LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.B.A. DEGREE EXAMINATION – BUSINESS ADMINISTRATION
FIFTH SEMESTER – APRIL 2011
BU 5504 – COST ACCOUNTING
Date : 19-04-2011 Dept. No. Max. : 100 Marks
Time : 1:00 – 4:00
PART A
Answer ALL questions Marks:10×2=20
Explain the following:
- Rowan plan
- Absorption of overheads
- Equivalent units
- Economic batch quantity
- Fill in the blanks:
- By products are always of lower value and importance than the ———–product.
- Rent of building is apportioned on the basis of ————-.
- Minimum consumption 150 units per week; maximum consumption 350 units per week; reorder period 2-4 weeks; reorder quantity 1000 units. Calculate maximum level and minimum level.
- Profit as per financial accounts Rs.4000;
Factory overheads under-absorbed in cost accounts Rs.8000;
Closing stock over-valued in financial accounts Rs.3000.
Calculate profit as per Cost accounts
- Standard time per unit 12 minutes; standard rate per hour Rs.60; differential to be used 80% and 120%. In a day of 8 hours A produced 50 units. Calculate his earnings under Taylors differential piece rate system.
- Annual demand for a component is 6000 units. Setting up cost per batch Rs. 20; annual rate of interest 6%; cost of manufacture per unit Rs.100. Calculate Economic Batch quantity.
- Calculate the amount of profit to be taken to P and L account.
Notional profit Rs.60000; cash received Rs.6,40,000 being 80% of works certified; contract price Rs.16,00,000. Calculate the profit to be credited to P and L account
PART B
Answer ANY FIVE questions Marks:5×8=40
- a) Distinguish between Bin Card and Stores Ledger.
- Write a note on ABC stock control.
- Differentiate between financial accounting and cost accounting.
- The following annual charges are incurred in respect of a machine in a shop where work is done by means of 5 similar machines.
Rent for the shop Rs.4800
Depreciation on each machine Rs.500
Repairs for 5 machines Rs.1000
Lighting charges for the shop Rs.540.
Sundry supplies for the shop Rs.450
There are two attendants for the 5 machines and they are each paid Rs.60 per month. There is one supervisor for the 5 machines who is paid Rs.250 per month.
Machine uses 10 units of power per hour at 50p per unit.
Calculate the machine hour rate, assuming each machine works for 1200 hours per annum.
- Fast Roadways run 10 buses between two suburban centres which are 25 kilometres apart. Seating capacity of each bus is 30 passengers. The expenses for the month of March 2010 were as under:
(Rs)
Salaries of drivers and conductors 60,000
Salaries of mechanical staff 36,000
Taxes, insurance, etc. 20,200
Repairs and maintenance 28,000
Diesel and oil cost Rs.8 per litre. The vehicle runs 16 kms per litre. The cost of the vehicle is Rs.6,20,000. It has a life of 5 years and a salvage value of Rs.20,000 at the end of its life. Seating capacity utilised was 60%. All the buses ran 25 days a month. Each bus made four round-trips daily.
Find out the cost per passenger kilometre and the cost per round trip per passenger.
- The following are the particulars relating to a contract which has begun on 1st January 2010:
(Rs)
Contract price 5,00,000
Machinery 30,000
Materials 1,70,000
Wages 1,48,750
Direct expenses 6,330
Outstanding wages 5,380
Uncertified work 9,000
Overheads 8,240
Materials returned 1,600
Materials on hand 31st December 2010 3,700
Machinery on hand 31st December 2010 22,000
Value of work certified 3,90,000
Cash received 3,51,000
Prepare the Contract Account for the year 2010 showing the amount of profit that may be taken to the credit of Profit and Loss A/c of the year. Also show the amount of the work-in-progress as it would appear in the balance sheet of the year.
