Cost Accounting – II

St. Joseph’s College of Commerce 2016 II Sem Cost Accounting Ii Question Paper PDF Download

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  1. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

END SEMESTER EXAMINATION – MARCH/APRIL 2016

B.COM(Int. Fin & A/c)– II SEMESTER
C4 15 MC 201 : COST ACCOUNTING II
Duration: 3 Hours                                                                                    Max. Marks: 100
SECTION – A
I) Answer ALL the questions.  Each carries 2 marks.                                (10×2=20)
  1. What is marginal costing?
  2. From the following particulars, find out the new selling price per unit if B.E.P. is to be brought down to 9,000 units:

Variable cost per unit Rs. 125; Fixed expenses Rs. 2,70,000 and Selling price per unit Rs. 150.
  3. Mention the different types of budgets prepared based on functionality.
  4. What are the stages or phases in Product Life Cycle Costing?
  5. The following information is given:

Standard fixed overhead rate (per hour) Rs. 5; Budgeted hours 12,500; Standard number of working days is 25; Actual hours 11,500; Actual number of working days is 22. Calculate Calendar Variance.
  6. Write a note on Target Costing.
  7. Explain the Theory of Constraints.
  8. Give the meaning of Sunk Cost with an example.
  9. Briefly discuss the aim of Environmental Management Accounting.
  10. What are the three E’s of performance analysis in the not-for-profit organizations? Give examples.
SECTION – B
II) Answer any FOUR questions.  Each carries 5 marks.                               (4×5=20)
  11. Pear manufactures laptop computers and smart phones. The company has prepared the following forecast for the following financial period:

Particulars Laptops Smart Phones
Budget Sales 1,200 600
  $ $
Unit Selling Price 1,000 500
Unit Variable Cost 700 400
Unit Contribution 300 100

Budget fixed costs are $245,000 for the period.

Required:

(a) The break-even revenue, using total contribution to sales ratio.

(b) The sales revenue required to make a target profit of $ 245,000.

                                                                                                                 (2.5 + 2.5)
  12. XY Ltd. manufactures auto parts. The following costs are incurred for processing 1,00,000 units of a component:

Direct material cost Rs. 5 Lakhs
Direct labour cost Rs. 8 Lakhs
Variable factory overhead Rs. 6 Lakhs
Fixed factory overhead Rs. 5 Lakhs

The purchase price of the component is Rs. 22. The fixed overhead would continue to be incurred even when the component is bought from outside although there would be reduction to the extent of Rs. 2,00,000.

Required:

Should the part be made or bought, considering that the present facility when released following a buying decision would remain idle?

 
  13. From the following, calculate labour variances for Department A also verify the same.

Particulars Department A
Actual direct wages Rs. 2,000
Standard hours produced 8,000
Standard rate per hour 30 paisa
Actual hours worked 8,200
  14. Following are the estimated sales of a company for eight months ending 30.11.2015:

Months Estimated Sales (Units)
April 12,000
May 13,000
June 9,000
July 8,000
August 10,000
September 12,000
October 14,000
November 12,000

As a matter of policy, the company maintains the closing balance of finished goods and raw-materials as follows:

Stock Item Closing Balance of a month
Finished goods 50% of the estimated sales for the next month
Raw materials Estimated consumption for the next month

Opening Balance is 50% of current month’s sales. Every unit of production requires 2 Kgs. of raw material costing Rs. 5 per kg.

Prepare Production Budget (in units).

 
  15. “Relevant means pertinent to the decision at hand. Since business decisions involve planning for future and require consideration of several alternative choices, decisions are based on the relevant approach.”—In this regard briefly discuss the various relevant costs considered for decision-making.

 
  16. A factory produces two products A and B. Both products pass through three processes: Process 1, Process 2 and Process 3. Process 2 has been identified as the bottleneck. There are 10 hours of Process 2 time available per day. Information relating to the two products is as follows:

 

 

 

Particulars A ($) B ($)
Selling price per unit 100 80
Direct materials per unit 70 60
Direct labour per unit 5 10
Total contribution per unit 25 10
Maximum demand per day 8 14
Time on Process 2 per unit (hours) 1 0.5

The fixed costs per day of the factory are as follows:

Labour costs $ 120
Variable overheads $ 180
Fixed overheads $ 50
Total fixed costs per day $ 350

Determine the daily production plan that would maximize throughput contribution.

 
SECTION – C
III) Answer any THREE questions.  Each carries 15 marks.                       (3×15=45)                                                                                                
  17. X ltd. has a production capacity of 2,00,000 units per year. Normal capacity utilization is reckoned as 90%. Standard variable production costs are Rs. 100 per unit. The fixed costs are Rs. 3,60,000 per year. Variable selling costs are Rs. 3 per unit and fixed selling costs are Rs. 2,70,000 per year. The unit selling price is Rs. 20. In the year just ended on 31st March, 2016, the production was Rs. 1,60,000 units and sales were 1,50,000 units. The closing inventory on 31st March, 2016 was 20,000 units. The actual variable production costs for the year were Rs. 35,000 higher than the standard.

