Dibrugarh University - Cost Accounting 1990

1. What is cost accounting? What are its advantages so compared to financial accounting? (5+15)

2. Explain the utility of ‘Elements of cost’ to management. What are the different types of expenditure that are not included in Cost accounts. (10+10)

3. When do you advocate pricing the issue of material at cost price based on ‘Last in first out (LIFO)’? Give your agreements. What are the limitation of this method of pricing? (10+10)

5. A Co. is supplying its products to the ultimate consumers through the wholesalers to retailers. The managing directors thinks that if they sell through retailers or to the consumer direct they can increase their sales, earns better prices & makes more profit. As a cost accountant of the Company you are required to advise the managing director in selecting the channel of distribution from the given information:-
I                                                               II                                                             III
Channels of distribution                                                To consumer direct                         To retailer direct                               To wholesaler
Sales price per unit (Rs)                                                 4.75                                                        4.25                                                        3.75
Estimated sales per year (nos)                            1200000                                                1140000                                                1080000
Selling & distribution cost per unit (Rs)                   1.50                                                        0.80                                                        0.45
Cost of production:-
Variable cost @ Rs2 per unit.
Fixed cost Rs1000000.
In selecting the channels of distribution what factors besides cost would you consider? Give your answer with the help of a statement.       (20)

6. A Co.’s product passes through two distinct processes, A & B & then to finished stock. It is known from past experience that  wastage occurs in the processes as under:-
In process A – 5% of the units entering the product.
In process B – 10% of the units entering the product.
The process costs are:-
Process A (Rs)                   Process B (Rs)
Materials consumed                                                       6000                                       3000
Wages                                                                                  7000                                       4000
Manufacturing expenses                                             2000                                       2000
10000 units were introduced into the process A costing Rs5000. The outputs were:-
Process A – 9400 units.
Process B – 8300 units.
Prepare process cost accounts showing the cost of the output.  (20)

7. It has been mentions that the cost standards for material consumption are 40 kg @ Rs10 per kg. Compute the variance when actual are :- (5x4)
a)      48 kg @ Rs10 per kg
b)      40 kg @ Rs12 per kg
c)       48 kg @ Rs12 per kg
d)      36 kg for a total cost of Rs360

8. Write short notes on:- (5x4)
a.       Normal wastage.
b.      Labour turnover.