Loyola College B.B.A. Business Administration April 2007 Adv. Cost Management Accounts Question Paper PDF Download

             LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.B.A. DEGREE EXAMINATION – BUSINESS ADMINISTRATION

MS 22

SIXTH SEMESTER – APRIL 2007

                                       BU 6600 – ADV. COST MANAGEMENT ACCOUNTS

 

 

 

Date & Time : 16-04-2007/9.00-12.00           Dept. No.                                                       Max. : 100 Marks

 

SECTION-A

(Answer all questions)                           (10×2=20)

1.What do you understand by memorandum reconciliation statement?

2.Identify any four industries in which batch costing is employed.

3.What do you mean by cost plus contracts?

4.Calculate the total Kms and passenger Kms from the following.

Number of buses           – 5

Trips made by each bus (round)-4

Distance of route – 20 kms (one way)

Days operated in a month –25

Capacity in each bus- 50 passengers

Normal passengers travelled- 90% of capacity.

5.Mention the cost units used under the following cases.

  1. i) Goods transport ii) Hospitals.

6.State the various methods of preparing sales budget.

7.Define “Standard cost”

8.What is Capital Budgeting?

9.What are the advantages of N.P.V.?

10.Calculate the material usage variance from the following;

Standard             : 400 units at Rs.10 each.

Actual                 : 360 units at Rs.7 each.

 

SECTION-B

(Answer any five questions, choosing not less than TWO from each group)            (5×8=40)

GROUP-I

11.Write short notes on the following:

  1. a) Abnormal loss b) Operating costing c) Job costing d) Valuation of work in progress

in contract  costing.                                                                                 .                          12.The following is the profit&loss a/c of “V”-Ltd

 

Particulars     Rs     Particulars      Rs
To Materials

To Wages

To Factory expenses

To Administration        expense

To Selling expenses

To Depreciation

To Net profit

 

     30,000

14,000

10,000

 

8,000

6,000

2,000

45,000

1,15,000

By sales

By Closing stock

By Profit on sale of machinery

By Discount received

 

 

 

 

1,00,000

8,000

 

2,000

5,000

 

 

 

1,15,000

 

Additional information;

  • Profit as per cost accounts was Rs.37,000
  • Factory overhead is absorbed in cost accounts at 100 % of wages.
  • Administration and selling expenses were recovered at 5% and 7% on

Sales respectively.

  • Depreciation was charged in costing at Rs.3,000.
  • Closing stock was valued at Rs.10,000 in cost accounting.

You are required to prepare a reconciliation statement of cost and financial profits.

 

13.From the following particulars, calculate the cost of running a taxi per kilometer.

Number of Taxis          -10

Cost of each taxi          – Rs.2,00,000.

Salary of manager        – Rs.6,000 p.m.

Salary of accountant     – Rs.5,000 p.m.

Salary of cleaner           – Rs.2,000 p.m

Salary of mechanic       – Rs.4,000 p.m

Garage rent                   – Rs.6,000 p.m.

Insurance premium       –  5% p.a.

Annual tax                    – 6,000 per taxi

Drivers salary               – 2,000 per month per taxi.

Annual repair                – 10,000 per taxi.

Total life of a taxi is about 2,00,000 kms. A taxi  runs in all 3,000 kms in a month

Of which30% is empty. Petrol consumption is one litre for 10 k.m at Rs.18

Per litre. Oil and other  sundries are Rs.50 per 100 kms.

14.From the following particulars, prepare a cost sheet showing both production and

Setting up costs, total and per unit,When  the batch consists of 200 units;

Cost of materials 12-paise per unit.

Operator’s wages Rs.1.44 an hour.

Machine hour rate.Rs.3

Setting up time of machine 4 hours and 40 minutes .

Manufacturing time 20 minutes per unit.

GROUP-II

15.Write short notes on the following.

  1. Key factor b) Budgetary control c) Pay-back period d) IRR.

16.From the following particulars given below, calculate the following labour variances

for the two departments.

  1. a) Labour cost variance b) Labour rate variance c) Labour efficiency variance.

 

 

      Department-A Department-B
 Actual gross wages (direct)

Standard hours produced

Standard rate per hour

Actual hours worked

      Rs.20,000

8,000

Rs.3

8,200

 Rs.18,000

6,000

Rs.3.50

5,800

 

 

17.The following particulars are taken from the records of the company engaged in

manufacturing two products X and Y from a certain raw material.

