LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034 B.Com. DEGREE EXAMINATION – COMMERCE SUPPLEMENTARY EXAMINATION – JUNE 2008 CO 5501 - COST ACCOUNTING Date : 27-06-08 Time : 9.00 – 12.00 Dept. No. Max. : 100 Marks PART A Answer ALL questions Marks : 10 x 2 = 20 1. 2. 3. 4. 5. 6. 7. 8. Mention 2 expenses not included in Cost. Distinguish between ‘Fixed’ and ‘Variable’ cost. What is ‘Overtime Premium’? State 2 methods of absorbing factory overheads What is ‘Opportunity Cost’? What are ‘Joint products’ and ‘By products’? What is ‘Margin of Safety’? Selling price per unit Rs.40; Variable cost per unit Rs.25; Fixed cost Rs.15,000. Calculate break even sales in units and rupees. 9. Standard time allowed for a job is 10 hours. X completes the job in 8 hours. Rate per hour is Rs.10. Calculate his earnings under Halsey and Rowan Plan. 10. Year Sales(Rs.) Profit(Rs.) 2006 2,00,000 20,000 2007 2,50,000 30,000 Calculate: a) Profit volume ratio b) Sales to earn a profit of Rs.60,000. PART B Answer ANY FIVE questions Marks : 5 x 8 = 40 11. Explain the reasons for the difference between the profits shown in Financial Accounts and that shown in the Cost Accounts. 12. Distinguish between ‘Job costing’ and ‘Process costing’. 13. What are the steps involved and problems faced in installing a Costing system? 14a.Calculate the minimum stock level, maximum stock level and re-ordering level from the following information: i) Minimum consumption = 100 units per day ii) Maximum consumption = 150 units per day iii) Normal consumption = 120 units per day iv) Re-order period = 10-15 days v) Re-order quantity = 1500 units vi) Normal re-order period = 12 days 14b. Find out the economic ordering quantity (E.O.Q) from the following particulars. Annual usage : 6,000 units Cost of material per unit : Rs.20 Cost of placing and receiving one order : Rs.60 Annual carrying cost of one unit : 10% of inventory value 1 15. From the following data calculate the cost per km. of a vehicle: Value of vehicles Rs.15,000 Road licence fee per year Rs. 500 Insurance charges per year Rs. 100 Garage rent per year Rs. 600 Driver’s wages per month Rs. 200 Cost of petrol per litre Rs. 0.80 Km. per litre 8 Proportionate charge for tyres and maintenance per km Re. 0.20 Estimated life 1,50,000 kms Estimated annual kilometers 6,000 Ignore interest on capital. 16. Calculate the earnings of workers A and B under Straight Piece-rate System and Taylor’s Differential Piece-rate System from the following particulars: Normal rate per hour Rs. 1.80 Standard time per unit - 20 seconds Differentials to be applied: 80% of piece rate below standard 120% of piece rate at or above standard Worker A produces 1,300 units per day and worker B produces 1,500 units per day of 8 Hours. 17. From the following information relating to the machine, ‘Shylock’ installed in a factory, work out the machine hour rate: Purchase price of the machine with scrap value of zero Rs.90,000 Installation and incidental charges incurred on the machine Rs.10,000 Life of the machine is 10 years of 2,000 working hours each Repairing charges – 50% of depreciation Machine consumes 10 units of electric power per hour @ 10 p per unit. Oil expenses @ Rs.2 per day of eight hours Consumable stores @ Rs.10 per day of eight hours The operator is engaged on the machine @ Rs.4 per day of eight hours. 18. From the following data prepare a reconciliation statement: Rs. Profit as per cost accounts 1,45,500 Works overhead under-recovered 9,500 Administrative overheads under-recovered 22,750 Selling overheads over-recovered 19,500 Overvaluation of opening stock in cost accounts 15,000 Overvaluation of closing stock in cost accounts 7,500 Interest earned during the year 3,750 Rent received during the year 27,000 Bad debts written off during the year 9,000 Preliminary expenses written off during the year 18,000 2 PART C Answer ANY TWO questions Marks : 2 x 20 = 40 19. A firm of building contractors began to trade on 1st April, 2007. The following was the expenditure on the contract for Rs.3,00,000: Materials issued to contract Rs.51,000; Plant used for contract Rs.15,000; Wages incurred Rs.81,000; Other expenses incurred Rs.5,000. Cash received on account to 31st March, 2008, amounted to Rs.1,28,000 being 80% of the work certified. Of the plant and materials charged to the contract, plant which cost, Rs.3,000 and materials which cost Rs.2,500 were lost. On 31st March, 2008 plant which cost Rs.2,000 was returned to store, the cost of work done but uncertified was Rs.1,000 and materials costing Rs.2,300 were in hand on site. Charge 15% depreciation on plant,. Prepare the Contract Account, Contractee’s Account and Balance Sheet from the above particulars. 20. The following are the particulars for the production of 2000 radios of X Ltd for the year 2007. Materials .. Rs.1,60,000; Wages .. Rs.2,40,000; Factory expense .. Re.1,00,000; Administration expenses.. Rs.1,80,000; Selling expense .. Rs.60,000; Sales .. Rs.8,00,000. Prepare a statement showing Cost and Profit per machine. In the year 2008 the company plans to manufacture and sell 3,000 radios. The following additional information is given: a) Material prices are expected to rise by 20% and wage rates by 5% b) Factory expenses are recovered as a percentage on prime cost c) Selling expenses per unit will remain the same d) Administration expenses will remain unaffected by the rise in output. You are required to prepare a statement showing the price at which the radio should be sold in 2008 to earn a profit of 20% on cost. 21. A company produces a product which passes through three processes A, B and C. 20000 units are introduced in processing at a cost of Rs.10,000. Other details are as follows: A B C Materials consumed (Rs.) 6.000 4,000 2,000 Direct wages 8,000 6,000 3,000 Factory expenses 1,000 1,000 1,500 Normal loss (%age on input) 2% 5% 10% Sale value of loss per 100 units (Rs) 5 5 20 Output in units 19,500 18,800 16,000 Prepare Process Accounts, normal loss account abnormal loss account and abnormal gain account. @@@@@ 3