Brief Answer Questions
[10 × 2 = 20]State any two importance of cost accounting.
Define direct cost with suitable examples?
Write any two motives of holding inventory.
Write any two causes of labour turnover.
What do you mean by service costing?
Following information is given :
Annual requirement: 3600 units @ Rs. 20 each
Carrying cost: 10% of inventory value
Cost of placing an order: Rs. 400
Required: Number of order of EOQ.
Difference in total cost is Rs. 100,000 between 40,000 units and 20,000 units. The total fixed cost is Rs. 200,000.
Required: Total cost for 30,000 units.
The following data are given to you:
Standard output = 1,000 units
Actual output = 1,200 units
Normal price rate = Rs. 20
Required: Total wages under Taylor's differential piece rate system.
Following information are supplied to you:
Consumption per day: 800 – 1200 units
Re-order period: 3 – 5 days
Maximum stock level: 6000 units
Required: Re-order quantity.
Following particulars are provided:
Cost of selection: Rs. 25,000
Training cost: Rs. 20,000
Cost of welfare services: Rs. 22,000
Pension scheme: Rs. 15,000
Loss due to inefficiency of new workers: Rs. 20,000
Average no. of workers: 1000
No. of workers replaced: 200
Required: Preventive cost per employee.
Short Answer Questions (Attempt any FIVE)
[5 × 10 = 50](a) What is job order costing? Explain the importance of job order costing. [2+3]
(b) Following are the particulars of an industry manufacturing two products X and Y:
| Product | Output in units | Machine hour per unit | No. of set ups | No. of Orders |
| X | 2,000 | 4 | 40 | 20 |
| Y | 4,000 | 3 | 60 | 30 |
The overhead cost and cost drivers are as follows:
| Activities | Cost drivers | Overheads |
| Volume related cost | Machine hours | Rs. 200,000 |
| Set ups cost | No. of set ups | Rs. 200,000 |
| Purchase related cost | No. of orders | Rs. 100,000 |
Required: Cost per unit under Activity Based Costing method. [5]
(a) Explain the characteristics of joint product and by-product. [5]
(b) The following information are given:
| Materials | Standard | Actual | ||
| Quantity | Price (Rs.) | Quantity | Price (Rs.) | |
| A | 60% | Rs. 8 per kg | 50 kg | Rs. 9 per kg |
| B | 40% | Rs. 5 per kg | 250 kg | Rs. 8 per kg |
Standard loss is 10% and actual output is 280 kg.
Required: Material variances. [5]
A manufacturing company with normal capacity of 30,000 units provides the following particulars:
| Productions units | 25,000 |
| Sales units | 26,000 |
| Closing stock units | 4,000 |
| Direct material per unit | Rs. 6 |
| Direct labour per unit | Rs. 4 |
| Variable manufacturing cost per unit | Rs. 5 |
| Variable selling expenses per unit | Rs. 2 |
| Selling price per unit | Rs. 30 |
| Fixed manufacturing OH per unit | Rs. 5 |
| Fixed administrative and selling expenses | Rs. 72,000 |
Required:
a. Income statement under absorption costing system.
b. Reconciled profit under variable costing system. [7+3]
The sales revenue and total cost of a manufacturing company for two years were as follows:
| Year | Sales revenues | Total Cost |
| I | Rs. 450,000 | Rs. 400,000 |
| II | Rs. 700,000 | Rs. 600,000 |
Required:
a. Profit volume ratio
b. Fixed cost
c. Break-even point in Rs.
d. Break-even point in units if selling price per unit is Rs. 10
e. Sales to earn desired profit after tax of Rs. 75,000 if tax rate is 25%
f. Profit when sales are Rs. 80,000
g. Margin of safety if profit is Rs. 125,000 [1+1+2+1+2+1+2]
"Budget is an important tool for the development of organizations." Explain. [10]
Define management accounting. Explain the importance of management accounting in the modern business world. [10]
Long Answer Questions (Attempt any TWO)
[2 × 15 = 30]The following is a summary of the entries in a contract ledger as on 31st Chaitra 2081.
| Material purchased | Rs. 70,000 |
| Material from store | Rs. 200,000 |
| Direct labour | Rs. 100,000 |
| Site office expenses | Rs. 30,000 |
| Other expenses | Rs. 10,000 |
| Plant installed | Rs. 200,000 |
| Sub-contract cost | Rs. 10,000 |
The additional information are as follows:
i. 5% of the value of work certified still remained to be certified.
ii. Material returned to store Rs. 8,000.
iii. Material costing Rs. 15,000 sold at a profit of Rs. 1,000.
iv. Depreciation on plant @ 15% p.a.
v. Material at site Rs. 10,000
vi. Cash received from contractor Rs. 540,000 being 90% of work certified.
vii. Contract price Rs. 900,000.
Required:
a. Contract account
b. Contractee's account
c. Work in progress account
d. Balance sheet [7+2+2+4]
The following details are given to you:
| Particulars | Process A | Process B | Process C |
| Raw material used 1,000 kg | Rs. 60,000 | -- | -- |
| Indirect material | Rs. 52,000 | Rs. 39,600 | Rs. 59,240 |
| Labour cost | Rs. 40,000 | Rs. 60,000 | Rs. 80,000 |
| Production overhead 100% of labour | |||
| Actual output kg | 950 | 840 | 750 |
| Normal loss | 5% | 10% | 15% |
| Sale of scrap per kg | Rs. 40 | Rs. 80 | Rs. 100 |
Required:
a. Process accounts
b. Normal loss account
c. Abnormal gain account
d. Abnormal loss account [4+5+4+2]
"Cost reduction is the accomplishment of a permanent and real reduction in per unit cost of goods without compromising the value it is intended to deliver." Comment. And also differentiate between cost reduction and cost control.