 

Product-X (Rs.per unit) Product-(Rs.per unit)
Sales                 Materials(Rs.2.5 per k.g)  Wages (Rs.15 per hour)

Variable overhead

 

 

                  125.00

25.00

37.50

12.50

         250.00

62.50

75.00

25.00

 

Total fixed overheads Rs.50,000

Comment on the profitability of each product when

  1. Total availability of raw material is 20,000 kgs and maximum sales potential

Of each product is 1,000 units. Find out the product mix to yield maximum profit.

  1. Total sales in value is limited
  2. Labour time is limited.
  3. Production capacity in units is a key factor.

 

18.A company sells two products A and B which are produced  in its special products

division. Sales for the year 2006 were planned as follows.

1-st Qr(units)   2nd Qr(units)  3rd   Qr (units)

 

4th Qr(units)
Product-A

Product-B

    10,000

5,000

     12,000

4,500

     13,000

4,000

 

   15,000

3,800

 

The selling prices were Rs.20 per unit and Rs.50 per unit respectively for A and B. Average sales returns are 5% of sales and the discount and bad debts amount to 4%

Of the total sales.

Prepare sales budget for the year 2006.

 

SECTION-C

(Answer any TWO Questions  )                          (2×20=40)

19.a) Three contracts X,Y and Z commenced on 1-stJanuary ,1stjuly and 1stOctober 2006,

respectively were undertaken by ELLORA Constructions Ltd, and their accounts on 31-st Dec.

showed the following position;

     X

(Rs)

    Y

(Rs)

     Z

(Rs)

Contract price

Expenditure;

Raw material

Wages

General expenses

 

Plant purchased

Materials in hand

Wages accrued

Work certified

Work uncertified

Cash received in respect of work certified

 

8,00,000

 

1,44,000

2,20,000

8,000

 

40,000

8,000

8,000

4,00,000

12,000

3,00,000

 

5,40,000

 

1,16,000

2,24,800

5,600

 

32,000

8,000

8,000

3,20,000

16,000

2,40,000

 

6,00,000

 

40,000

28,000

2,000

 

24,000

4,000

3,600

72,000

4,200

54,000

 

T he plant was installed on the date of commencement of each contract ,depreciation

is to be taken at 10% per annum.                                                                                        Prepare the contract accounts in Tabular form and show   how they would appear in the Balance sheet as on Dec.2006.

OR

19.b)A product passes through three processes. The following details are related to the

processes during-Dec-2006.

 

     Total Process-I Process-II Process-III
Materials(Rs)

Labour (Rs)

Production overhead (Rs)

Output (units)

Normal loss (%-of input)

Scrap value

     5,625

7,330

7,330

      2,600

2,250

450

10

2

 

 

     2,000

3,680

340

20

4

    1,025

1,400

270

25

5

 

 

 

500 units @Rs.4 per unit were introduced in process-I. Production overhead is absorbed in the ratio of labour.

Prepare process accounts and abnormal loss and abnormal gain accounts.

 

20.a) From the following particulars , prepare a cash budget for 6 months .

Months Total sales

Rs

Materials

Rs

  Wages

Rs

Production over

head

Rs

Selling and

Dist.overhead

Rs

Jan

Feb

March

April

May

June

 

  20,000

22,000

24,000

26,000

28,000

30,000

  20,000

14,000

14,000

12,000

12,000

16,000

    4,000

4,400

4,600

4,600

4,800

4,800

     3,200

3,300

3,300

3,400

3,500

3,600

 

      800

900

800

900

900

1,000

Cash balance on 1-st jan. was Rs.10,000. A new machine is to be installed at Rs.30,000 On credit, the amount to be repaid by two equal instalments in March and April.

 

Sales commission at 5% on total sales is to be paid within the month following actual

Sales.Rs.10,000 being amount of 2nd call may be received in march. Share premium                     amounting to Rs.2,000 is also obtained with 2nd call.

 

Period of credit allowed by suppliers-2 months

Period of credit allowed to customers-1 month.

Delay in payment of overheads-1month.

Delay in payment of wages-1/2 month.

Assume cash sales to be 50% of the total sales.

(OR)

20.b) J& co is planning to invest in a project which requirea a capital outlay of

Rs.4,00,000. Forecast for annual income after depreciation but before tax is as

Follows.

 

 

     Year          Rs
       1

2

3

4

5

   2,00,000

2,00,000

1,60,000

1,60,000

80,000

Depreciation may be taken as 20% on original cost and taxation at 50% of net income.

