LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.B.A. DEGREE EXAMINATION –BUSINESS ADMINISTRATION
SUPPLIMENTARY EXAMINATION – JUNE 2007
BU 6600 - ADV. COST MANAGEMENT ACCOUNTS
Date & Time: 25/06/2007 / 9:00 - 12:00
Dept. No.
Max. : 100 Marks
SECTION-A
(10X2=20)
(Answer all questions)
1.How will you deal with the under valuation and overvaluation of stocks at the time of
reconciling cost and financial profits?
2.What do you mean by surveyor’s certificate?
3.What do you understand by escalation clause?
4.What are the causes of process losses?
5.Calculate the economic batch quantity for a chemical manufacturing company from
following details.
Annual demand for the product-16,000 units. Setting up cost.Rs.50
Carrying cost per unit of production Rs.10 per annum.
6.State the importance of net present value.
7.Write a note on “Fixed budget”.
8.What is meant by Variance analysis?
9.The standard rate per labour hour was Rs.20.However during the month payment was
made for 26,000 labour hours at Rs.22 each.
Calculate labour rate variance.
10.Explain the term “Zero based budgeting”.
SECTION-B
(5x8=40)
Answer any five questions, choosing not less than Two questions from each group.
GROUP-I
11.Compare and contrast between process costing and job costing.
12.The following details are given by a company using job costing. The following
data is provided from its books for the year ending 31-12-2004.
Rs
Direct Materials
1,00,000
Direct Wages
50,000
Factory overheads
55,000
Administration overheads
55,000
Selling overheads
40,000
Profit
75,000
a) Prepare a job cost sheet indicating prime cost, works cost , production cost ,cost of sales and
the sales value.
b) In 2005 the company receives an order for a number jobs .It is estimated that
Direct materials required will be Rs.1,40,000 and direct labour costs Rs.60,000
What should be the price to be charged by the company for these jobs if theCompany intends
to earn the same profit on sales as in 2004.Assuming that selling and distribution overheads
have gone up by 15%. The company recovers
Factory overheads as percentage of direct wages and administrative and selling
Overheads as percentage of works cost.
13.Pallavan Transport corporation runs the following fleet of buses in a particular area
of Chennai for 30 days in a month.25-buses of 50 passengers capacity ,on an average
each bus makes 10 trips a day covering a distance of 8 kms in each trip with 75% of
Seats occupied. Generally, 10% of buses are kept away from the roads for repair.
Monthly expenses
Rent
Road tax
Salary of chief operating manager
Salary of three assistant managers
Salary of four supervisors
Wages of thirty cleaners
Wages of twenty five drivers
Wages of twenty five conductors
Consumable stores
Diesel
Lubricants
Replacement of tyres
Miscellaneous expenses
Depreciation
Work shop expenses
Rs
2,500
500
1,500
800 each
400 each
100 each
240 each
200 each
4,500
34,000
5,500
1,750
2,750
6,500
3,500
Calculate the cost per passenger km of operating the service.
14. A manufacturing company’s product passes through two distinct processes A and B
and then to finished product. The normal loss is estimated as follows.
Process-A – 5%input , process-B-10% of input.
The scrap value of the loss in process A is Rs.8 per 100 units and in process B
Is Rs.10 per 100 units. The process figures are as follows.
Process-A Process-B
Rs
Rs
Materials
3,000
1,500
Wages
3,500
2,000
Factory expenses
1,000
1,000
5,000 units were introduced into process A at a cost of Rs.2,500.The outputs were;
Process-A ; 4,700 units ,Process- B ; 4,300 units.
Prepare Process cost accounts showing the cost of output.
GROUP-II
15.Briefly explain the classification of budgets on the basis of functions.
16.The following figures relate to a product for the quarter ending31-3-2005 are
available.
Budgeted sales ; January – 3,00,000 units
February - 2,40,000 units
March - 3,60,000 units
Stock position; 1-1-2005 – 50% of January’s sales
31-3-2005- 80,000 units.
31-1-2005-40% of February’s sales.
28-2-2005-60% of March’s sales.
You are required to prepare a production budget for the quarter ending 31-3-2005.
17.From the following particulars ,calculate the Material variances.
a) Material cost variance b) Material price variance c) Material usage variance
d)Material mix variance.
Material
Standard Qty
Standard price Actual Qty
Actual price
KGS
Rs
KGS
(Rs)
X
20
5
24
4.00
Y
16
4
14
4.50
Z
12
3
10
3.25
--------48
48
2
18.From the following particulars ,find out the profitable product mix and prepare a
Statement of profitability.
