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:

1. Rowan plan
2. Absorption of overheads
3. Equivalent units
4. Economic batch quantity
5. Fill in the blanks:
6. By products are always of lower value and importance than the ———–product.
7. Rent of building is apportioned on the basis of ————-.
8. 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.
9. 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

8. 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.
9. 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.
10. 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

11. a) Distinguish between Bin Card and Stores Ledger.
12. Write a note on ABC stock control.

12. Differentiate between financial accounting and cost accounting.

13. 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.

14. 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.

15. The following are the particulars relating to a contract which has begun on 1^st 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 31^st December 2010         3,700

Machinery on hand 31^st 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.

16. 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

17. 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.

18. 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

19. 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:

1. The price of materials will rise by 20% on the previous year’s level.
2. Wage rates will rise by 5%.

• Manufacturing expenses will rise in proportion to the combined cost of materials and wages.

1. Selling expenses per unit will remain unchanged.
2. 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

21. 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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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.B.A. DEGREE EXAMINATION – BUSINESS ADMINISTRATION

FIFTH SEMESTER – APRIL 2012

BU 5504/BU 5501 – COST ACCOUNTING

Date : 30-04-2012              Dept. No.                                        Max. : 100 Marks

Time : 9:00 – 12:00

                                                                    SECTION – A 

ANSWER ALL QUESTIONS:                                                                                   (10×2 = 20marks)

1. What is a cost sheet?
2. What is Bin Card?
3. What is Merit Rating?
4. What is ‘under-absorption’ of overheads?
5. Explain ‘Escalation Cause’.
6. Compute the prime cost:         Rs.

Direct Material used                                         82,000

Productive wages                                              17,000

Royalty paid                                                      11,000

Hire charge of special machines foe the job       13,000

7. Find out the Economic Order Quantity from the following particulars:

Annual usage                                               6,000 units

Cost of placing per unit                                Rs.20

Cost of placing and receiving one order:Rs. 60.  Annual carrying cost of one unit: 10% of Inventory

value.

8. Mr.A a worker in a factory is paid on time basis. During the month of October 2010 he has worked

for 200 hours.  His hourly wage rate is Rs.10 per hour.

Mr.B another employee of the company is paid on the basis of piece wages.  During the month of

January 2010 his output was 1,000 units.  Rate of wages per piece is Rs.3.

Calculate the wages of respective workers for the month of October 2010.

9. The works overheads of a department are Rs.3,00,000.

The direct wages are 3,00,000

The direct material cost is 9,00,000.

Ascertain the prime cost percentage rate of works overhead.

10. A company produces 300 units of product R, 200 units of product ‘S’ and 100 units of product J from

a single process.  The costs upto the point of separation amounted to Rs.30,000.  You are required to

apportion the joint cost of production among the products, using the average unit cost method.

SECTION –B

Answer any FIVE  questions:                                                                              (5 X 8 = 40 marks) 

11. Discuss the advantages of Cost Accounting.
12. Explain the causes of labour turnover.
13. Compute the various stock levels from the following data:

Maximum consumption in a month     300 units

Minimum usage in a month                  200 units

Average usage in a month                    225 units

Time-lag for procurement of materials:

Maximum 6 months ;  Minimum  2 months;  Reorder quantity   750 units.

14. The following details pertain to the production department of a factory.

Material consumed                                                                               Rs.60,000

Direct wages                                                                                         Rs.40,000

Machine hours                                                                                      Rs.50,000

Labour hours worked                                                                            Rs.25,000

Factory overhead relating to the department                                         Rs.50,000

Calculate  overhead absorption rates under different possible method from the above detail.

15. Laxmi Travels, a transport company is running a fleet of six buses between two towns 75 kms apart.

The seating capacity of each bus is 40 passengers.  The following particulars are available for the

month of April 2005.

Rs.