You are required to evaluate the projects according to each of the following methods.

  1. Pay- back period b) Rate of return on original investment c)Rate of return on average investment d)Discounted flow method taking cost of capital at 10%.
  2. Excess present value method.

 

Note;

The discount factor at 10% for the first 5-years are ; 0.909, 0.826,0.751,0.683 and

0.621.

 

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Loyola College B.B.A. Business Administration April 2007 Adv. Cost Management Accounts (2) Question Paper PDF Download

             LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.B.A. DEGREE EXAMINATION – BUSINESS ADMINISTRATION

MS 22

SIXTH SEMESTER – APRIL 2007

                                       BU 6600 – ADV. COST MANAGEMENT ACCOUNTS

 

 

 

Date & Time : 16-04-2007/9.00-12.00           Dept. No.                                                       Max. : 100 Marks

 

SECTION-A

(Answer all questions)                           (10×2=20)

1.What do you understand by memorandum reconciliation statement?

2.Identify any four industries in which batch costing is employed.

3.What do you mean by cost plus contracts?

4.Calculate the total Kms and passenger Kms from the following.

Number of buses           – 5

Trips made by each bus (round)-4

Distance of route – 20 kms (one way)

Days operated in a month –25

Capacity in each bus- 50 passengers

Normal passengers travelled- 90% of capacity.

5.Mention the cost units used under the following cases.

  1. i) Goods transport ii) Hospitals.

6.State the various methods of preparing sales budget.

7.Define “Standard cost”

8.What is Capital Budgeting?

9.What are the advantages of N.P.V.?

10.Calculate the material usage variance from the following;

Standard             : 400 units at Rs.10 each.

Actual                 : 360 units at Rs.7 each.

 

SECTION-B

(Answer any five questions, choosing not less than TWO from each group)            (5×8=40)

GROUP-I

11.Write short notes on the following:

  1. a) Abnormal loss b) Operating costing c) Job costing d) Valuation of work in progress

in contract  costing.                                                                                 .                          12.The following is the profit&loss a/c of “V”-Ltd

 

Particulars     Rs     Particulars      Rs
To Materials

To Wages

To Factory expenses

To Administration        expense

To Selling expenses

To Depreciation

To Net profit

 

     30,000

14,000

10,000

 

8,000

6,000

2,000

45,000

1,15,000

By sales

By Closing stock

By Profit on sale of machinery

By Discount received

 

 

 

 

1,00,000

8,000

 

2,000

5,000

 

 

 

1,15,000

 

Additional information;

  • Profit as per cost accounts was Rs.37,000
  • Factory overhead is absorbed in cost accounts at 100 % of wages.
  • Administration and selling expenses were recovered at 5% and 7% on

Sales respectively.

  • Depreciation was charged in costing at Rs.3,000.
  • Closing stock was valued at Rs.10,000 in cost accounting.

You are required to prepare a reconciliation statement of cost and financial profits.

 

13.From the following particulars, calculate the cost of running a taxi per kilometer.

Number of Taxis          -10

Cost of each taxi          – Rs.2,00,000.

Salary of manager        – Rs.6,000 p.m.

Salary of accountant     – Rs.5,000 p.m.

Salary of cleaner           – Rs.2,000 p.m

Salary of mechanic       – Rs.4,000 p.m

Garage rent                   – Rs.6,000 p.m.

Insurance premium       –  5% p.a.

Annual tax                    – 6,000 per taxi

Drivers salary               – 2,000 per month per taxi.

Annual repair                – 10,000 per taxi.

Total life of a taxi is about 2,00,000 kms. A taxi  runs in all 3,000 kms in a month

Of which30% is empty. Petrol consumption is one litre for 10 k.m at Rs.18

Per litre. Oil and other  sundries are Rs.50 per 100 kms.

14.From the following particulars, prepare a cost sheet showing both production and

Setting up costs, total and per unit,When  the batch consists of 200 units;

Cost of materials 12-paise per unit.

Operator’s wages Rs.1.44 an hour.

Machine hour rate.Rs.3

Setting up time of machine 4 hours and 40 minutes .

Manufacturing time 20 minutes per unit.

GROUP-II

15.Write short notes on the following.

  1. Key factor b) Budgetary control c) Pay-back period d) IRR.

16.From the following particulars given below, calculate the following labour variances

for the two departments.

  1. a) Labour cost variance b) Labour rate variance c) Labour efficiency variance.