(i) Calculate the profit for the year by:

(a) The absorption costing method, and

(b) The marginal costing method.

 

(ii) Explain the difference in the profits.

(13+2)

 
  18. (a) The standard material cost to produce one tonne of Chemical X is :

300 Kgs. of Material A @ Rs. 10 per Kg.
400 Kgs. of Material B @ Rs. 5 per Kg.
500 Kgs. of Material C @ Rs. 6 per Kg.

During a period, 100 tonnes of Chemical X were produced from the usage of :

35 tonnes of Material A at a cost of Rs. 9000 per tonne.
42 tonnes of Material B at a cost of Rs. 6000 per tonne.
53 tonnes of Material C at a cost of Rs. 7000 per tonne.

Calculate Material Variances (MCV, MPV, MUV, MYV, MMV)

 

 

 
  19. Z Ltd. has prepared the budget for the production of 1,00,000 units from a costing period as under:

Particulars Per unit (Rs.)
Raw materials 10.08
Direct labour 3.00
Direct expenses 0.40
Works overhead (60% fixed) 10.00
Administration overhead (80% fixed) 1.60
Sales overhead (50% fixed) 0.80

Actual production in the period was only 60,000 units. Prepare budgets for the original and revised levels of output.

 
  20. The following information relates to XYZ Ltd.:

Month Wages Incurred Materials Purchased Overhead Sales
February 6,000 20,000 10,000 30,000
March 8,000 30,000 12,000 40,000
April 10,000 25,000 16,000 60,000
May 9,000 35,000 14,000 50,000
June 12,000 30,000 18,000 70,000
July 10,000 25,000 16,000 60,000
August 9,000 25,000 14,000 50,000
September 9,000 30,000 14,000 50,000

You are required to prepare a cash budget for the three months of June, July and August after taking note of the following information:

a) It is expected that cash balance on 31st May will be Rs. 22,000.

b) The wages may be assumed to be paid within the month they are incurred.

c) It is the company’s policy to pay creditors for materials three months after receipt.

d) Debtors are expected to pay two months after delivery.

e) Included in the overhead figure is Rs. 2,000 per month which represents depreciation on two cars and one delivery van.

f) There is one month delay in paying the overhead expenses.

g) 10% of the monthly sales are for cash and 90% are sold on credit.

h) A commission of 5% is paid to agents on all the sales on credit but, this is not paid until the month following the sales to which it relates; this expense is not included in the overhead figure shown.

i) It is intended to repay a loan of Rs. 25,000 on 30th June.

j) Delivery is expected in July of a new machine costing Rs. 45,000 of which Rs. 15,000 will be paid on delivery and Rs. 15,000 in each of the following months.

k) Assume that overdraft facilities are available, if required.

 

 

 

 

 
  21. The following are product Intex Saft’s data for next year budget:

Activity Cost Driver Cost Driver Volume /Year Cost Pool (in Rs.)
Purchasing Purchase Orders 1,500 75,000
Setting Batches Produced 2,800 1,12,000
Materials Handling Materials Movements 8,000 96,000
Inspection Batches Produced 2,800 70,000
Machining Costs Machine Hours 50,000 1,50,000

 

Purchase Orders 25
Output 15,000 units
Production Batch Size 100 units
Materials Movements per batch 6
Machine Hours per unit 0.1

Required:

a) Calculate the Budgeted Overhead Costs using Activity Based Costing principles.

b) Calculate the Budgeted Overhead Costs using Absorption Costing (Absorb Overhead using Machine Hours).

(8+7)
SECTION – D
IV) Case Study – Compulsory question.                                                              (1×15=15)                                                                                          
  22. An Agro-products producer company is planning its production for next year. The following information is relating to the current year:

Products/Crops A1 A2 B1 B2
Area occupied (acres) 250 200 300 250
Yield per acre (ton) 50 40 45 60
Selling Price per ton (Rs.) 200 250 300 270
Variable Cost per acre (Rs.):        
–          Seeds 300 250 450 400
–          Pesticides 150 200 300 250
–          Fertilizers 125 75 100 125
–          Cultivations 125 75 100 125
–          Direct Wages 4,000 4,500 5,000 5,700

Fixed Overhead per annum (Rs.) 53,76,000.

The land that is being used for the products of B1 and B2 can be used for either crop, but not for A1 and A2. The land that is being used for A1 and A2 can be used for either crop, but not for B1 and B2. In order to provide adequate market service, the Company must process each year at least 2,000 tons each of A1 and A2 and 1,800 tons each of B1 and B2.

You are required to:

a) Prepare a Statement of the profit for the current year.

b) Profit for the production mix by fulfilling market commitment.

c) Assuming that the land could be cultivated to produce any of the four products and there was no market commitment, calculate profit amount of most profitable crop and break-even point of most profitable crop in terms of acres and sales value.                                                                      (5+5+5)

 

 

 

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