Wages of Drivers, Conductors, etc                                                                        3,600

Salaries of office and supervisory staff                                                                  1,500

Diesel oil, etc                                                                                                        10,320

Repairs and maintenance                                                                                       1,200

Taxes and insurance                                                                                               2,400

Depreciation                                                                                                           3,900

Interest and other charges                                                                                       3,000

The actual passengers carried were 80% of the capacity.  All the buses run all the days in the

month.  Each bus made one round trip per day.

Find out the cost per passenger kilometre.

16. The following are the expenses of Balaji & Co., in respect of a contract which commenced on 1^st

January 2008.

Rs.

Materials purchased                                                                   50,000

Materials on hand                                                                         2,500

Direct wages                                                                               75,000

Plant issued                                                                                 25,000

Direct Expenses                                                                          40,000

The contract price was Rs.7,50,000 and the same was duly received when the contract was completed in August 2008.  Charge indirect expenses at 15% on wages; provide Rs.5,000 for depreciation on plant and prepare the contract account.

17. From the following particulars calculate the earnings of workers A & B under straight piece rate

system and Taylor’s differential piece rate system.

Standard time allowed 25 units per hour

Normal time rate Rs.50 per hour

Differentials to be applied

80% of piece rate when below standard

120% of piece rate at or above standard

In a day of 8 hours A produced 150 units and B produced 250 units.

18. The cost accounts department of a company has supplied the following data for the supply of 2,000

units of product.

Direct materials:  40,000 tons at Rs.5 per ton.

Direct wages      :   8,000 labour hours at Rs.50 per hour

Overheads:

Variable:               Factory Rs.10 per labour hour

Selling Rs.20 per unit

Fixed:                    Factory Rs.1,00,000

Office   Rs.2,00,000

Prepare a Statement showing the price to be fixed which will fetch a profit of 25% on cost.

SECTION –C

Answer any TWO questions:                                                                                   (2 X 20 = 40 marks) 

19. From the following data, prepare a cost and production statement of Popular Stove Manufacturing

Company for the year 2010.

Rs.

Stock of materials on 1-1-2010                                                            35,000

Stock of materials on 31-12-2010                                                          4,900

Purchase of materials                                                                           52,500

Factory wages                                                                                       95,000

Factory expenses                                                                                   17,500

Establishment expenses                                                                         10,000

Completed stock in hand on 1-1-2010                                                      NIL

Completed stock in hand on 31-12-2010                                                35,000

Sales                                                                                                     1,89,000

The number of stoves manufactured during the year was 4,000.

The company wants to quote for a contract for the supply of 1,000 electric stoves during the year 2011.

The stoves to be quoted are of uniform quality and make, and are similar to those manufactured in the

previous year; but the cost of material has increased by 15% and cost of factory labour by 10%.

Prepare a statement showing the price to be quoted to give the same percentage of net profit on

turnover as was realised during the year 2010 assuming that the cost per unit of overhead charges will

be the same as in the previous year.

20. Make out the necessary accounts from the following details:

Process A                            Process B

Rs.                                     Rs.

Materials                                                                       30,000                                 3,000

Labour                                                                           10,000                               12,000

Overheads                                                                       7,000                                 8,600

Input (units)                                                                  20,000                               17,500

Normal loss                                                                       10%                                    4%

Sales of waste per unit                                                    Rs.1                                    Rs.2

There was no opening or closing stock or work-in-progress.  Final output from process B was 17,000

units.

21. In a Light Engineering Factory, the following particulars have been collected for the three monthly

period ended 31-12-2008.  Compute the departmental overhead rates for each of the production

departments, assuming that overheads are recovered as a percentage of direct wages.

The expenses for the period were:

Rs.                                                                                         Rs.

Motive power                                          550                Amenities to staff                                          1,500

Lighting power                                        100                Repairs and maintenance                               3,000

Stores overhead                                       400                 General overhead                                           6,000

Depreciation                                        15,000               Rent and taxes                                                    275

Apportion the expenses of service department E proportionate to direct wages and that of service department D in the ratio of 5:3:2 to departments A, B and C respectively.