 

 

      Department-A Department-B
 Actual gross wages (direct)

Standard hours produced

Standard rate per hour

Actual hours worked

      Rs.20,000

8,000

Rs.3

8,200

 Rs.18,000

6,000

Rs.3.50

5,800

 

 

17.The following particulars are taken from the records of the company engaged in

manufacturing two products X and Y from a certain raw material.

 

Product-X (Rs.per unit) Product-(Rs.per unit)
Sales                 Materials(Rs.2.5 per k.g)  Wages (Rs.15 per hour)

Variable overhead

 

 

                  125.00

25.00

37.50

12.50

         250.00

62.50

75.00

25.00

 

Total fixed overheads Rs.50,000

Comment on the profitability of each product when

  1. Total availability of raw material is 20,000 kgs and maximum sales potential

Of each product is 1,000 units. Find out the product mix to yield maximum profit.

  1. Total sales in value is limited
  2. Labour time is limited.
  3. Production capacity in units is a key factor.

 

18.A company sells two products A and B which are produced  in its special products

division. Sales for the year 2006 were planned as follows.

1-st Qr(units)   2nd Qr(units)  3rd   Qr (units)

 

4th Qr(units)
Product-A

Product-B

    10,000

5,000

     12,000

4,500

     13,000

4,000

 

   15,000

3,800

 

The selling prices were Rs.20 per unit and Rs.50 per unit respectively for A and B. Average sales returns are 5% of sales and the discount and bad debts amount to 4%

Of the total sales.

Prepare sales budget for the year 2006.

 

SECTION-C

(Answer any TWO Questions  )                          (2×20=40)

19.a) Three contracts X,Y and Z commenced on 1-stJanuary ,1stjuly and 1stOctober 2006,

respectively were undertaken by ELLORA Constructions Ltd, and their accounts on 31-st Dec.

showed the following position;

     X

(Rs)

    Y

(Rs)

     Z

(Rs)

Contract price

Expenditure;

Raw material

Wages

General expenses

 

Plant purchased

Materials in hand

Wages accrued

Work certified

Work uncertified

Cash received in respect of work certified

 

8,00,000

 

1,44,000

2,20,000

8,000

 

40,000

8,000

8,000

4,00,000

12,000

3,00,000

 

5,40,000

 

1,16,000

2,24,800

5,600

 

32,000

8,000

8,000

3,20,000

16,000

2,40,000

 

6,00,000

 

40,000

28,000

2,000

 

24,000

4,000

3,600

72,000

4,200

54,000

 

T he plant was installed on the date of commencement of each contract ,depreciation

is to be taken at 10% per annum.                                                                                        Prepare the contract accounts in Tabular form and show   how they would appear in the Balance sheet as on Dec.2006.

OR

19.b)A product passes through three processes. The following details are related to the

processes during-Dec-2006.

 

     Total Process-I Process-II Process-III
Materials(Rs)

Labour (Rs)

Production overhead (Rs)

Output (units)

Normal loss (%-of input)

Scrap value

     5,625

7,330

7,330

      2,600

2,250

450

10

2

 

 

     2,000

3,680

340

20

4

    1,025

1,400

270

25

5

 

 

 

500 units @Rs.4 per unit were introduced in process-I. Production overhead is absorbed in the ratio of labour.

Prepare process accounts and abnormal loss and abnormal gain accounts.

 

20.a) From the following particulars , prepare a cash budget for 6 months .

Months Total sales

Rs

Materials

Rs

  Wages

Rs

Production over

head

Rs

Selling and

Dist.overhead

Rs

Jan

Feb

March

April

May

June

 

  20,000

22,000

24,000

26,000

28,000

30,000

  20,000

14,000

14,000

12,000

12,000

16,000

    4,000

4,400

4,600

4,600

4,800

4,800

     3,200

3,300

3,300

3,400

3,500

3,600

 

      800

900

800

900

900

1,000

Cash balance on 1-st jan. was Rs.10,000. A new machine is to be installed at Rs.30,000 On credit, the amount to be repaid by two equal instalments in March and April.

 

Sales commission at 5% on total sales is to be paid within the month following actual

Sales.Rs.10,000 being amount of 2nd call may be received in march. Share premium                     amounting to Rs.2,000 is also obtained with 2nd call.

 

Period of credit allowed by suppliers-2 months

Period of credit allowed to customers-1 month.

Delay in payment of overheads-1month.

