IV Semester B.B.M.

Preparatory Examination (Semester Scheme)

BUSINESS MANAGEMENT Cost Accounting

SECTION -A Answer any ten sub-questions. Each correct answer carries 2 marks. a) Define cost accounting. b) What is multiple costing? c) Name any four non cost items. d) How do you calculate the weighted average price of material issue? e) Give the meaning of idle time. f) Name any four industries where operating costing is used. g) Define the term overhead. h) What is Incentive scheme? i) How, do you calculate the machine hour rate? j) Give the meaning of escalation clause. k) How do you treat abnormal cost in process costing? l) State any four objectives of material control. m) What is Reconciliation Statement? (19x2=20)

SECTION - B

Answer any five questions. Each correct answer carries 5 marks. 2. Distinguish between cost and financial accounting. 3. Write a note on various methods of issue pricing of material. 4. A critical study of the past records of a container manufacturing company has revealed the following details regarding the expenses incurred in the manufacture of types of containers X and y. Particulars Type X Rs. 3.50 1.00 2.00 2.00 Type Y Rs. 6.50 1.50 3.00 3.00

Direct materials Direct wages Plant utilization expenses (allocated on hourly basis) General charges (200% of wages)

Total cost per container

8.50

14.00

Cost records for the month of July 2008 showed: Rs. Materials Wages Plant utilization. General overhead 26,500 5,850 16,250 11,700

Compute the earnings of a worker under: i. Time rate ii) Halsey plan iii) Rowan plan

In formation given: Wage rate Rs. 2 per hour Dearness allowance Re. 1 per hour Standard hours 80 Actual hours 50

9. The following information is given in the books of a company . . Production and sales: 4,000 units. Particulars of expenses for 4,000 units. Material cost Rs. 12 per unit. Direct labour Rs. 10 per units. Selling price Rs. 35 per unit. The overhead charges are as follows: Fixed Variable Semi-variable Rs. 6,000 Rs. 3,600 Rs. 2,400 of which 60% is fixed.

Calculate the profit per units.

Section -C Answer any three questions. Each correct answer carries 15 marks.

10. Overhead costs before distribution of service departments costs are as follows:

Production Depts. Particulars A Overheads' Service Dept. P SeryiceDept. Q 40% 7,550 20% 20% B 7,200 C 9,650 30% 30% 40%

Service Depts.

4,625 1,575 10% 10%

Compute the total overheads of production overhead by simultaneous equation method and repeated distribution method.

11. RR Transport Company supplies the following details in respect of a truck of 5tonne capacity: Cost of truck Estimated life Rs. 90,000 10 years

Diesel, oil, grease

Rs. 15 per trip each way Rs. 500 per month

Repairs and maintenance Cleaner's wages Driver's wages Insurance Tax

Rs. 250 per month Rs. 500 per month Rs. 4,800 per year Rs. 2,400 per year Rs. 4,800 per year

General supervision charges

The truck carries goods to and from city covering a distance of 50 miles each way. While going to the city, height is available to the extent of full capacity and on return 20% of capacity. Assuming that the truck run on an average 25 days a month, work out (i) Operating cost per tonne-mile, and (ii) Rate per trip that the company should charge if profit of 50% on freightage is to be earned.

12. Rashmi undertook a contract for Rs. 15,00,000 on an agreement that 80% of the value of work done as certified by the architect of the contract should be paid immediately and the remaining 20% be retained until the contract is completed. In 2006; the amounts expended were:

Materials Rs. 1,80,000; wages Rs. 1,70,000; carriage Rs. 6,000; cartage Rs. 1,000 sundry expenses Rs. 3,000; the work w. as certified for Rs. 3,75,000 and 80% of this was paid as agreed. In 2007 the amounts expended were: Materials Rs. 2,20,000; Wages 2,30,000; Carriage Rs. 23,000; Cartage Rs. 2,000; Sundry expenses Rs. 4,000. Three fourth ofthe contract was certified as done by 31 st Dec. and 80% of this was received accordingly. The value of unused stock and work-in-progress was ascertained at Rs.20,OOO. In 2008 the amounts expended were: Materials Rs. 1,26,000; Wages Rs. 1,70,000; Cartage Rs. 6,000; Sundry expenses Rs. 3,000; and on 30th June the whole contract was completed. Show how the contract account as would appear in each of these years in the books of the contractor assuming that balance due to him was received on completion of the contract. 13. From the following Trading and Profit and Loss Account of a company for the year ended 31 st March 2008. Expenses Amount Incomes Amount

To Material consumed To Direct wages To Works expenses To Administrative expenses To Goodwill written off To Discount on debentures written off To Net profit

12,000 4,000 12,000 12,000 4,000 3,000 28,000

Amount By Sales (350 units) "By Finished stock (50 units) By Interest received

70,000 3,500 1,500

75,000

75,000

Total Total

The company's records show that: i) Works overheads have been recovered at 100% on prime cost. ii) Administrative overheads have been recovered at 25% of factory cost. Prepare ~ i) A statement of cost indicating net profit; and ii) A 'statement reconciling the profit as disclosed by cost accounts and that shown in financial accounts.

14. A product is completed in 3 consecutive processes. The input to product A of basic raw materials is 5000 units at Rs.2 per unit.

Particulars Output in units Scrap value Rs.100 units Direct wages

A 4700 1 3000

B 4300 5 5000

C 4050 6 8000

Direct Expenses

9750

9910

15,560

O. H amounted to Rs. 32000 chargeable as percentage of direct wages. Normal loss of process A is 5% and Process B is 10%, Process C is 5%. Prepare process account abnormal loss and gain account, normal loss account.