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Tuesday, May 21, 2019

Gauhati University Question Papers:Cost Accounting (Nov-Dec’ 2015)

Full Marks: 80
Time: 3 hours
(The figures in the margin indicate full marks for the questions)
1. Answer the following as directed:                                                      1x6=6

a)         The main purpose of Cost Accounting is to
1)         Maximize profit.
2)         Minimize losses.
3)         Help management in taking decisions by providing information.
(Select the correct answer)
b)         Cost of goods produced include
1)         Production cost and work in progress.
2)         Only prime cost.
3)         Production cost and finished goods inventory.
(Select the correct answer)
c)          A normal loss is
1)         Due to the nature of process.
2)         Due to the abnormal factors.
3)         None of the two.
(Select the correct answer)
d)         Equivalent production in process costing represents production
1)         In terms of completed units.
2)         Production at cost price.
3)         Production of incomplete units.
(Select the correct answer)
e)         Weighted average cost method of valuing material issues involves adding all the different prices and dividing by the number of such prices. (Indicate whether the statement is true or false)
f)          Labour turnover is calculated by –
1)         Number of workers left/average number of workers.
2)         Number of additions/average number of workers.
3)         Number of workers replaced/average number of workers.
(Select the correct answer)
2. Answer the following questions briefly:                                              2x5=10
a)         What is the concept of cost?
b)         State the two reasons of abnormal idle time of labour.
c)          Why is ABC analysis of inventory significant?
d)         What is the basic difference between allocation and apportionment of overhead?
e)         What is the need for charging inter-process profits?
3. Answer the following questions:
(a) Write the differences between Cost Accounting and Financial Accounting.              5
(b) State the benefits of centralized purchasing system of materials.                                                   5
Following information relating to a type of raw material is available:
Annual demand
Unit price
Ordering cost per order
Storage cost
Interest rate
Lead time
2,400 units
Rs. 2.40
Rs. 4.00
2% per annum
10% per annum
Half Month
Calculate EOQ and total inventory cost in respect of the particular material.                       5
(c) What will be the earning of a worker at 55 paisa per hour when he takes 140 hours to do a volume of work for which the standard time allowed is 200 hours? The plan payment of bonus on sliding scale is as under:
1)         Within the 1st 10% saving in standard time, bonus is 40% of the time saved.
2)         Within the 2nd 10% saving in standard time, bonus is 50% of the time saved.
3)         Within the 3rd 10% saving in standard time, bonus is 60% of the time saved.
4)         For the rest, the bonus is 75% of the time saved.                             5
(d) What are the necessities of classification for overhead into Fixed and Variable?                      5
(e) What is Contract Costing? Mention the distinguishing features of Contract Accounts.   1+4=5
4. Write in detail the classification of direct and indirect costs.                             9
The following are the costing records for the year 2014 of a manufacturer:

Production 1,000 units
Cost of raw materials
Labour cost
Factory overheads
Office overheads
Selling expenses
Rate of profit 25% on selling price

The manufacturer decided to product 1,500 units during the year 2015. It is estimated that the cost of raw material will increase by 20%, the labour cost will increase by 10%, 50% of the overhead charges are fixed and other 50% are variable. The selling expenses per unit will be reduced by 20%.
The rate of profit will remain same.
Prepare a Cost Statement for the year 2015, showing the Profit and Selling price per unit.
5. The following transaction took place in respect of an item of material:


Rate (Rs.)
Jan – 1
Opening balance
Jan – 5
Received from vendor
Jan – 12
Received from vendor
Jan – 20
Received from vendor
Jan – 25
Received from vendor

500 units

200 units

150 units

300 units

400 units

@ Rs. 4/-

@ Rs. 4.25/-

@ Rs. 4.10/-

@ Rs. 4.50/-

@ Rs. 4/-

Jan 4
Jan 10
Jan 15
Jan 19
Jan 26
Jan 30
200 units,
400 units,
100 units,
100 units,
200 units,
250 units.
Issues are to be priced on the principle of Last in first out method.
Write out the Store Ledger Account in respect of the materials for the month of January.                             10
What are idle facilities? From the information given below, calculate the idle time cost and present the same in a tabular form when the hourly fixed cost of running the machine is Rs. 8/-.
The capacity usage ratio and the capacity utilization ratio in respect of a machine for a particular month is 80% and 90% respectively.
The available working hours in a month are 200 hours.
The break-up of idle time is as follows:
Waiting for job
Waiting for tools
5 hours
4 hours
3 hours 

6. The net profit of A Co. Ltd. appeared at Rs. 60,652 as per financial records for the year ending 31st march, 2014. The Cost Books, however showed a net profit of Rs. 86,200 for the same period. A scrutiny of the figures from both the sets of accounts revealed the following facts:

Works overhead under recovered in cost
Administrative overhead over recovered in cost
Depreciation charged in Financial Accounts
Depreciation recovered in costs
Interest on investment not included in costs
Loss due to obsolescence charged in Financial Accounts
Income tax provided in Financial Accounts
Bank interest and transfer fee credited in Financial Book
Stores adjustment (credit) in financial books
Value of Opening Stock in:
Cost Accounts
Financial Accounts
Valuation of Closing Stock in:
Cost Accounts
Financial Accounts
Interest charged in cost accounts
Goodwill written off
Loss on sale of furniture


Prepare a statement showing the reconciliation between the figures of net profit as per Cost Accounts and the figures of net profit as shown in the Financial Books.          10
Elucidate the functional classification of overheads.                            10
7. What is process costing? Describe the basic feature of process costing.             2+8=10
A.M. Industry Ltd. has three processes through which its products pass for becoming a finished product. There is a loss of 2% in each process on the total weight put in and 10% is scrap in all processes. The scrap realizes Rs. 5/- per ton from process 1. Rs. 7 per ton from process 2 and Rs. 10 per ton from process 3.
The detailed information of various processes is as follows:                   10

Process 1
Process 2
Process 3
Passed to next process
Sent to warehouse for sale

Process 1
Rs. tons
Process 2
Rs. tons
Process 3
Rs. tons
Raw materials
Labour cost
General expenses
150,000 500
24,480 136
7,200 24
Prepare Process Cost Accounts showing cost per ton at each process.


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