Delay in payment of wages-1/2 month.

Assume cash sales to be 50% of the total sales.

(OR)

20.b) J& co is planning to invest in a project which requirea a capital outlay of

Rs.4,00,000. Forecast for annual income after depreciation but before tax is as

Follows.

 

 

     Year          Rs
       1

2

3

4

5

   2,00,000

2,00,000

1,60,000

1,60,000

80,000

Depreciation may be taken as 20% on original cost and taxation at 50% of net income.

You are required to evaluate the projects according to each of the following methods.

  1. Pay- back period b) Rate of return on original investment c)Rate of return on average investment d)Discounted flow method taking cost of capital at 10%.
  2. Excess present value method.

 

Note;

The discount factor at 10% for the first 5-years are ; 0.909, 0.826,0.751,0.683 and

0.621.

 

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Loyola College B.B.A. Business Administration April 2008 Adv. Cost Management Accounts Question Paper PDF Download

LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.B.A. DEGREE EXAMINATION – BUSINESS ADMINISTRATION

AP 16

 

SIXTH SEMESTER – APRIL 2008

BU 6600 – ADV. COST MANAGEMENT ACCOUNTS

 

 

 

Date : 16/04/2008             Dept. No.                                        Max. : 100 Marks

Time : 9:00 – 12:00

 

SECTION     A

Answer ALL Questions                                                             10 x 2= 20

 

  1. State any two reasons for the difference between the profit shown by cost accounts

and the profit shown by financial accounts.

2 What is meant by equivalent production?

  1. Write any TWO distinctions between job costing and process costing.
  2. What is meant by flexible budget?
  3. What are the advantages of pay back period?
  4. Distinguish between joint product and by-product.
  5. Calculate the ton kilometers run by a truck from the following details.

Distance traveled 200 kms per day

Normal loading capacity 100 tons.

Wastage in loading 10%

Percentage of vehicles under repair 5%

Effective days in a month 25.

8.A project requires an investment of Rs. 50,000 and has a scrap value of Rs. 2,000

after five years. It is expected to yield profit after taxes and depreciation during the

five years amounting to Rs. 4,000, Rs. 6,000,Rs. 7,000, Rs. 5,000 and Rs. 5,000.

Calculate the average rate of return on investment.

  1. Data relating to a job are thus;

Standard rate of wages per hour    Rs10

Standard hours                                  300

Actual rate of wages per hour        Rs 12

Actual hours                                     200

Calculate 1)Labour cost variance 2)Labour rate variance

10.Notional Profit on a contract is Rs.90,000 and 40% of the contract is completed. Cash received is 80%

of work certified. Calculate the amount of Profit to be reserved for contingencies.

 

                                               SECTION    B  

Answer any FIVE questions, choosing not less than TWO from each group   (5 x 8=40)

GROUP    I

 

11.Write short notes on the following: (1) Inter process profits, (2) Work certified

(3) Abnormal gain (4) Batch Costing.

 

12.Alpha Company has a contract to run a tourist car on a 20 Kms route (one way)

for the chief executive of a firm.  The company  buys a car for Rs. 1,50,000 which has

life of 5 years. The company  estimates the following expenses:

Insurance Rs. 4,500 p.a.; Taxes Rs. 900 p.a.; Garage rent Rs. 500 p.m.; Repairs Rs. 4,800 p.a.; Drivers wages Rs. 300 p.m.; In addition the driver has to be paid 10% of the collections as commission.  Petrol will cost Re. 1 per Km. The car will make 4 round trips each day and will operate for 25 days in a month. If Alpha Company wants a profit of 15% on collection how much must the company charge per round trip?

 

  1. Profit disclosed by a company’s accounts for the year was Rs. 50,000 whereas

The net profit as disclosed by the financial accounts was Rs. 29,750.  Following

information is available:

  • Overheads as per cost accounts were estimated at Rs. 8,500. The charge for

The year shown by the financial accounts was Rs. 7,000.

  • Director’s fees shown in the financial accounts only for Rs. 2,000
  • The company allowed Rs. 5,000 as provision for doubtful debts.
  • Work was commenced during the year on a new factory and expenditure of

Rs. 30,000 was made.  Depreciation at 5% p.a. was provided for in the

financial accounts for 6 months.

  • Share-transfer fees received during the year were Rs. 1,000
  • Provision for income-tax was Rs. 15,000

 

From the above, prepare a statement reconciling the figures shown by cost and financial accounts.

