IPU BBA Semester 2: Cost Accounting - End Term Paper (2015)
END TERM EXAMINATION
Second Semester BBA
May June 2015
Paper Code: [BBA/TTM/B&I/MOM ]110
Subject: Cost Accounting
Note: Attempt any five questions. Simple calculator is permitted.
Question 1:
(a) Define the term Cost, Costing, Cost Accounting and Cost Accountancy. (8)
(b) What is the meaning of life cycle costing? State its importance & limitations. (7)
Question 2:
At the beginning of October 2013 Quality Brush Company had in stock 10,000 brushes value at Rs. 10 each. Further purchases were made during the month as follows:
7th October 4000 Brushes@12.50 Issues to shop floor were as follows
14th October 6000 Brushes @15 16th October 16000 Brushes
24th October 8000 Brushes @16.500 28th October 10000 Brushes
You are required to prepare a stores ledger card for the month of October on the assumptions that materials were issued on the basis of FIFO and LIFO. (15)
Question 3:
(a) Distinguish between Halsey Plan and Rowan Plan. (6)
(b) What do you mean by labour turnover? How would you treat labour turnover cost in Cost Accounting? (5+4=9)
Question 4:
The cost accountant of a newly formed company was asked to establish a predetermined rate for applying overhead to the job moving through a single manufacturing shop and to check results periodically. After consulting various departments estimated and actual data for the year 2013 is as follows:
| Direct labour hours | Estimated(144,000) | Actual (121,500) |
|---|---|---|
| Factory Supervision | 50,000 | 51,000 |
| Indirect labour | 115,000 | 99,000 |
| Inspection | 70,000 | 73,000 |
| Maintenance | 35,000 | 39,000 |
| Indirect Material | 25,000 | 20,000 |
| Heat, Light and Power | 20,000 | 18,000 |
| Depreciation | 35,000 | 35,000 |
| Miscellaneous factory | 10,000 | 3,000 |
At the end of 2013, the first year of operations, the actual results were recorded against each item above. You are required to compute the predetermined overhead rate, based on direct labour hours. Also compute the incurred overhead rate. (15)
Question 5:
On 1st April 2013, Delux Ltd. Undertook a contract for Rs. 500,000. 31st April 2014, when the accounts were closed, the following details about the contract were gathered.
Material Purchased 100,000
Wages Paid 45,000
General Expenses 10,000
Plant purchased 50,000
Material on hand (104.2013) 25,000
Wages accrued (31.04.2014) 5,000
Work certified 200,000
Cash received 150,000
Work Uncertified 15,000
Depreciation of Plant 5,000
The above contract has an escalation clause which reads as follows:
“In the event of prices of materials and rates of wages increase by more than 5% the contract price would be increased accordingly by 25% of the rise in the cost of materials and wages beyond 5% in each case".
It was found that since the date of signing the agreement, the prices of materials and wage rates increased by 25%. The value of the work certified does not take into account the effect of the above clause.
Prepare the contract account. (15)
Question 6:
A factory incurred the following expenditure during the year 2013.
| Director material consumed | 12,00,000 | |
| Manufacturing wages | 7,00,000 | |
| Manufactuxing overhead | ||
| Fixed | 3,60,000 | |
| Variable | 2,50,000 | 6,10,000 |
| 25,10,000 |
In the year 2011, following changes axe expected in production and cost of production.
(i) Production will increase due to recruitment of 60% more workers in the factory.
(ii) Overall efficiency will decline by 10% on account of recruitment of new workers.
(iii) There will be an increase of 20% in fixed overhead and 60% in variable overhead.
(iv) The cost of direct material will be decreased by 6%.
(v) The company desire to earn a profit of 10% on selling price.
Ascertain the cost of production and selling price. (15)
Question 7:
The product of a company passes through three different process, X,Y, 2. It is ascertained from past experience that wastage in each process is incurred as under.
Process X 2% Process Y 5% Process Z 10%.
The % of wastage in each case is computed on the basis of number of units entering the process concemed.
The wastage of each process has scrap value. The wastage of process X and Y is sold at Rs. 1 per unit and that of process Z at Rs. 4 per unit.
The company gives you the following information for the month of July 2013.
2000 units of crude material were introduced in Process X at a cost of Rs. 8 per unit. Besides this the following were other expenses:
| Process X | Process Y | Process Z | |
|---|---|---|---|
| Material Consumed | 8000 | 3000 | 2000 |
| Direct Labour | 12000 | 8000 | 6000 |
| Work Expenses | 2000 | 1000 | 3000 |
| Unit | Unit | Unit | |
| Output | 1950 | 1925 | 1590 |
| Stock On: July 1 | 200 | 300 | 500 |
| July 21 | 150 | 400 | --- |
| Stock valuation on July 1,per unit |
Rs. 19 | 27 | 36.5 |
Stocks on 31st July 2013 are to be valued at cost as shown by month’s production account. Prepare process account. (15)
Question 8:
Write short note on any two of following:
(a) Joint Product and By-Product
(b) Operation costing
(c) Reconciliation of Cost Account and Financial Account
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