LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.A. DEGREE EXAMINATION –CORPORATE SECR.
SUPPLEMENTARY EXAMINATION – JUNE 2007
CR 5501 - COST ACCOUNTING
Date & Time: 26/06/2007 / 9:00 - 12:00
Dept. No.
Max. : 100 Marks
SECTION: A
Answer all questions:
10 x 2 = 20
1) Define Cost Accounting.
2) State whether the following statements are true or false:
a) Variable cost increases or influenced in proportion to the output.
b) Operating Costing is suitable for Service Industries
3) Calculate Economic Ordering quantity: annual usage; 600 units, Cost of Materials per unit
Rs.20; Cost placing and receiving one order Rs.12; annual carrying cost per annum 20%.
4) Calculate the total earnings from the following data under Halsey Plan.
Standard Time: 10 hours; Time Taken: 8 hours; Time rate: Rs.2.50 per hour.
5) Fill in the blanks:
a) Power cost is apportioned on the basis of ---------- hours.
b) Crèche expenses are apportioned on the basis of ----------------------------.
6) Write short note on equivalent production units.
7) What is escalation clause?
8) A transport service company is running four buses between two towns, which are 50kms.
Apart. Seating capacity of each bus is 40 passengers. Actual passengers carried were 75% of
the seating capacity. All the four buses ran on all the days and of the month if April 2006.
Each bus made one round trip per day. Calculate the total kilometers and total passenger
kilometers for the month.
9) The following details available for the month of May 2005 relating to two service
departments “A” and “B” and production departments R and S.
Dept
Amount
Apportionment basis
Rs.
B
R
S
A
20000
25%
40%
35%
B
15000
40%
60%
R
30000
S
32000
Prepare a summary of overhead distribution under the stepladder method.
10) Answer the following questions in a sentence or two: A) How the normal loss treated in
process costing? B) How is abnormal loss valued in process costing?
SECTION – B
Answer any five only.
5 x 8 = 40
11) From the following particulars work out the earnings for the week of a worker under (A)
Straight Piece- rate; (B) Taylor’s Differential piece rate; (C) Halsey Premium System; (D)
Rowan System.
Number of working hours per week-48.
Wages per hour – Rs.3.75
Normal time per piece – 20 minutes.
Rate per piece – Rs.1.50
Normal output per week – 120 pieces
Actual output for the week – 150 pieces.
12) Draw a stores ledger card recording the following transaction under LIFO method.
2000 July
1 Opening stock 50 tonnes at Rs.10.20 per tonne
9 Issued 30 tonnes.
12 Received 60 tonnes at RS.10.30 per tonne.
14 Issued 25 tonnes
14 Stock verification reveals loss of I tonne.
25 Issued 40 tonnes
27 Received 22 tonnes at Rs.10.40 per tonne.
30 Issued 30 tonnes
13) In process B 75 units of commodity were transferred from process A at a cost of Rs.1310.
the additional expenses incurred by the process were Rs.190. 20% of units entered are
normally lost and sold @ Rs.4. per unit. The output of the process was 70 units. Prepare
process account and abnormal loss or gain account.
14) Distinguish between Financial accounting and Cost accounting.
15) Briefly explain various inventory control techniques.
16) What is Activity Based Costing? Differentiate it from the traditional costing system. Also
state the advantages of ABC.
17) U construction Ltd. undertook a contract in 1998 for road construction. The contract price
was Rs.20, 00,000 and its estimated cost of completion would be Rs.18,40,000. At the end
of 1998 the company received Rs.7, 20,000 representing 90% of work certified. Work not
yet certified was Rs.20, 000. Expenditure incurred on the contract during 1998 was as
follows:
Materials Rs.1,00,000, Labour Rs.6, 00,000, Plant Rs.40, 000, Materials costing Rs.10,000
were damaged and had to be disposed for Rs.2000. Plant to be depreciated by 25% Prepare
contract account for 1998 in the books of U construction Ltd. also show the profit can be
reasonable credited to profit and loss account in respect of the contract.