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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.B.A. DEGREE EXAMINATION – BUSINESS ADMINISTRATION

FIFTH SEMESTER – NOVEMBER 2012

BU 5504/BU 5501 – COST ACCOUNTING

Date : 06/11/2012             Dept. No.                                        Max. : 100 Marks

Time : 9:00 – 12:00

PART A

Answer ALL questions:                                                                                           (10×2=20 marks)

1. Mention two differences between Bin Card and Stores Ledger.
2. Define Cost Unit. Give an example.
3. What is Economic Batch Quantity?
4. What is a Labour Hour Rate?
5. Fill in the blanks:
6. 200 units closing work in progress 60% complete is equal to …………equivalent units.
7. Staff welfare expenses are apportioned among departments in the ratio of …………
8. From the following particulars, calculate the economic order quantity.

Annual requirements :  1,600 units

Cost of materials per unit : Rs.40

Cost of placing and receiving one order : Rs.50

Annual carrying cost of inventory : 10% of inventory value.

7. Rate per hour 1.50 per hour

Time allowed for job      20 hours

Time taken                         15 hours

Calculate the total earnings of the worker under Rowan Plan.

8. Stock as on 1/1/2010 : 1000 units @ Rs.5 per unit

Purchases on 1/1/2010 : 9000 units @ Rs.6 per unit

Sale during the month : 8000 units

Calculate the value of closing stock on 31/01/2010, assuming the weighted average method of pricing is adopted.

9. A machine runs for 2000 hours a month, of which 100 hours is for non-production purposes. The fixed expenses of the machine is Rs.3800 per month and the variable expenses are Rs.3.00 per hour when run for production purposes only.

Calculate the machine hour rate.

10. The joint cost of making 40 units of Product A and 120 units of Product B is Rs.66.The selling price of the products at the split off point are Product A Rs.3 per unit and Product B Rs.2 per unit.

Calculate the share of joint cost of each product, if they are apportioned on sale value basis.

PART  B

Answer ANY FIVE questions                                                                                                                       (5×8=40 marks)

11. Write short notes on:
12. Labour turnover
13. Treatment of overtime in Cost Accounts.
14. Perpetual Inventory system
15. Retention money
16. Compare and contrast Financial Accounting with Cost Accounting.
17. Calculate the earnings of workers A and B under Straight Piece-rate System and Taylor’s Differential Piece-rate System from the following particulars.

Normal rate per hour : Rs.18

Standard time per unit : 20 seconds

Differentials to be applied:

80% of piece rate below standard

120% of piece rate at or above standard.

Worker A produces 1,300 units per day and worker B produces 1,500 units per day.

14. Calculate the minimum stock level, maximum stock level and re-ordering level from the following information:
15. Minimum consumption : 100 units per day
16. Maximum consumption : 150 units per day
17. Normal consumption : 120 units per day
18. Re-order period : 10-15 days
19. Re-order quantity : 1500 units
20. Normal delivery time : 12 days
21. From the following data prepare a reconciliation statement and ascertain the profit as per the financial accouts:

Rs.

Profit as per cost accounts                                           1,45,500

Works overheads under-recovered                              9,500

Administrative overheads under-recovered            22,750

Selling overheads over-recovered                               19,500

Overvaluation of opening stock in cost accounts     15,000

Overvaluation of closing stock in cost accounts         7,500

Interest earned during the year                                                      3,750

Rent received during the year                                        27,000

Preliminary expenses written off during the year    27,000

16. A product passes through 2 processes, A and B before it is completed.

100 units of raw material are introduced in Process A at a cost of RS.10 per unit. Other details relating to the 2 processes are:

Process A                            Process B

Labour                                                                  Rs.400                                   Rs.100

Other expenses                                                               Rs.202                                   Rs.  90

Normal loss as a %age of input                   10                                           20

Sale value of normal loss per unit             Rs.3                                        Rs.4

Output in units                                                  75                                           70

Prepare Process accounts, Abnormal Loss Account and Abnormal Gain Account.

