Cost And Management Accounting – Ii

St. Joseph’s College of Commerce IV Sem Cost And Management Accounting -II Question Paper PDF Download

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ST. JOSEPH’S COLLEGE OF COMMERECE (AUTONOMOUS)
END SEMESTER EXAMINATION – APRIL 2015
B.com – iv sem
C! 12 401: COST AND MANAGEMENT ACCOUNTING -II
Duration: 3 Hours                                                                                                     Max. Marks: 100
SECTION – A
I) Answer ALL the questions.  Each carries 2 marks.                                                  (10×2=20)
  1. What do you understand by ‘Inter-Process Profit’ in Process Costing?
  2. Briefly explain with examples what is ‘Relevant costing’.
  3. State the procedure and objectives of preparing ‘Cash budget’.
  4. What is the basis for ‘Plant Shut down decisions’?
  5. What is the difference between PV chart and Break Even chart?
  6. PV ratio is 55% and the marginal cost is Rs.90. What will be the selling price?
  7. What is the purpose of calculating ‘Material Yield Variance’? Also give the formula for MYV
  8. Product A requires 20 kgs of material at the rate of Rs. 6 per kg. The actual consumption for manufacture of product A was 24 kgs of material at the rate of Rs. 7.25 per kg. Calculate MCV, MPV and MQV.
  9. Differentiate between Joint Products and By-Products?
  10 What is Standard Costing? Explain its importance
SECTION – B
II) Answer any FOUR questions.  Each carries 5 marks.                                      (4×5=20)
  11. A company manufactured and sold 1,000 mixies  last year at a price of Rs.800 each. The cost structure of a mixy is as follows

  Rs.
Materials 200
Labour 100
Variable cost 50
Marginal cost 350
   
Factory overhead (fixed) 200
Total cost 550
   
Profit 250
Selling Price 800

Due to heavy competition, price has to be reduced to Rs.750 for the coming year. Assuming no change in costs, state the number  of mixies  that would have to be sold at the new price to ensure the same amount of total profits  as that of last year.

 
  12. In manufacturing the main product ’A’ a company also produces 2 by-products B&C prepare the comparative profit& Loss statement.

Total cost up to the point of separation was Rs.1, 36,000.

 

  A B C
Sales 3,28,000 32,000 48,000
Cost after separation — 9,600 14,400
Estimated net profit (% age of sales) ? 20% 30%
Estimated selling expenses 20% 20% 20%
   

13.

  

Company A manufactures bicycles. It can produce 1,000 units in a month for a fixed cost of $300,000 and variable cost of $500 per unit. Its current demand is 600 units which it sells at $1,000 per unit. It is approached by Company B for an order of 200 units at $700 per unit.

a)Identify the relevant and irrelevant costs

b) Should the company accept the order?

 
  14. X company sells 2 products A and B and their variable costs are 45% and 60% of their sales value respectively. Total fixed costs are Rs.12,12,000. Their present sales mix is 50:50.

You are required to find out break even point. Also find out the break even point if sales mix is changed to 70:30

 
  15. A company submits the following information relating to a production for three months for 2014. Sales target: – April-30,000 units, May-24,000 units, June-36,000 units.

Stock position:- 1st April  50% of  April sales

30th June  20,000 units

End of April and May 50% of subsequent months sales.

Prepare the Production Budget from April to June

 
  16. Calculate fixed overhead variance

                      Actual                   Budget    

Output                            30,000                       32,000

No. of  .                              25                              28

working days

Fixed overheads             60,000                       61,000

There was an increase of 4.5% in capacity.

 
 

SECTION – C
III) Answer any THREE questions.  Each carries 15 marks.                                           (3×15=45)                                                                                                 
  17. A Company has a production capacity of 2,00,000 units per year. Normal capacity utilization is reckoned as 90%. Standard Variable production costs are Rs.11 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 30th June 2014, the production was 1,60,000 units and sales were 1,50,000 units. The closing inventory on 30-6-2014 was 20,000 units. The actual variable production costs for the year were Rs.35,000 higher than standard.

i.                    Calculate the profit for the year

(a)   By absorption costing method and  (b) marginal costing method

ii.                 Explain the difference in the profits.
  18. The expenses budgeted for the production of 20,000 units in a factory are given below:

Particulars-                                                                                     Per Unit(Rs.)