 

  1. A company manufactures three joint products A,B and C. The actual joint-expenses

Rs. 8,000.  Profit on each product as a percentage of sales would be 30%, 25% and

15% respectively.  Subsequent expenses were as follows:

A                           B                         C

Rs.                         Rs.                      Rs.

Materials                                   100                         75                       25

Labour                                       200                       125                       50

Overheads                                 150                       125                       75

Sales                                       6,000                    4,000                  2,500

Prepare a statement apportioning joint expenses on the basis of reverse cost method.

 

GROUP II

  1. Write short notes on the following: (a) features of capital budgeting, (b) advantages

of budgetary control.

 

16.Following information has been made available from the cost records of United

Automobiles Ltd.

Direct Materials                                                                         Per Unit(Rs.)

X                                                                                             8

Y                                                                                             6

Direct Wages

X                                                                                            6

Y                                                                                            4

Variable Overheads-150% of direct wages

Fixed cost (total)                  Rs. 750

Selling Price

X                                                                                            25

Y                                                                                            20

The directors want to adopt anyone of the following alternative sales mixes in the

following period.

  • 250 units of X and 250 units of Y, (b) 400 units of Y only, (c) 150 units of X and

350 units of Y. State which of the alternative sales mixes you would recommend to the management.?

 

 

 

 

 

 

17.Prepare a cash budget for the month of May, June and July 2004 on the basis of

following information.

Months              Sales                    Credit Purchases    Wages                 Overheads

March          Rs. 80,000                        Rs. 36,000    Rs. 9,000             Rs. 10,000

April                   82,000                              38,000          8,000                     9,000

May                    85,000                               33,000        10,000                   12,000

June                    78,000                               35,000          8,500                     9,000

July                     80,000                               39,000          9,500                   10,500

Additional information:

  1. Cash balance on 1st May 2004 is Rs. 8,000
  2. Cash sales is 25% of sales
  3. Period of credit allowed by suppliers, two months and to customers, one month
  4. Lag in payment of wages, one month
  5. Advance Tax is payable in June of Rs. 8,000.
  1. From the following particulars, calculate all Material variances:

Material                       Standard                          Actual

Quantity    Price             Quantity    Price

Kg.          Rs.                 Kg.           Rs.

A                                 10             8                   10             7

B                                    8             6                    9             7

C                                    4            12                   5            11

22                                 24________

 

SECTION   C

Answer any TWO Questions                    2 x 20=40

  1.  (a)   R commenced a contract on 1-4-2005.  The contact price was fixed at

Rs. 3,00,000  and the following expense were incurred on the contract upto

31-3-2006.

Materials issued Rs. 51,000 , plant issued Rs. 15,000, wages Rs. 81,000 and other

expense Rs. 5,000 , Cash received on the contract upto 31-3-2006 amounted to

Rs. 1,28,000, being 80% of the work certified.  Of the plant and materials charged to the contract, plant costing Rs. 3,000 and material costing Rs. 2,500 were lost.  Work uncertified on 31-3-2006 was Rs. 1,000 and materials at site on that date was Rs. 2,300, Depreciate plant at 15% p.a.

Prepare the contract account as on 31-3-2006 and show how the relevant items would appear in the  balance sheet as on that date.

 

 

(or)

 

 

19.(b)  Product ‘Z’ is obtained after it passes three distinct processes.  The following

Information is obtained from the accounts for the month ending March 2005:

Process

Items                                                           _________________________________

Total                       I                        II                      III

Rs.                      Rs.                    Rs.                     Rs.

Direct Material                       7,542                  2,600                 1,980                 2,962

Direct Wages                         9,000                  2,000                  3,000                4,000

Production Overheads           9,000                      –                         –                        –

%of Normal Loss to input                                   5%                      10%                  15%

Output(in units) during the month                      950                      840                   750

Value of Scrap per unit (Rs.)                                 2                         4                       5

 

1,000 units at Rs. 3 each were introduced to process I.  There was no stock of material

or work-in progress at the beginning or end of the period.  The output of each process passess direct to the next process and finally to finished stores.  Production overhead is recovered on 100 percent of direct wages.

Prepare process  cost accounts and other related accounts.

 

20.(a) Prepare a flexible budget for overheads on the basis of the following data.

Ascertain overheads at 50% 60% and 70% capacity.

Variable overheads                                           At 60% capacity

Rs.