17. The Chennai Transport Co has been given a route 50 kms long to run a bus. The bus costs Rs.4,50,000. It has a life of 5 years and no salvage value. It is insured for 4% per annum and has an annual tax of RS.18,000 per annum. Other details are : Garage rent Rs.4,000 per month; Driver’s salary Rs.6,000 per month; Conductor’s salary : Rs.5,000 per month and office expenses Rs.10,000 per month.

Petrol will cost Rs.100 for 20 kms. The bus will run 3 round trips per day, carrying on an average 40 passengers on each trip. It will run for 30 days in a month.

If the company wants a profit of 20% on takings, what should be the fare per passenger kilometre?

18. The following information has been obtained from the records of Left-Centre Corporation for the period from January 1 to June 30, 2012.

Rs.                   Rs.

Cost of raw materials                                      30,000             25,000

Cost of work-in-progress                                12,000             15,000

Transactions during six months are:

Purchases of raw materials                              4,50,000

Wages paid                                                     2,30,000

Factory overheads                                               92,000

Administration overheads                                   30,000

Selling and distribution overheads                     20,000

90% of the production was sold @ a profit of 20% on sales.

Prepare statement of Cost and Profit.

PART  C

Answer ANY TWO questions                                                                     (2×20=40 marks)

19. A company undertook a contract for construction of a large building complex. The construction work commenced on 1^st April 2011 and the following data are available for the year ended 31^st March 2012.

Rs.                                                                          Rs.

Contract price                                     350,000

Work certified                                     200,000

Progress payments received                150,000           Site Office cost                       10,530

Materials issued to site                                      85,000                       Direct expenses             9,020

Direct wages paid                                 62,500                       Work not certified        1,490

Material returned from site                     2,500

The contractors own a plant which originally cost Rs.20,000 has been continuously in use in this contract throughout the year. The residual value of the plant after 5 years of life is expected to be Rs.5,000. Straight line method of depreciation is in use.

As on 31^st March 2012 the direct  wages due amounted to Rs.2,700 and the materials at site were estimated at Rs.2,000.

2012. Prepare the contract account for the year ended 31^st March 2012.
2013. Show the Contractee’s account.
2014. Show the relevant balance sheet entries.
2015. Following are the particulars for the production of 2,000 sewing machines of Nath Engineering Co. Ltd., for the year 2011.

Cost of materials Rs.1,60,000; Wages Rs.2,40,000; Manufacturing expenses Rs.1,00,000; Administration expenses Rs.1,80,000; Selling expenses Rs.40,000; Sales Rs.8,00,000.

Prepare a statement of cost and profit for 2011.

The company plans to manufacture 5,000 sewing machines during 2012.

The following additional information is supplied to you:

1. Price of material is expected to rise by 20%
2. Wages rates are expected show a decrease of 10%
3. Manufacturing expenses will rise in proportion to the combined cost of materials and wages.
4. Selling expenses per unit will remain the same
5. Other expenses will remain unaffected by the rise in output.

Prepare a statement showing the price at which the machine should be sold in 2012 to earn a profit  of 10% on sales.

21. The “Modern Company” is divided into four departments: A and B are production departments and X and Y are service departments. The actual costs for a period are as follows:

Rs.                                                                   Rs.

Rent                                        1,000   Supervision                                         1,500

Repairs to plant                           600  Fire insurance in respect of stock            500

Depreciation of Plant                  450  Power                                                      900

Light                                                       350

The following information is available in respect of the four departments:

Dept A                        Dept B                        Dept X                        Dept Y

Area (sq.metres)                      1500                1100                     900                 500

Number of employees                  20                    15                      10                     5

Direct wages (Rs.)                  6000                4000                   3000               2000

Value of Plant (Rs.)                24000              18000              12000                6000

HP of Plant                                    24                    18                    12                     6

Light points                                    15                    10                      5                     5

Direct material                           4000                3000                1500                1000

Value of stock                            1000                  600                  400                  –

Apportion Service Dept X’s  expenses between A, B and Y in the ratio of 2:2:1 and Service Dept Y’s expenses between A and B in the ratio of direct wages.

If the estimated machine hour in Departments A and B are 2000 hours and 1800 hours respectively, calculate the Machine Hour Rate for each department.

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