Materials                                                                                         80

Labour                                                                                             25

Variable factory overheads                                                          25

Fixed factory overheads   (2,00,000)                                           10

Variable expenses (Direct)                                                             5

Selling expenses (10% fixed)                                                        13

Distribution expenses (20% fixed)                                                7

Administration expenses (fixed-1,00,000)                                    5

Cost of Sales per unit                                                          170

Prepare a budget for the production of 12,000 and 16,000 units.
   

19.

  

A Company sells 4 products, some of them are unprofitable, proposes discontinuing sales of one of them. The following information is available regarding the income, costs and activities for a year.

Particulars Product-A Product-B Product-C Product-D
Sales (Rs) 3,00,000 5,00,000 2,50,000 4,50,000
Cost of sales at Purchase price (Rs) 2,00,000 4,50,000 2,10,000 2,25,000
         
Area of storage (sq.ft) 50,000 40,000 80,000 30,000
No. of parcels sent 1,00,000 1,50,000 75,000 1,75,000
No. of invoices sent 80,000 1,40,000 60,000 1,20,000

 

Fixed overhead costs and basis of allocation are

  Rs. Basis of allocation
Rent & Insurance 30,000 Sq.ft
Depreciation 10,000 Parcel
Salesmen salaries & expenses 60,000 Sales volume
Administrative salaries 50,000 No. of invoices

Variable costs

Packing, wages and materials 20 paise per parcel
Commissions 4% of sales
Stationery 10 paise per  invoice

You are required to

a.      Prepare a profit and loss statement showing percentage profit or loss to sales of each product

b.      Compare the profit if the company discontinues sales of Product B with the profit of discontinued Product C.
  20. Prepare statement of Equivalent production Statement of cost and Process a/c from the following information using FIFO method.

Units introduced      3,800

Output (units)          3,000

Process cost

Materials       Rs. 7,280

Labour           Rs. 10680

Overheads     Rs. 7120

Degree of completion for closing work-in-process

Materials       85%

Labour           75%

Overheads     75%
  21. A company is expected to have Rs.50,000 cash in hand on 1st April 2014 and it requires you to prepare an estimate of cash position during the three months. April to June 2014. The following information is supplied to you

Month Sales (Rs.) Purchases

(Rs.)

 Wages

(Rs.)

 Expenses

(Rs.)
Feb 1,40,000 80,000 18,000 16,000
March 1,60,000 1,00,000 18,000 17,000
April 1,84,000 1,04,000 19,000 17,000
May 2,00,000 1,20,000 20,000 18,000
June 2,40,000 1,10,000 22,000 19,000

Other information (a) 10% of Sales of each month is for Cash, 50% of credit Sales is collected in the next month and 50% in the following month (b) Suppliers allow credit of half a month (c) Delay in payment of wages and expenses – ½   month  (d) Income tax of Rs.55,000 to be paid in June 2004.

 
 

SECTION – D
IV Case Study                                                                                                                      (1×15=15)                                                                                          
  22 A leading University conducts an entrance test for admitting students to its B.Tech course. The final selection is based on this examination. The examination consists of 4 objective type papers and is spread over 4 days. Each candidate is charged a fee of Rs.500 for taking up this entrance test.

 

The following data relate to past 2 years.

 

 

 

 

Statement of net revenue from the Entrance test.

  2013 2014
A)Gross Revenue (fees collected) 10,00,000 15,00,000
B)Costs    
Evaluation 4,00,000 6,00,000
Printing of question papers 2,00,000 3,00,000
Examination hall rent (Rs.20000 per day) 80,000 80,000
Honorarium to chief examiner 10,000 10,000
Supervision charges (one supervisor for every 100 candidates@ Rs. 500 per day) 40,000 60,000
General administration charges 60,000 60,000
Total cost 7,90,000 11,10,000
Net Revenue (A-B) 2,10,000 3,90,000

 

You are required compute

 

a.      The break even number of candidates

b.      The number of candidates to be enrolled if desired net income is Rs.1,00,000

 

 

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St. Joseph’s College of Commerce IV Sem Cost And Management Accounting – Ii Question Paper PDF Download

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ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)
END SEMESTER EXAMINATION – MARCH/APRIL 2016
B.COM – IV SEMESTER
C1 12 401 :COST AND MANAGEMENT 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 Sunk Cost?  Give an example.
  2. Mention any two advantage of Standard Costing.
  3. How is Absorption Costing different from Marginal Costing?
  4. Differentiate between Normal Loss and Abnormal Loss in Process Costing.
  5. Mention any four components of Master Budget.
  6. From the following particulars, find out the Break Even Point in quantity and in Value.