Product-A
1,500
60
Maximum production(units)
Selling price per unit(Rs)
Requirements per unit;
Direct material (kg)
Direct labour (hrs)
Variable overheads(Rs)
Cost of direct material per k.g.(Rs)
Fixed overheads (Rs)
Direct wages per hour (Rs)
Product-B
2,000
55
5
4
9
5
4
2
3
3
14
5
4
2
Product-C
1,000
50
4
2
6
5
4
2
Total availability of direct material 12,000.kgs.
Total availability of direct labour hours 10,000.
All products A,B and C are produced from the same direct materials using the same type
Of machines.Consider both material and labour as key factors.
SECTION-C
(Answer any TWO Questions).
(2x20=40)
19.a)The following transactions have been extracted from the financial books of -J.
Ltd, for the year ending 31-12-2004.
Units
RS
Sales
Materials
Wages
Factory overheads
Office and administration exps.
Selling and distribution expenses
Closing stock of finished goods
20,000
1,230
W.I.P.
----------Materials
Labour
Factory overheads
2,50,000
1,00,000
50,000
45,000
26,000
18,000
15,000
3,000
2,000
2,000
Goodwill written off
20,000
Interest on capital
2,000
In cost books factory overheads are charged at 100% on wages , administration Overheads at 10%
on factory cost and selling and distribution overheads at Re.1
Per unit sold.
Prepare;
i)
A statement showing profit as per cost accounts
ii)
Profit and loss account as per financial books and
iii)
A statement of reconciliation reconciling profit as per cost accounts and financial accounts.
OR
3
19.b) A construction company having an authorized capital of Rs.1,00,000 divided into
1000 ordinary shares of Rs.100 each , commenced operations on 1-1-2005 and
during the period it was engaged in one cotract. The contract price was Rs.4,00,000
The trial balance extracted from their books on 31-12-2005 stood as follows.
Rs
Rs
Share capital
Sundry creditors
Land & building
Cash at bank
Materials
Plant
Wages
Expenses
Cash received being 80% of work certified.
--80,000
--8,000
34,000
9,000
80,000
15,000
1,05,000
5,000
--1,60,000
2,48,000
2,48,000
Of the plant and materials charged to the contract plant costing Rs.2,000 and
Materials costing Rs.2,000 were destroyed in an accident . On 31-12-2005, plant
Which costs Rs.4,000 was returned to stores. Value of material on site was 4,000
And cost of work done but not certified was Rs.2,000. Charges depreciation at 10%
On plant and carry to profit& loss a/c two third of profit. Prepare contract account
For the year and balance sheet as on 31-12-2005 and show the amount to be credited
To P&L A/C.
20.a) The cost of an article at a capacity level of 5,000 units is given below;
Material cost
Labour cost
Power
Repairs
Stores
Inspection
Depreciation
Administrative overheads
Selling overheads
Rs
25,000 (100% variable)
15,000 (100% variable)
1,250 (100%Variable)
2,000 (75% variable)
1,000 (100% variable)
500 (20% variable)
10,000 (100% variable)
5,000 (25% variable)
3,000 (25% variable)
62,750
Cost per unit Rs.12.55
Calculate the total cost and cost per unit of the product at production levels of
4,000 and 6,000 units.
.
OR
20.b)-1). A Ltd company has Rs.80,000 to invest .It has two attractive proposals at hand
for consideration. The alternatives are;
Investment outlay
Year;
1
2
3
4
Proposal –X
Rs.
80,000
32,000
32,000
36,000
---1,00,000
Proposal-Y
Rs.
80,000
30,000
30,000
30,000
10,000
1,00,000
4
Required ;
a) Which investment proposal would you recommend under pay- back period
Method.
b) Would your decision be different if proposal Y has Rs.40,000 in the third year
Instead of Rs.30,000 cash inflow?.
2.A Company is considering two mutually exclusive projects. Both require an initial
Cash outlay of Rs.10,000 each and have a life of 5 years. The company’s required rate of return
is 10% and pays a tax at 50% rate. The projects will be depreciated on a straight line basis. The net
cash flows before taxes and depreciation are expected to be as follows.
Year
1
2
3
4
5
Project-I
Rs.
4,000
4,000
4,000
4,000
4,000
Project-II
Rs.
6,000
3,000
2,000
5,000
5,000
Present value at 10%
0.909
0.826
0.751
0.683
0.621
Calculate ; Net present value of each project.
Advise the company as to which project should be accepted and why?
*****************
5