- Compute the reorder level, minimum level, maximum level and average stock level for the component A based on the following data:
Maximum consumption per week 150 units
Average consumption per week 100 units
Minimum consumption per week 50 units
Reorder period 8 to 12 weeks
Annual consumption 4000 units
Ordering cost per order Rs.5
Cost per unit Rs.2
Storage and carrying cost 8% of annual inventory
- A factory is engaged in the production of a Chemical X and in the course of its manufacture a by-product Y is produced, which after a separate process has a commercial value. For the month of January, the following are the summarised costing data:
Joint expenses Separate expenses
(Rs) X (Rs) Y (Rs)
Materials 19,200 7,360 780
Labour 11,700 7,680 2,642
On cost 3,450 1,500 544
The output for the month was 150 tons of X and 49 tons of Y and the selling price of Y averaged Rs.280 per ton.
Assuming that the profit on Y is estimated at 50% of the selling price, calculate the profit on X if its selling price is Rs.400 per tonne.
- Net profits of Mayur Industries for the year ended 31.12.2010 as per Cost Account was Rs.1,60,000. However, financial records showed a different net profit. Scrutiny of the books of accounts revealed the following information:
Rs.
Interest on investments 10,000
Income tax provided 48,000
Loss due to obsolescence 6,800
Bank interest and transfer fees in financial accounts only as expenditure 1,250
Share transfer fees received 6,750
Depreciation charged in financial accounts 18,650
Depreciation charged in cost accounts 21,250
Works overhead under recovered in cost accounts 3,540
Closing stock under-valued in financial accounts 1,410
Prepare a reconciliation statement and show the amount of net profit as per financial accounts.
PART C
Answer ANY TWO questions Marks:2×20=40
- Usha Engineering Works Ltd., manufactured and sold 1,000 sewing machines in 2010. Following are the particulars obtained from the records of the company:
Rs.
Cost of materials 80,000
Wages paid 1,20,000
Manufacturing expenses 50,000
Salaries 60,000
Rent, rates and insurance 10,000
Selling expenses 30,000
General expenses 20,000
Sales 4,00,000
Prepare a statement of Cost and Profit for the year 2010.
The company plans to manufacture 1200 sewing machines in 2011. You are required to submit a statement showing the price at which machines would be sold so as to show a profit of 10% on the selling price. The following additional information is supplied to you:
- The price of materials will rise by 20% on the previous year’s level.
- Wage rates will rise by 5%.
- Manufacturing expenses will rise in proportion to the combined cost of materials and wages.
- Selling expenses per unit will remain unchanged.
- Other expenses will remain unaffected by the rise in output.
20 Prepare Process accounts, Normal Loss, Abnormal loss and Abnormal Gain accounts from the following details:
Process No.1 Process No.2
Materials (Rs) 30,000 3,000
Labour (Rs) 10,000 12,000
Overheads (Rs) 7,000 8,600
Inputs (units) 20,000 –
Output of the process 17,500 17,000
Normal loss on input 10% 4%
Sales value of scrap per unit Re.1 Rs.2
- In a manufacturing concern there are four departments viz. A, B, C and D.
A and B are Production Departments and C and D are Service Departments. C renders service worth Rs.12,000 to D and balance to A and B in the ratio of 3:2. D renders service to A and B in the ratio of 9:1.
The overhead expenses incurred in a year are as follows:
Depreciation Rs.95,000
Rent, Rates and Taxes Rs.18,000
Insurance Rs. 7,600
Power Rs.10,000
Canteen expenses Rs. 5,400
Electricity Rs. 2,400
Following further information are given regarding the departments:
A B C D
Direct materials (Rs) 6,000 5,000 3,000 2,000
Direct labour (Rs) 20,000 10,000 10,000 5,000
Floor space occupied (sq.ft) 5,000 4,000 1,000 2,000
Value of assets (in lakhs) 10 5 3 1
H.P. of machines 1,000 500 400 100
No. of workers 100 50 50 25
Light and fan points 50 30 20 20
From the above particulars prepare a Statement showing overhead expenses of Production Departments A and B after redistribution of Service Department expenses. Also calculate the overhead recovery rate if it is based as a percentage on labour.
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