Dibrugarh University - Cost Accounting - (2012 Old Syllabus)

All questions are of equal marks
1.       Outline the steps involved in installing a costing system in a manufacturing unit. What are the essentials of an effective costing system?
Explain the term “cost accounting”. How does it contribute to the planning of business operations?

2.       “Store ledgers are essential to an efficient costing system.” Give your views on this statement highlighting the uses and values of stores ledgers.
Your factory buys and uses a component for production at Rs. 10 per piece. Annual requirement is 2000 number of pieces. Carrying cost of inventory is 10% per annum and ordering cost is Rs. 40 per order. The purchase manager argues that as the ordering cost is very high, it is advantageous to place a single order for the entire annual requirement. He also says that if 2000 pieces are ordered at a time, 3% discount can be obtained from the supplier. Evaluate the proposal and make your recommendation.

3.       In a factory, Ram and Shyam produce the same product using the same input of same material and at the same normal wage rate. Bonus is paid to both of them in the form of normal time wage rate adjusted by the proportion in which time saved bears to the standard time for the completion of the products. The time allotted to the product is fifty hours. Ram takes 30 hours and shyam takes 40 hours to produce the product. The factory cost of the product for Ram is Rs. 3100 and for shyam is Rs. 3280. The factory overhead rate is Rs. 12 per man hour. Calculate (i) normal wage rate, (ii) cost of material used for the product and  (iii) the input material if the unit material cost is Rs. 16.
Distinguish between normal and abnormal idle time. How would you deal with each of them in cost accounting?

4.       What do you mean by under absorption and over absorption of production overhead? How do they arise? How are they arise? How are they treated in cost accounts?
What do you understand by codification of overheads? What are the essential characteristics of a good system of codification? Enumerate various methods of codification.

5.       Journalise the following transactions assuming that cost and financial accounts are integrated. [ignore narrations]:
Raw material purchased
Direct materials issued to production
Wages paid (30% indirect)
Wages charged to production
Manufacturing expenses incurred
Manufacturing overhead charged to production
Selling and distributive cost
Finished product at cost
Receipts from customers
Paid to creditors
Closing stock
State the reasons for the difference between the profits shown in the cost accounts and those shown in the financial accounts of an industrial organisation. Explain the need for reconciliation of cost and financial accounts.