Dibrugarh University - Cost Accounting 2002

Answer any five questions.

1. “Financial accounting treats costs very broadly, while the cost accounting does this in much greater detail”. Discuss this with Suitable examples. 10+10=20

2. It is said, “cost accounting is a system of foresight and not post-mortem examination; it turns losses into profits, speeds up Activities and eliminates wastes”. Discuss this statement in detail. 20

3. What do you mean by elements of cost? Explain the different elements of total cost. 8+12=20

4. (a) A lorry load of materials of mixed grades was purchased for Rs. 9,000. They were sorted into the following grades whose Selling price is shown against each:
                                                                                                                Units                                     Selling price per unit
                Grade A                                                                                5,000                                                     Rs1.20
                Grade B                                                                                3,000                                                     Rs1.00
                Grade C                                                                                2,000                                                     Rs0.50

Find the purchase rate unit of each grade of the material, assuming all grades yield same rate of profit. 10

     (b) What are the essentials of material control? 10

5. The following is an extract of the records of the receipts and issues of a chemical during a month.

                1 Feb.                    Opening balance              500 tonnes @ Rs.200
                3 Feb.                    Issued                                   70          
                4 Feb.                    Issued                                   100        
                8 Feb                     Issued                                   80          
                13 Feb.                 Received                             200         “@ Rs.190
                14 Feb.                 Returned from
                                                Department                       15          
                16 Feb.                 Issued                                   180        
                20 Feb.                 Received                             240            @ Rs.190
                24 Feb.                 Issued                                   300        
                25 Feb.                 Received                             320             @ Rs.190
                26 Feb.                 Issued                                   115        
                27 Feb.                 Returned from
                                                Departments                     35          
                28 Feb.                 Received                             100              @ Rs.190

Issues are to be priced on the principle of “First-in-First-out”. The stock verifier has found a shortage of 10 tonnes on the 22nd, And left a note accordingly. Draw up a store ledger card for the material showing the above transactions. 20

6. (a) From the particulars given below, calculate earnings of two workers, A and B under straight piece rate system and Taylor’s
Differential piece rate system:
                Standard time per unit 36 seconds
                Normal rate per hour Rs.3
                Differential rates to be applied:
                80% of piece rate when below standard
                120% of piece rate when at or above standard.
                The workers A and B have produced in a day of 8 hours as follows:
                A: 700 units
                B: 900 units                                                                                                                                                                                                         10

(b) What are the requisites of a satisfactory system of labour remuneration?                                                                                      10

7. A company makes two types of vehicles, A and B. The total expenses during a period as shown by the books for the assembly
    Of 600 of the type A and, 800 of the type B vehicle are as under.
                Materials                                                                                                             1, 98,000
                Direct wages                                                                                                      12,000
                Stores overheads                                                                                            19,800
                Running expenses of machine                                                                   4,400
                Depreciation                                                                                                      2,200
                Labour amenities                                                                                             1,500
                Works general overhead                                                                             30,000
                Administrative and selling overhead                                                       26,800

                The other data available to you is:
a)      Material cost ratio per unit A : B= 1: 2
b)      Direct labour ratio per unit 2: 3
c)       Machine utilization ratio per unit 1: 2
Calculate the cost of each vehicle per unit giving reasons for the basis of apportionment adopted by you.             10+10=20

8. Aniance Ltd. Processes a patent material used in buildings. The material is produced in three consecutive grades – soft, medium And hard.
                                                                                                Process I                              Process II                             Process III
                (a) Raw material used                                    1000 tonnes                              _                                            _
                (b) Cost per tonne                                           Rs.200                                          _                                            _
                (c) Manufacturing wages & exp.                Rs.87, 500                            Rs.39, 500                            Rs.10, 710
                (d) Weight lost (% of input of the process)    5%                                       10%                                    20%
                (e) Scrap (Sale price Rs.50 per tonne)     50 tonnes                            30 tonnes                            51 tonnes
                (f) Sale price per tonne                                 Rs.350                                   Rs.500                                   Rs.800

Management expenses were Rs.17, 500 and selling expenses Rs.10, 000. Two third of the output of process I and one half of the Output of process II is passed on to the next process and the balances are sold. The entire output of process III is sold. Prepare The three process accounts and a statement of profit. Make approximations, where necessary.   10+10