Variable Cost per unit Rs. 75
Fixed Cost   Rs. 2,70,000
Selling Price per unit Rs. 100
  7. What are irrelevant costs?  Mention any two examples of irrelevant Cost.
  8. How do you calculate Idle Time Variance?  Can Idle Time Variance be Favourable?
  9. What are Opportunity Costs?  Are they relevant for decision making?
  10. The output of Process A was 2,500 units.  Normal loss allowed was 10% of input.  Abnormal loss was 200 units.  Calculate the number of units of input.
SECTION – B
II) Answer any FOUR questions.  Each carries 5 marks.                                      (4×5=20)
  11. 600 Kg. of a material was charged to Process A at the rate of Rs. 4 per kg.  The direct labour amounted to Rs. 200 and the other departmental expenses amounted to Rs. 760.  The normal loss is 10% of the input and the net production was 500 Kg.  Assuming that process scrap is saleable at Rs. 2 per Kg., prepare a ledger of Process A clearly showing the values of normal and abnormal loss.
  12. From the information given below, you are required to calculate the following:

a)      The P/V Ratio

b)     Break Even Point in Units

c)      Margin of Safety if actual sales is Rs. 75,000

d)     Net Profit when actual sales are 10% above BEP.

e)      Expected Sales in value to earn a profit of Rs. 25,000.

Direct Material per unit Rs. 3
Direct Labour per unit Rs. 2
Fixed Overheads (Total) Rs. 10,000
Variable overhead 100% of Direct Labour
Selling Price per unit Rs. 9.50
   

13.

  

The expenses budgeted for production of 10,000 units in a factory are furnished below:

Particulars Rs. Per unit
Materials 70
Labour 25
Variable Overheads 20
Fixed Overheads 10
Variable Expenses (direct) 5
Selling Expenses (10% fixed) 13
Distribution Expenses (20% fixed) 7
Administration Expenses (Rs. 50,000) 5
Total 155

Prepare a budget for the production of 7,000 units. Assume that Administration expenses are fixed for all levels of production.

 
  14. 10,000 shirts have been manufactured for export at a cost of Rs. 300 per shirt. These shirts were rejected because of defects and can be sold for Rs. 240 per shirt in the local market. If the defects are rectified by spending Rs. 60 per shirt, the same can be sold for Rs. 320.

i)                   What are the relevant costs?

ii)                 Should the rectification be done?

iii)              What is the gain or loss if not rectified?

iv)                What is the gain or loss if rectified?
  15. Calculate Variable Overhead Variances from the following and verify your result.

Particulars Budgeted Actual
Output in units 20,000 19,000
No. of Hours 5,000 4,500
Variable Overheads Rs. 5,000 Rs. 4,800
  16. Mention the differences between Fixed Cost and Variable Cost.
SECTION – C
III) Answer any THREE questions.  Each carries 15 marks.                                (3×15=45)                                                                                                
  17. Prepare Process Accounts and Calculate Total Cost of Production from the data given below:

Particulars Process A (Rs.) Process B (Rs.) Process C  (Rs.)
Materials 2,250 750 300
Wages 1,200 3,000 900
Direct Expenses:      
 Fuel 300 200 400
Carriage 200 300 100
Works Overheads 1,890 2,580 1,875

 

The indirect expenses Rs. 1,275 should be apportioned on the basis of wages.
  18. Prepare a Cash Budget for the three months ending 30th June, 2016 from the information given below:

a)

Month Sales (Rs.) Materials (Rs.) Wages (Rs.) Overheads (Rs.)
Feb 14,000 9,600 3,000 1,700
Mar 15,000 9,000 3,000 1,900
Apr 16,000 9,200 3,200 2,000
May 17,000 10,000 3,600 2,200
Jun 18,000 10,400 4,000 2,300

b) Credit Terms are:

Sales and Debtors:  10% of Total Sales are for Cash, 50% of the credit sales are collected next month and the balance in the following month.