18) You are required to calculate a suggested fare per passenger / k.m. from the following
information for a mini bus:
a) Length of route: 30k.m
b) Purchase price: Rs.4, 00,000
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c) Part of above cost met by loan, annual interest of which is Rs.10, 000 p.a
d) Other annual charges: insurance Rs.15000, Garage RentRs.9000, Road tax Rs.3, 000
Repairs and Maintenance Rs.15, 000, Administration Charges Rs.5, 000.
e) Running Expenses: Driver and Conductor Rs.5, 000 p.m Repairs/Replacement of
tyre tube Rs.3, 600 p.a. Diesel oil cost per k.m Rs.5
f) Effective life of vehicle is estimated at 5 years at the end of which it will have a
scrap value of Rs.10, 000
g) Mini bus has 20 seats and is planned to make six number of two way trips for 25
days p.m
h) Provide profit @ 25% of total cost.
SECTION – C
Answer any two only.
2 x 20 = 40
19) During a particular year the auditors certified the financial accounts showing a profit of
RS.1, 68,000 whereas the same as per costing books was coming out to be Rs.2, 40,000.
Given the following information you are required to prepare a reconciliation statement
showing clearly the reasons for the gap:
Trading and Profit and Loss Account
Particulars
To Opening Stock
To Purchases
To Direct Wages
To Factory Overheads
To Gross Profit C/D
Rs.
8,20,000
24,72,000
2,30,000
2,10,000
4,83,000
------------42,15,000
-------------
Particulars
By Sales
By Closing Stock
Rs.
34,65,000
7,50,000
------------42,15,000
--------------
Profit &loss A/c
To Administrative Expenses
95,000
By Gross Profit b/d
4,83,000
To Selling Expenses
2,25,000
By Sundry Incomes
5,000
To Net Profit
1,68,000
---------------------------4,88,000
4,88,000
----------------------------The Costing records show:
1) Book value of closing stock Rs.7, 80,000
2) Factory overheads have been absorbed to the extent of Rs.1, 89,800
3) Sundry income is not considered
4) Administrative expenses are recovered at 3% of sales.
5) Total absorption of direct wages Rs.2, 46,000
6) Selling prices include 5% for selling expenses.
20) A factory has three production departments A, B and C and two service departments X and
Y. the budgeted expenditure for the month of march 2002 are given below:
Rs.
Stores overhead
5,000
Indirect wages
40, 000
Insurance
14, 000
Rent
21,000
3
Power
Lighting
Depreciation
Other Overheads
28, 000
10, 000
2,10, 000
80, 000
The other details are:
Particulars
A
Direct wages (Rs.)
1,50,000
Floor Area (sq.mtrs)
800
Value of Machine (Rs) 4,00,000
Horse Power
80
Direct materials (Rs.)
20,000
No. of light points
16
B
80,000
1000
5,00,000
100
40,000
14
C
X
1,20,000 20,000
1200
600
4,00,000 60,000
80
10
20,000 10,000
10
6
Y
30,000
600
40,000
10
10,000
4
Service department overheads are apportioned on the following basis:
A
B
C
X
Y
Service Dept. X:
50
30
10
-10
Service Dept. Y:
30
40
20
10
-Assuming that overheads are recovered as percentage on direct wages, calculate the
overhead recovery rates.
21) The following data are available is respect of Process I for a month.
Opening work in-progress: 1,800 units at Rs.9,000
Degree of completion:
Materials 100%, Labour 60%, Overhead 60%
Input of Materials:
18,200 units at Rs.54, 600
Direct wages:
Rs.16,400
Production overhead:
Rs.32,800
Units Scrapped:
2,400 units
Degree of completion:
Materials 100%, Labour 70%, Overhead 70%
Closing work in progress:
2,000 units
Degree of completion:
Materials 100%, Labour 80%, Overhaead 80%
Units transferred to next
Process:
15,600 units.
Normal process loss in 10% of total input (opening stock plus units put in); Scrap value is
Rs.3 per unit.
Required:
 Compute equivalent production
 Compute cost per equivalent unit for each element and cost of abnormal loss or gain,
closing WIP and units transferred to the next process; and
 Prepare necessary accounts.
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