Indirect material                                              6,000

Indirect labour                                               18,000

Semi-variable overheads

Electricity (40% fixed 60% variable)                30,000

Repairs (80% fixed 20% variable)                      3,000

Fixed overheads

Depreciation                                                    16,500

Insurance                                                          4,500

Salaries                                                           15,000

Total overheads                                                93,000

(or)

 

20.(b) A Co. plants to buy a machine for Rs. 80,000.  It is expected to have a life of 5

years and a scrap value of Rs. 10,000 at the end of its life.  The machine is expected to generate the following profits before depreciation and tax.

Year     Profit before Dep & tax (Rs.)     P.V. of Re 1 @ 10%

1                          20,000                                0.909

2                          40,000                                0.826

3                          30,000                                0.751

4                          25,000                                0.683

5                          16,000                                0.621

If the tax rate is 50% and the cost of capital is 10%, calculate

  • Pay Back Period, (b)Net Present Value

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Loyola College B.B.A. Business Administration April 2009 Adv. Cost Management Accounts Question Paper PDF Download

LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.B.A. DEGREE EXAMINATION – BUSINESS ADMINISTRATION

JQ 16

SIXTH SEMESTER – April 2009

BU 6600 – ADV. COST MANAGEMENT ACCOUNTS

 

 

 

Date & Time: 25/04/2009 / 9:00 – 12:00        Dept. No.                                                           Max. : 100 Marks

 

 

PART A

Answer ALL questions                                                                                               (10×2=20)

  1. Idle time variance
  2. Master budget
  3. Limiting factor
  4. Economic batch quantity
  5. Internal rate of return
  6. Joint and by-products
  7. A Ltd plans to purchase a machine costing Rs.5,00,000. It has a life of 5 years and no salvage value. If the company expects to earn a profit of Rs.2,50,000 per annum, before depreciation and tax, calculate the pay back period. Tax rate is 50%. Provide depreciation under Straight Line Method.
  8. X ltd expects to sell 1,00,000 units of product A in the month of July 2009. Each unit of product A requires 2 kgs of material X. calculate the quantity of X to be purchased, from the following data.

A  (units)                     X (kgs)

Estimated stock on 1/7/09                        30,000                         25,000

Desired stock on 31/7/09             50,000                         45,000

  1. 100 units are introduced in Process 1. The total expenses for the process if RS.9,000. 80 units are completed and transferred to Process 2. 20 units, 50% complete remained as closing work in progress. Prepare Process 1 account.
  2. A owns a lorry of 6 ton capacity. During the month it made 20 trips covering a distance of 200 kms every trip. 40% of the time it ran empty. It carried an average load of 80% of capacity during the period. Calculate the total ton kilometers for the month.

PART  B

 

Answer FIVE questions choosing at least TWO from each section.                                  (5×8=40)

 

Section 1

 

  1. Distinguish between ‘Job costing” and “Process costing”

 

  1. R Ltd gives you the following data. In respect of a truck of 5 ton capacity.

Cost of truck                    Rs.90,000

Estimated life                   10 years

Diesel, oil etc.                  Rs.15 per trip each way

Repairs and Maintenance Rs.500 per month

Driver’s wages                 Rs.500 per month

Cleaner’s wages               Rs.250 per month

Insurance                         Rs.4,800 per annum

Tax                                   Rs.2,400 per annum

Supervision                      Rs.4,800 per annum

The truck carries goods to and from the city, covering a distance of 50 kms each way. While going to the city it runs with full capacity, but on the return journey, it carries only 20% of its capacity.  The truck runs on an average 25 days a month. Calculate the operating cost per ton kilometer.

  1. R Ltd gives you the following data in respect of a contract for Rs. 8,00,000, for the year ending 31st December 2008:

Rs.

Materials issued from stores                                             1,50,000

Wages paid                                                                       2,20,000

General charges                                                                     8,000

Plant installed at site on 1st July 2008                                  40,000

Materials on hand on 31st December 2008                                         8,000

Wages accrued on 31st December 2008                                8,000

Cash received being 75% of works certified                                      3,000

Works uncertified                                                                            12,000

Materials transferred to other contracts                                8,000

Materials received from other contracts                               2,000

Depreciate Plant at 10% per annum.

Prepare Contract account for the year ending 31st December 2008.

 

  1. While manufacturing Product X, a by-product Y is obtained, which after further processing is sold. The joint expenses incurred is Rs.39,000. Expenses after split off were Rs.25,000 for X and Rs.6,200 for Y. 400 kgs of X and 100 kgs of Y are produced. Y is sold at Rs.240 per kg on which the profit earned is estimated at 30% of the selling price.

