Dibrugarh University - Cost Accounting 1998

Answer any five questions:-

1. a) “Costing is an aid to management”. Enumerate the main points in support of this statement. (10)

    b) Distinguish between: - (5x2)
i)        Fixed overhead & variable overhead.
ii)       Cost of sales & cost of goods sold.

2. a) What do you understand by economic order quantity? Discuss what factors are to be taken into consideration for deciding this quantity.   (10)

    b) The stores materials of a Co. on 1/7/1997 were 1000 units @ Rs2 per unit. Further purchase were made during the month as follows: - (10)
                4th July                  200 units @ Rs2.50 per unit
                10th July                500 units @ Rs3.00 per unit
                20th July                1000 units @ Rs3.50 per unit
                The issues during the period were as follows:-
12th July                1600 units
28th July                900 units
What would be the value of closing stock at the end of the month on the basis of materials being treated According to FIFO method.

3. a) What is labour turnover? What are its causes & its effects on labour cost?   (10)

    b) During a certain week in Sep, 97’ a worker manufactured 240 articles. Working hour during a week 48 hours. Standard rate Rs5 per hour & standard time to manufacture on article 15 minutes. Calculate his grass wages for the week according to Halsey Premium Bonus plan. (10)

4. From the following particulars furnished below. Compute the machine hour rate:- (20)

                Cost of machine                                                                                               Rs90000
                Cost of installation                                                                                           Rs10000
                Scrap value at the end of 10 yrs                                                                 Rs5000
                Indirect wages & materials per year                                                        Rs500
                Supervision cost for four (4) similar machines per year                   Rs16000
                Insurance premium for the machines per quarter                            Rs200
                Rent of the machine shop per month                                                     Rs400
                Electricity cost for the machine shop per month                                Rs100
                Power consumption of the machine is 20 units per actual working hour. Power cost is 50 paisa per unit.

                The total area of the machine shop is 600 sq.m. of which the machine occupies only 150 sq.m. There are 200 light paints in the machine shop of equal voltage of which it utilizes only 40 paints. It is estimated that machine will normally work 2700 hours in a year, but will remain idle for 200 hours.

5. a) Define normal & abnormal loss. (10)
    b) Product A passes through two process I & II & then to finished stock. From the following data prepare the process accounts. (10)

Particulars                                                           Process I                                              Process II
Input                                                                     2000                                                       1900
Material consumed                                         30000                                                    20000
Wages                                                                  20000                                                    20000
Overhead                                                            7200                                                       6170
Normal loss                                                        5%                                                          10%
Scrape value (per unit)                                  2                                                              3

6. a) Distinguish between:- (5x2)
i)        Budgetary control & Standard costing.
ii)       Standard cost & Estimated cost.

    b) From the following data calculate materials yield variance:-                (10)
                                                                Standard mix                                     Actual mix
                Materials A                         200 units @ Rs12                              160 units @ Rs13
                Materials B                         100 units @ Rs10                              140 units @ Rs10

                Standard loss allowed is 10% of input. Actual output 275 units.

7. Explain with example:- (5x4)
1)      Job evaluation.
2)      Group bonus scheme.
3)      Absorption of overhead
4)      Break even analysis.

8. a) The following figure are available from the books of XYZ Ltd. For the year ended 31/12/1997.
                Material consumed                                                                                         10000
                Wages                                                                                                                  8000
                Factory overhead                                                                                            6000
                Office & administrative overhead                                                             4500
                Selling overhead Rs2 per unit
                Profit for the year = 20% on cost of sales
                Unit produced & sales 3000
                Prepare a cost sheet.     (10)

     b) In the next year the factory received an order of 750 units. In the year due to inflation, the cost structure has been changed by the following ways :-

                Price of materials increased by                  10%
                Rate of wages increased by                         20%
                Factory overhead decreased by                20%
                Selling reduced to Rs1.50
If the Co. wants to earn a profit higher then 10% of profit earned in last year, what will be the sale price of the job?  (10)