LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com. DEGREE EXAMINATION – COMMERCE
FIFTH SEMESTER – APRIL 2012
CO 5501 – COST ACCOUNTING
Date : 27-04-2012 Dept. No. Max. : 100 Marks
Time : 9:00 – 12:00
PART – A
Answer ALL Questions: (10×2=20 Marks)
- What is Reorder Level?
- What is Batch Costing?
- Write a short note on Escalation clause.
- What is By – Products.
- State whether True or False
- Unit costing is applied in those industries where different products are produced simultaneously
- In the cement industries the unit of cost is per tonne.
- Calculate the re-order quantity from the following particulars:
Annual usage …30,000 units
Buying cost per order …Rs.15
Cost per Unit …Rs.100
Cost of carrying inventory …10% of cost
- The firm employs 5 workers at an hourly rate of Rs.25/- During the week they worked for 4 days for a total period of 40 hrs each and completed a job for which the standard time was 48 hrs for each worker. Calculate the labour cost, under Rowan method.
- What is machine hour rate?
- A transport service company is running five buses between two towns which are 60 Kms.
apart. Seating capacity of each bus is 35 passengeres. Actual passengers carried were 80% of
the seating capacity. The company operates for 25 days a month. Each bus made two round
trips per day. Calculate the total passengers kms for the month.
- What are the bases for apportionment of expenses given below to the different departments?
- i) Rent & Rates ii) Supervisory wages iii) Depreciation iv) General lighting.
PART – B
Answer any FIVE questions: (5×8=40 Marks)
- From the following particulars, prepare a Cost Statement showing the components of Total Cost and
Profit for the year ended 31st December 2006.
|Stock of finished goods||6,000||15,000|
|Stock of raw materials||40,000||50,000|
|Purchase of raw materials||4,75,000||Sales for the year||8,60,000|
|Carriage inward||12,500||Income tax||500|
|Works Manager’s salary||30,000||Debenture interest||5,000|
|Factory employees’ salaries||60,000||Transfer to Sinking Fund for replacement of machinery||10,000|
|Factory rent, taxes and insurance||7,250|
|Power expenses||9,500||Goodwill written off||10,000|
|Other production expenses||43,000||Payment of sales tax||16,000|
- P Ltd. Uses three types of materials A,B and C for production of ‘X’ the final product. The relevant monthly data for the components are as given below:
|Reorder period (months)||2 to 3||3 to 4|
|Calculate for each component:-|
|a) Reorder level;||b) Minimum level;|
|c) Maximum level and||d) Average stock level
- Distinguish between Taylor’s Differential Rate and Emerson Efficiency Plan.
- The following particulars relate to a new machine purchased:
|Purchase price of the machine||4,00,000|
|Rent per quarter||15,000|
|General lighting for the total area||1,000||Per month|
|Foreman’s salary||30,000||Per annum|
|Insurance premium for the machine||3,000||Per annum|
|Estimated repair for the machine||5,000||Per annum|
|Estimated consumable stores||4,000||Per annum|
|Power – 2 units per hour at Rs.50 per 100 units.|
The estimated life of the machine is 10 years and the estimated value at the end of the 10th year is
Rs.1 lakh. The machine is expected to run 20,000 hours in its life time. The machine occupies
25% of the total area. The foreman devotes 1/6th of his time for the machine. Calculate the
machine hour rate for the machine.
- From the following data prepare a reconciliation statement. Rs.
Profit as per cost accounts 1,50,000
Works overheads under-recovered 10,000
Administrative overheads under-recovered 22,500
Selling overheads over-recovered 18,500
Overvaluation of opening stock in cost accounts 16,000
Overvaluation of closing stock in cost accounts 7,000
Interest earned during the year 4,250
Rent received during the year 27,000
Bad debts written off during the year 8,500
Preliminary expenses written off during the year 17,000
- Prakash Transport company has been given a route 20 km. long to run a bus. The bus costs the
company a sum of Rs.50,000. It has been insured at 3% p.a. and the annual tax will amount to
Rs.1,000. Garage rent is Rs.100 p.m. Annual repairs will be Rs.1,000 and the bus is likely to last
for 5 years.
The driver’s salary will be Rs.2,500 p.m. and the conductor’s salary will be Rs.1,500 p.m. in
addition to 10% taking as commission (to be shared by the driver and the conductor equally).
The cost of stationery will be Rs.100 p.m. Manager-cum-Accountant’s salary is Rs.3500 p.m.
Petrol and oil will be Rs.25 per 100 km. the bus will make 3 round trips carrying, on an average,
40 passengers on each trip. Assuming 15% profit on takings, calculate the bus fare to be charged
from each passenger. The bus will run on an average 25 days in a month.
- Prepare a Stores Ledger Account from the following details using LIFO method of pricing the issue of
|April 1||Opening Balance||10,850 kgs @ Rs.130.00 per kg|
|2||Purchased||20,000 kgs @ Rs.134.00 per kg|
|3||Issued||6,750 kgs to production|
|5||Issued||8,500 kgs to production|
|6||Received back|| 550 kgs from production
|7||Purchased||17,550 kgs @ Rs.128.00 per kg|
|8||Issued||11,250 kgs to production|
|9||Physical stock verification revealed a loss of||250 kgs|
|10||Issued||8.950 kgs to production|
|12||Issued||6.300 kg. to production|
|15||Purchased||10,000 kgs @ Rs. 132.00 per kg|
|16||Issued||7,750 kgs to production|
- Write short notes on:
- a) Perpetual Inventory system.
- b) ABC analysis.
PART – C
Answer any TWO questions: (2 x 20 = 40 marks)
- Trichy Limited has three production departments (A,B and C) and two service departments (D and E).
From the following figures extracted from the records of the company, calculate the overhead rate per
labour hour using Repeated Distribution method.
|Depreciation on machinery||25,000|
|Depreciation on building||5,000|
|Rent, Rates and taxes||10,000|
|Electric power machinery||15,000|
|Electric power for lighting||500|
|Value of machinery||2,50,000||60,000||1,00,000||40,000||25,000||25,000|
|Floor area (sq.ft.)||50,000||15,000||10,000||10,000||5,000||10,000|
|H.P. of machinery||150||50||60||30||5||5|
|No. of light points||50||15||10||10||5||10|
|The expenses of service departments D and E are to be apportioned as follows:|
- The following information is available in respect of a contract undertaken by a building contractor in 2000. The contract was for Rs.2,40,000
|Plant installed at site on 1st July 2000||12,000|
|Materials in hand at the end||2,400|
|Wages accrued due||2,400|
|Work completed but not certified||3,000|
|Materials transferred to other contracts||2,400|
|Materials received from other contracts||600|
Depreciation on plant is to be provided at 10% per annum. Prepare Contract Account and show what
part of the profit on contract should be taken to credit in 2000.
- The product of company passes through three distinct processes to completion. They are known as A,B and C. from past experience it is ascertained that loss is incurred in each process as: Process A-2%, Process B-5%, Process C-10%. In each case the percentage of loss is computed on the number of units entering the process concerned. The loss of each process possesses a scrap value. The loss of processes A and B is sold at Rs. 5 per 100 units and that of process C at Rs.20 per 100 unts. The output of each process passes immediately to the next process and the finished units are passed from process C into stock.
|Process A||Process B||Process C|
20,000 units have been issued to process A at a cost of Rs.10,000. The output of each process has been
as under: Process A 19,500; Process B 18,800; Process C 16,000. There is no work-in-progress in any
Prepare Process Accounts. Calculations should be made to the nearest rupee.