Cost Accounting

Attempt any five of the following questions:

(a) Define cost accounting

(b) What is the difference between traditional costing and activity based costing?

(c) List out the steps involved in labour cost control. . .

(d) What do you mean by over absorption of overheads?

(e) Briefly explain the method of calculating profit on cost price and selling price

(f) How work in progress is shown in contract account and balance sheet?

(g) Give five expenditures items which are not shown in cost accounts.

(h) Differentiate between joint products and By-products with examples. 

Calculate the wages of a worker under Halsey Premium Plan and Rowan Premium Plan.

Standard time                    50 Hours

Actual time                        40 Hours

Wages rate                         Rs. 5 per hour

Bonus                                 50% for time saved

Dearness Allowance         Re. 1 per day for 8 hours

(a) A worker completes a job in a certain number of hours. The standard time allowed for      the job is 12 hours and the hourly rate of wages is Rs. 5 per hour. The worker earns, at the rate of 50%, a bonus of Rs. 7.5 under Halsey Plan.

Ascertain the total earnings of the worker under Rowan Premium Plan. Also calculate the effective rate of earning per hour.

(b) Calculate Machine Hour Rate from the following:

Cost of Machine                             Rs. 1,30,000

Installation Charges                      Rs 20,000

WorkingLife                                     10 years

Working Hours                                1,500 per year

Repairing Charges 40% of Depreciation

Power 10 units per hour @ Rs. 0.10 per unit

Lubricating oil Rs. 6 per day of 8 hours.

Consumable store Rs. 10 per day of 8 hours

Wages of Operator Rs. 4 per day.

Machine Insurance 40% of Depreciation. 

"Cost may be classified in a variety of ways according to their nature and the information needs of management." Explain and discuss this statement giving examples of classifications required for different purposes.

Prepare the process account form the following information: 

The output during the period is 2,000 units, the overheads are Rs. 7,800

Allocate the overheads on the basis as given below: In process X 150% of Y and in Process Z 50% of Process X. 

A manufacturer finds that an increase in the cost of production has taken place. Formerly his cost-Raw Materials 30%; Wages 20%; Rent rates etc. 5%; Fuel 10%; General Expenses 15%;. Now there has been increase of 50% in fuel; 30% in materials; 25% in wages and 20% in rent and rates etc.

He consults you as to what percentage he must add to the selling price in order to obtain the same profit? What would be the result of your calculations and how would you prove to him that they were correct?

(a) A worker completes a job in a certain number of hours. The standard time allowed for      the job is 12 hours and the hourly rate of wages is Rs. 5 per hour. The worker earns, at the rate of 50%, a bonus of Rs. 7.5 under Halsey Plan.

Ascertain the total earnings of the worker under Rowan Premium Plan. Also calculate the effective rate of earning per hour.

(b) Calculate Machine Hour Rate from the following:

Cost of Machine                             Rs. 1,30,000

Installation Charges                      Rs 20,000

WorkingLife                                     10 years

Working Hours                                1,500 per year

Repairing Charges 40% of Depreciation

Power 10 units per hour @ Rs. 0.10 per unit

Lubricating oil Rs. 6 per day of 8 hours.

Consumable store Rs. 10 per day of 8 hours

Wages of Operator Rs. 4 per day.

Machine Insurance 40% of Depreciation. 

Prepare a cost sheet with imaginary figures.

What is meant by operating cost and operating costing? In which industries it is used? Prepare operating cost sheet with imaginary figures 

What do you understand by normal and abnormal wastage of materials during the process of manufacture? Explain how each should be treated in cost accounts. 

Write short notes on any two of the following: -

(a) Memorandum Reconciliation Statement

(b) Transport Costing.

(c) Power House Costing 

A good system of costing serves as a means of control over expenditure and helps to secure economy in manufacturing." Discuss. . 

A company manufactures 5,000 units of a product per month. The cost of placing an order is Rs. 100. The purchase price of the raw material is Rs. 10 per kg. The re-order period is 4 to 8 weeks. The consumption of raw materials varies from 100 kg to 450 kg per week, the average consumption being 275 kg The carrying cost of inventory is 20% per annum. You are required to calculate-

(a) Re-order Quantity (b) Re order Level (c) Maximum Level (d) Minimum Level  le) Average Stock Level

What do you mean by absorbed overhead? Under what circumstance will a difference arise between absorbed overhead and actual overhead? How will you dispose of the balance? 

What is contract costing? Is it desirable to take profit on incomplete contract? If so, to what extent and why? 

What are the objectives of material control? Discuss the methods of pricing the issues of material and their suitability.

Write up a Contract Account form the following

The contract was completed in 26 weeks at the end of which plant was returned subject to a depreciation of 20% on the original cost. The value of loose tools and stores returned were Rs. 500 and Rs. 1,00 respectively. The value of the tractor was Rs. 1,20,000 and thedepreciation is to charged to this contract @20% per year. Provided office overheads @10% on works cost. The contract was agreed to be performed 50 total cost 

"Costs may be classified in a variety of ways according to their nature and the information needs of the management." Explain and discuss this statement giving examples of classifications required for different purposes.

The product of a company passes through three distinct processes completion. They are known as A, B and C. From past experience it ascertained that wastage is incurred in each process as under: Process A 2%; Process B 5%; Process C 10%. In each case, the percentage of wastage is computed on the number of units entering the process concerned. The wastage of each process possesses a scrap value. The wastage of process and B is sold at Rs. 5 per 100 units and that of process Cat Rs. 20 per 11 units.

- The output of each process passes immediately to the next process and the finished units are passed from Process C into stock. The following information is obtained:

20,000 units have been issued to Process A at a cost of Rs. 10,000. The output of each process has been as under Process A 19,500; Process B 18.800; Process C 16,000. There is no work-in-progress in any process. Prepare Process Account making the calculations to the nearest rupee. 

Write notes on:- (a) Normal profits

The cost of making 40 pianos of which 20 are of Grade A and 20 are of Grade B is Rs. 80,000. Pianos of Grade B cost 55% and Pianos of Grade A cost 45% of the total. Ascertain the cost of each grade and add thereto 10 percent for indirect expenses. Transport and space in the showroom cost Rs. 60 per piano. Sell expenses and advertising are 10 percent of the selling price which is Rs. 3150 in the case of Grade A and 3,885 in the case of Grade B. Write up a Cost Sheet showing the percentage of profit on total cost and selling price respectively on each Grade.

Job v/s Batch Costing

Escalation Clause

Contract Profit and Loss A/C

Process Costing

Abnormal loss

Find out the remuneration of a worker on the basis of

(a) Day Rate, (b) Piece Work Rate. (c) Halsey Scheme, (d) Rowan Scheme, from the following information:

Sachin Limited has three manufacturing departments A, B and C and one service department S. The following particulars are available for one month of 25 working days of 8 hours each day. Al departments work all days with full attendance. 

Calculate the Labour Hour Rate for each of the departments A, B and C.