Brief Answer Questions
[10 × 2 = 20]Write any two limitations of cost accounting.
Define the indirect cost with an example?
Define "Just in Time" inventory policy.
Write down the meaning of labour turnover.
What is normal loss?
A manufacturing company provides you the following information:
Total cost at economic order quantity: Rs. 3,000
Ordering cost per order: Rs. 60
Cost per unit of material: Rs. 20
Carrying cost is 10% of inventory value.
Required: Annual requirement.
The following data are given to you:
Standard time allowed: 160 hrs.
Actual time taken: 140 hrs.
Wage rate per hour: Rs. 20
Required: Bonus under Rowan premium plan.
A Company Ltd. is working now at its annual normal capacity of 10,000 units. The total cost per unit is Rs. 50. The annual fixed costs are Rs. 160,000.
Required: Total cost at 80% of the normal capacity.
The following information is available in respect of a material.
Maximum stock level = 20,000 units
Consumption per day = 2,000 – 3,000 units
Re-order period = 4 – 6 days
Required: Reorder quantity.
Following particulars are provided:
Cost of selection: Rs. 30,000
Training cost: Rs. 24,000
Cost of welfare services: Rs. 26,000
Loss due to inefficiency of new workers: Rs. 10,000
Average no. of workers: 50
No. of workers replaced: 100
Required: Replacement cost per employee.
Short Answer Questions (Attempt any FIVE)
[5 × 10 = 50](a) The planned production units for coming four months of a company are:
| January | February | March | April |
| 12,000 units | 10,000 units | 11,000 units | 9,000 units |
Each unit of finished product needs 5 kg of material @ Rs. 2 per kg. The company has a policy of keeping ending inventory of raw material is 50 percent of raw material required to same month's production need.
Required: Material Purchase Budget for three months ending March. [5]
(b) Differentiate between main product and by-product. [5]
(a) A company produces two products: A and B. Both products are produced on the same equipment and use similar processes. The information for output and the cost of activities are given below:
| Product A | Product B | |
| Output in units | 10,000 | 12,000 |
| Machine hour used | 12,000 | 15,000 |
| No. of Purchased Order | 50 | 60 |
| No. of Set-Ups | 4 | 6 |
The indirect cost of the different activities are as follows:
Volume related cost: 68,000
Purchase related cost: 55,000
Set up related cost: 30,000
Required: Cost per unit under activity-based costing method. [5]
(b) What is job order costing? Why is it needed? [2+3]
Following standard and actual data are given to you:
| Labour | Standard | Actual | ||
| No. | Rate per hour | No. | Rate per hour | |
| Skilled | 2 | Rs. 10 | 1 | Rs. 11 |
| Semi-Skilled | 3 | Rs. 7 | 3 | Rs. 8 |
| Unskilled | 4 | Rs. 5 | 5 | Rs. 4 |
| Total | 9 | 9 | ||
Standard output per gang hours is 0.25 units. 8,000 hours needed to work and paid. Actual output produced 2,200 units in 8,000 hours.
Required: Labour Variances. [10]
The total cost and profit of a manufacturing company for two years were as follows:
| Year | Total cost (Rs.) | Profit (Rs.) |
| I | 400,000 | 50,000 |
| II | 600,000 | 100,000 |
Required:
Break-even point in Rs.
Break-even point in units if selling price per unit is Rs. 100.
Sales to earn desired profit after tax of Rs. 30,000 if tax rate is 25%.
Profit when sales are Rs. 800,000.
Margin of safety if profit is Rs. 50,000. [10]
"Optimum investment in inventory is the main essence of inventory management." Clarify this statement with the help of objectives of Inventory Management. [10]
"Management accounting is effective tool for formulating plan & policies and taking right decisions." Explain this statement with the help of its significance. [10]
Long Answer Questions (Attempt any TWO)
[2 × 15 = 30]The following is summary of the entries in a contract ledger as on 31st Chaitra 2080.
| Material purchase | Rs. 60,000 |
| Material from store | Rs. 10,000 |
| Direct labour | Rs. 15,000 |
| Other expenses | Rs. 12,000 |
| Plant | Rs. 60,000 |
| Scrap sold | Rs. 4,000 |
The additional information are as follows:
i. The cost of work uncertified included material Rs. 5,000 and other expenses Rs. 3,000.
ii. Material lost by theft Rs. 1,000.
iii. Plant costing Rs. 8,000 sold for Rs. 7,000.
iv. Depreciation on plant at @ 15% p.a.
v. Material at site Rs. 2,000.
vi. Cash received from contract Rs. 120,000 being 80% of work certified.
vii. Contract price Rs. 200,000.
Required:
Contract Account
Contractee's Account
Work in progress Account
Balance Sheet [7+2+2+4]
The following details are taken from a factory:
| Particulars | Process I (Rs.) | Process II (Rs.) |
| Opening stock | 20,000 | 30,000 |
| Direct material | 80,000 | 60,000 |
| Direct wages | 60,000 | 40,000 |
| Production overhead | 40,000 | 20,000 |
| Closing stock on prime cost | 50,000 | 60,000 |
| Inter process profit on opening stock | 5,000 |
The output of process I is transferred to process II at a profit of 20% on cost price and that of process II to finished stock at a profit of 25% on transfer price. The factory sold 80% of the finished goods for Rs. 420,000.
Required:
Process I Accounts
Process II Account
Finished stock account
Actual realized profit [4+5+4+2]
(a) Explain in brief the meaning nature and scope of cost reduction. [2+3+3]
(b) What do you mean by batch costing? Also, explain its features. [3+4]