Calculate the profit made on product X, if X is sold at Rs.300 per kg.

Section 2

 

  1. Marginal costing is an invaluable aid for managerial decision making. Explain.

 

  1. Prepare a flexible budget for overheads on the basis of the following data, at 50% and 70% of operating capacity. Also calculate the overhead rate per labor hour:

At 60% capacity

(Rs.)

Variable overheads:

     Indirect material                          6,000

Indirect labour                         18,000

Semi variable overheads:

Electricity (40% fixed)                        30,000

Repairs (20% variable)                           3,000

Fixed overheads:

Depreciation                            16,500

Insurance                                    4,500

Salaries                                                15,000

———-

Total overheads                            93,000

Estimated direct labor hours          1,86,000

 

  1. 100 workers are employed in a factory. The standard wage rate is Re.1 per hour. The standard working time per week is 48 hours. During a week in march, 50 workers were paid at Re.1.10 p per hour, 20 workers at Re.1 per hour and 30 workers at 90 p per hour. The factory did not work for 8 hours due to power failure.  Calculate labor variances.

 

  1. A company manufacturers 3 products A,B and C, all of which use the same raw material. On the basis of the following data, calculate the product mix, which will give the highest profit assuming the company has only 1 lakh kgs of raw material available.

A                     B                      C

Raw material at Rs.10 per kg                    Rs.100             Rs.60               Rs.150

Labor cost per unit                                               Rs.15               Rs.25               Rs.20

Selling price per unit                                Rs.125             Rs.100             Rs.200

Maximum demand in units                                   6,000               4,000               3,000
PART  C

 

Answer any TWO questions choosing at least 1 from each section                                     2×20=40

Section 1

 

  1. The following figures are available from the financial accounts for the year ending 31st March 2008:

Rs.

Direct material consumed                                     2,00,000

Direct wages                                                         1,00,000

Factory overheads                                                               75,000

Administration overheads                                                2,25,000

Selling and distribution overheads                                    2,40,000

Fines paid                                                                 30,000

Preliminary expenses written off                              40,000

Legal charges                                                           20,000

Dividend received                                                                50,000

Interest on bank deposits                                          20,000

Sales (1,20,000  units)                                          18,00,000

Closing stock (30,000 units)                                 1,60,000

The cost accounts reveal the following:

Direct material consumed                                     2,20,000

Direct wages                                                             80,000

Factory overheads – 20% on prime costs

Administration overheads – Rs.2 per unit produced

Selling and distribution overheads – Rs.2 per unit sold

Ascertain the profits shown as per Cost Accounts and Financial Accounts.

Also prepare a statement reconciling the two profits.

 

  1. A product of a company passes through two processes A and B. 20,000 units are issued to Process A at a cost of Rs.10,000. Other details relating to the process are as follows:

Process A         Process B

Direct labor      (Rs.)                             14,000             10,000

Manufacturing expenses (Rs.)               1,000              1,000

Normal loss (%age of input)                2%                   5%

Sale value of scrap (Rs.)                                  1                      1.20

Output in units                                     19,500             18,800

Prepare Process accounts, Normal Loss A/c, Abnormal Loss A/c and Abnormal Gain A/c.

Section 2

 

  1. A factory produces an article X using two materials A and B, mixed in the ratio of 60% and 40%. The

standard price for material A and B is Rs.4 per kg and Rs. 3 per kg resp. standard loss in production is

estimated at 10%.   During a week 364 kgs of product X were produced, using,  280 kgs of material X at

Rs.3.80 per kg and 120 kgs of material Y at Rs.3.60 per kg.   Calculate material variances.

 

  1. X Ltd is considering the purchase of a machine. Two models A and B are available. The cost of each model is Rs.75,000. Each machine has a life of 5 years. The net profit, before tax but after depreciation for each machine are given below:

Year                                 Machine A                   Machine B       PV of Re.1 at 10%

(Rs.)                             (Rs.)

1                                       18,000                         6,000                          0.91

2                                       21,000                         16,000                         0.83

3                                       28,000                         22,000                         0.75

4                                       20,000                         28,000                         0.68

5                                       13,000                         25,000                         0.62

Calculate for each machine:

  1. Pay back period
  2. Return on investment
  3. Net present value, assuming cost of capital is 10%.

Tax rate is 50%.

 

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