1/4 th of his time to the machine. The machine has two light points out of the total 12 for lighting in the department.

The following is the information relating to contract No.123.

Contract price Rs.6,00,000 Wages Rs. 1,64,000

General expenses Rs. 8,600 Raw Materials Rs.1,20,000 Plant Rs.20,000

As on date, cash received was Rs.2,40,000 being 80% of work certified. The value of materials remaining at site was Rs.10,000. Depreciate plant by 10%. Prepare contract Account showing profit to be credited to P&L A/C.

Lakshmi Travels, a transport company is running a fleet of six buses between two towns 75 kms apart. The seating capacity of each bus if 40 passengers. The following particulars are available for the month of April, 2005.

Wages of Drivers, Conductors, etc Rs. 3,600

Salaries of office and supervisory staff Rs. 1,500

Diesel oil etc Rs.10,320

Repairs and maintance Rs. 1,200

Taxes and Insurance Rs. 2,400

Depreciation Rs. 3,900

Interest and other charges Rs. 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.

PART – C

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

The profit &Loss account of oil India Pvt.ltd. for the year ended 31.3.2007 is as follows:-

To Materials 4,80,000 By Sales 9,60,000

To wages 3,60,000 By Closing stock 1,80,000

To Direct Expenses 2,40,00 0 By work-in-progress

To Gross profit 1,20,000 Materials 30,000

Wages 18,000

Direct Exp 12,000 60,000

————- ————- ————–

12,00,000 12,00,000

To Administrative —————

Expenses 60,000 By Gross profit 1,20,000

To Net Profit 60,000

————- —————

1,20,000 1,20,000 ———– —————-

As per the cost records the direct expenses have been estimated at a cost of Rs.30 per kg and administrative expenses at Rs.15 per kg. The profit as per costing records is Rs.1,10,400. During the year 6,000 kgs. Were manufactured and 4,800 kgs were sold.

Prepare a statement of costing profit & loss account and reconcile the profit with financial records.

In a factory, there are two service departments I & II and three production departments A,B and C. In April 2002, the departmental expenses were:

Departments A B C I II

Rs. Rs. Rs. Rs. Rs.

6,50,000 6,00,000 5,00,000 1,20,000 1,00,000

The expenses of the service departments are allotted on a percentage basis as follows:-

A B C I II

I 30 40 15 – 15

II 40 30 25 5 –

Prepare a statement showing distribution of the expenses of the two services department on a percentage

basis by repeated distribution method.

The product of a company passes through two processes to completion known as A and B. from the past experience its is ascertained that Loss is incurred in each process as:

Process A 2% Process B 5%

In each case the percentage of loss is computed on the number of units entering the processs concerned.

The lossof each process possess scrap value. The loss of processes A and B is sold at Rs.5 per 100 units.

The out put ofeach process passes immediately to the next process and the finished units are passed into stock.

Process A Process B

Materials consumed Rs.6,000 Rs.4,000

Direct Labour Rs.8,000 Rs.6,000

Manufacturing expenses Rs.1,000 Rs.1,000

20,000 units have been issued to process A at a cost of Rs.10,000. The out put of each process has been as under: Process A 19,500; Process B 18,800.

Prepare Process Accounts.

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