06.04.2004
1.00 - 4.00
LOYOLA COLLEGE (AUTONOMOUS), CHENNAI –600 034
B.com., DEGREE EXAMINATION - COMMERCE
FIFTH SEMESTER – APRIL 2004
CO 5501/COM 506 - COST ACCOUNTING
Max:100 marks
SECTION - A
(10  2 = 20 marks)
Answer ALL questions
1. State whether the following statements are true or false.
a) Cost Accounting is a branch of financial Accounting.
b) Bin card is the same as stores ledger.
c) Valuation of closing stock is same under FIFO and LIFO.
d) Abnormal idle time wages are included in the cost of production.
2. Distinguish between idle time and idle capacity.
3. Distinguish between time-keeping and time-booking
4. What is machine hour rate?
5. What is the relevance of 'escalation clauses' provided in contracts?
6. What is Economic Batch Quantity.
7. Distinguish between joint product and by - products.
8. What is operation costing?
9. What is just in time of inventory management?
10. Explain Halsey incentive plan.
SECTION - B
Answer any FIVE questions
(5  8 = 20 marks)
11. What is labour Turnover? What are its causes and Explain the effects of labour Turnover.
12. What is ABC Analysis? Describe its advantages.
13. "Cost Accounting is an unnecessary Luxury for business establishments". Do you agree
with the statement. Discuss.
14. A consignment consisted of two chemicals A and B.
The invoice gave the following data:
Rs.
Chemical A 4000 1bs. @ Rs.2.5 per lb
10,000
Chemical B 3200 1bs. @ Rs.3.25 per lb
10,400
Sales Tax
816
Railway freight
384
--------21,600
--------A shortage of 200 lbs in A and 128 lbs. in B was noticed due to breakage's. What
stock rate would you adopt for pricing issue assuming a provision of 5% toward
further deterioration?
15. In a factory group Bonus system is in use which is calculate on the basis of earnings
under time rate. The following particulars are available for a group of 4 workers P,Q, R,
and S.
a) Output of the Group 16000 units
b) Price rate per 100 units Rs.2.50
c) No of hours worked by P-90; Q-70; R-80; S-100
d) Time rate per hour for P - Re. 0.80, A-Re. 1.00, R- Rs. 1.20, S - Re. 0.80
Calculate total wages and bonus earned by each worker.
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16. The following particulars related to a contract undertaken by Ajit; Material sent to site
Rs.85,349; labour engaged on site Rs.74,375; plant installed at cost Rs.15,000; Direct
expenditure Rs.3,167; Establishment charges Rs. 4,126; Materials returned to stores
Rs.549; work certified Rs.1,95,000; cost of work not certified Rs.4,500; Materials in hand
at the end of the year Rs.1,883; wages accrued due at the end Rs.2,400; Direct
expenditure accrued due at the end Rs.240; Value of plant at the end of the year
Rs.11,000; The contract price has been agreed at Rs.2,50,000; cash received from the
contractor was Rs.1,80,000.
You are required to prepare contract A/c showing profit.
17. Mrs. Ahuja runs a tempo service in the town and has two vehicle. He furnishes you the
following data and want's you to compute the cost per running mile:
vehicle A
Vehicle B
Rs.
Rs.
Cost of vehicle
25000
15000
Licensee per year
750
750
Salary p.a
1800
1200
Drivers wages per hour
4
4
Cost of fuel per litre
1.50
1.50
Repair and maintenance per mile
1.50
2.00
Tyre cost per mile
1.00
0.80
Garage rent p.a
1600
550
Insurance premium p.a
850
500
Miles run per litre
6
5
Mileage run during the year
15000
6000
Estimated life of vehicles
100000 miles 75000 miles
Charge interest at 10% p.a on the cost of vehicle. The vehicles run 20 miles per hour
on an average.
18. Following information to the manufacturing of a component X - 101 is a cost centre:
Cost of materials
6 paise per component
Operator's wages
72 paise an hour
Machine hour rate
Rs.1.50
Setting up time of the machine
2 hours 20 MINUTES
Manufacturing time
10 minutes per component.
Prepare cost sheet showing both products and setting up cost, total and per unit when
a batch consist of ;
a) 100 components b) 1000 components.
SECTION - C
Answer any TWO questions
(2  20 = 40 marks)
19. From the following particulars extracted from the books of r ltd for the month of June
1998, prepare the following,
a) Statement of Equivalent Production
b) Statement of cost
c) Process Account
(i)
Opening stock as on 1st June 200 units @ Rs.4.00 per unit.
Degree of completion Materials 100%
Labour and overheads 40%
(ii)
Inputs introduced during the month 1050 units.
(iii)
Output transferred to the next process 1100 units
(iv)
Closing stock 150 units
Degree of completion Materials 100%
Labour and overhead 70%
(v)
Other relevant information.
Materials - Rs.3150; Labour - Rs.4500; Over head - Rs.2250.
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20. Sympionic Ltd has three production department XYZ and two service department A and
B. The following estimated figures for a certain period have been made available:
Rs.
Rs.
Rent and Rates
10,000
Power
3,000
Lighting and electricity
1,200
Depreciation of machinery 20,000
Indirect wages
3,000
other expense
20,000
following are the further details available.
X
Y
Z
A
B
Floor space (Sq.fts)
2000 2500 3000 2000 500
light points (Nos)
20
30
40
20
10
Direct wages (Rs)
6000 4000 6000 3000 1000
Hours power of machine
120
60 100
20
cost of machinery (Rs.)
24000 32000 40000 2000 2000
working hours
4670 3020 3050 The expense of the service department A and B are to be allocated as follows:
X
Y
Z
A
B
A
20% 30% 40% 10%
B
40% 20% 30% 10% you are required to calculate the overhead absorption rate per hour in respect of three
production departments. What will be the total cost of an article with material cost of
Rs.80 and labour cost of Rs.40 which passes through X, Y and Z for 2,3 and 4 hours
respectively?
21. The following figures have been extracted form the financial accounts of V ltd for the
first year of its operation:
Rs.
Direct material consumption
50,000
Productive wages
30,000
Factory overheads
16,000
Administrative overheads
7,000
selling and distribution overhead
9,600
Bad debts written off
800
Preliminary expenses written off
400
legal charges
100
dividend received
1000
interest received on bank deposits
200
Sales (12000 units)
1,20,000
Closing stock:
Finished goods (400 units)
3200
work in progress
2400
The cost accounts for the same period reveal that direct material consumption was
Rs.56,000. Factory overhead is recovered at 20% on prime cost. Administration overhead is
recovered at 60 paise per unit of production, selling and distribution overheads at 80 paise per
units sold.
Prepare profit and loss A/c to find out profit as per financial records and ascertain
profit as per cost accounts. Also reconcile the profits as per the two records.
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