Creditors:  Materials :  2 months;  Wages :  ¼ month  and  Overheads : ¼ month.

c) Cash and Bank balance on 1st April 2016 is expected to be Rs. 6,000.

d) Other relevant information are:

1 Plant and Machinery will be installed in Feb. 2016 at a cost of Rs. 96,000.  The monthly installment of Rs. 2,000 is payable from April onwards.
2 Dividend at 5% on Preference Share Capital of Rs. 2,00,000 will be paid on 1st June.
3 Advance to be received for sale of vehicles Rs. 9,000 in June.
4 Dividends from investments amounting to Rs. 1,000 are expected to be received in June.
5 Income Tax (advance) to be paid in June is Rs. 2,000.
  19. The standard mix to produce one unit of product is as follows:

Materials No. of units Cost per unit Total (Rs.)
A 60 Rs. 15 900
B 80 Rs. 20 1,600
D 100 Rs. 25 2,500
Total 240   5,000

During the month of July, 10 units were actually produced and consumption was as follows:

Materials No. of units Cost per unit Total (Rs.)
A 640 Rs. 17.50 11,200
B 950 Rs. 18.00 17,100
D 870 Rs. 27.50 23,925
Total 2,460   52,225

Calculate all the Material Variances- MCV, MPV, MUV, MMV, MYV

 
  20. Reliable Product Co. manufactures product MK.  The company earned a profit of Rs. 14,00,000 from the production of this product MK in the year 2015-16, after charging fixed cost of Rs. 10,00,000.  Product MK was sold for Rs. 50 per unit and has a variable cost of Rs. 20 per unit.

Market research suggest the following responses to price changes:

 

Alternative Selling Price reduced by Quantity sold increased by
A 5% 10%
B 7% 20%
C 10% 25%

Evaluate these alternatives and suggest on profitability considerations, which alternative should be adopted for the forthcoming year 2016-17, assuming there is no change in the cost structure.

 
  21. a) The product cost for a factory of a year are given below:

Particulars Rs.
Direct labour cost 75,000
Direct material cost 1,20,000
Production overhead-  
                     Fixed Rs. 45,000  
                     Variable Rs. 70,000 1,15,000

The production manager anticipates the following changes in the following year:

i)       The average rate of direct labour will increase from Rs.4 per hr to Rs.5 per hr.

ii)     Production efficiency would increase by 5%.

iii)  Direct labour hour will increase by 15%.

iv)   The purchase price per unit of direct material and other expenses will remain unchanged.

Prepare the production cost budget (overheads will be absorbed on basis of direct wages).                                                                                        (10 Marks)

b)     A machinery was purchased for Rs. 26,00,000. The operating cost is Rs. 130 per hour. When the machine was about to be installed it was found out that another machine which is more efficient was available in the market for Rs. 45,50,000. The operating cost of the machine being Rs. 91 per hour.

If this new machine is purchased for Rs. 45,50,000, the old machine could be disposed off for Rs. 15,60,000.

i)                    Identify the relevant cost

ii)                  How many hours does the new machine have to run for the benefit of the company?

iii)                Calculate the break-even hours of both the machines, Considering Revenue per hour as Rs. 195.

(5 Marks)

 
SECTION – D
IV) Case Study – Compulsory question.                                                                (1×15=15)                                                                                          
  22. a) A manufacturer has planned his level of operation at 50% of his plant capacity of 30,000 units.  His expenses are estimated as follows, if 50% of the plant capacity is utilized:

 

a) Direct Materials Rs. 8,280
b) Direct Wages Rs. 11,160
c) Variable and other manufacturing exps Rs. 3,960
d) Total fixed expenses irrespective of  capacity of utilization Rs. 6,000

 

The expected selling price in the domestic market is Rs. 2 per unit.  Recently, the manufacturer has received a trade enquiry from an overseas organization interested in purchasing 6,000 units at a price of Rs. 1.45 per unit.

 

As a professional management accountant, what would be your suggestion regarding acceptance or rejection of the offer?

Support your suggestion with suitable quantitative information.

(7 Marks)

b)  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 summarized costing data:

Particulars Joint Expenses (Rs) Separate Expenses
X  (Rs.) Y  (Rs.)
Materials 19,200 7,360 780
Labour 11,700 7,680 2,642
Overheads 3,450 1,550 544

The output for the month was 142 tonnes of X and 49 tonnes of Y.  The selling price of Y averaged Rs. 280 per tonne.

Assuming that the profit on Y is estimated at 50% of the Selling Price, you are required to:

a)      Calculate Y’s share of Joint Cost.

b)     Prepare Main Product X A/c and

c)      By-product Y A/c.

( 8 Marks)

 

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