B.Com IV Semester (CBCS) – July 2021
Cost Accounting (CC)
(Code : 52414404)
M.M. : 100
Attempt any two questions in all.
All questions carry equal marks.
(Write your Name and Roll No. on each page of your answer sheet.)
Question 1 (a) “Limitations of financial accounting have made management to realize the importance of cost accounting.” Comment.
Question 1 (b) Explain the concept of “ABC Analysis” as a technique of inventory control.
Question 1 (c) The following information is available in respect of material number 30:
Reorder Quantity = 1,500 units
Reorder Period = 4 to 6 weeks
Maximum Consumption = 400 units per week
Normal Consumption = 300 units per week
Minimum Consumption = 250 units per week
Calculate: (i) Reorder Level (ii) Maximum Level (iii) Minimum Level (iv) Average Stock Level.
Question 1 (d) From the following information, calculate EOQ and number of orders to be placed in one
quarter of the year for product X:
(i) Quarterly consumption of material 2,000 kg
(ii) Cost of placing one order Rs. 50
(iii) Cost per unit Rs. 40
(iv) Storage and carrying cost 80% on average inventory
Question 2 (a) What is idle time? Explain the causes leading to idle time and its treatment in cost accounting.
Question 2 (b) The following information relates to the personnel department of a factory for the month of April 2020:
Number of workers on April 1, 2020 = 950
Number of workers on April 30, 2020 = 1050
Number of workers who quit the factory in April, 2020 = 10
Number of workers discharged in April 2020 = 30
Number of workers engaged in April 2020 (including 120 on account of expansion scheme) = 140
Calculate the labour turnover rate under the different methods.
Question 2 (c) Distinguish between allocation and apportionment of overheads.
Question 2 (d) A company has 3 Production Departments A, B and C and 2 Service Departments X and Y. The following information is available regarding various expenses:
Power = Rs. 2,400
Rent = Rs. 4,200
Canteen = Rs. 3,000
Insurance = Rs. 2,200
Depreciation = Rs. 20,000
Personnel Department = Rs. 4,000
Maintenance of Assets = Rs. 2,400
The following additional information is also given:
| Item | Production Department | Service Deptt | |||
| A | B | C | X | Y | |
| Area (sq. metres) | 400 | 400 | 300 | 200 | 100 |
| Kilowatt hours | 2000 | 2200 | 800 | 750 | 250 |
| Number of workers | 90 | 120 | 30 | 40 | 20 |
| Capital value of assets (in ‘000 of Rs.) | 50 | 60 | 40 | 30 | 20 |
| Direct material cost (Rs.) | 5000 | 3000 | 2000 | 1000 | 1000 |
The expenses of department X and Y will be apportioned among production departments in the ratio of 5:3:2 and 20%, 30% and 50% respectively. Prepare Overheads Distribution Summary.
Question 3 (a) A product passes through three distinct processes A, B and C. The following information is given:
| Process A | Process B | Process C | |
| Material (input 2,000 units) | 10,000 | – | – |
| Labour | 5,000 | 15,000 | 10,000 |
| Direct Expenses | 4,680 | 2,640 | 3,600 |
| Normal Wastage (% of Input) | 2% | 10% | 10% |
| Realizable Value of Wastage Per Unit | 2 | 10 | 10 |
| Output (Units) | 1,960 | 1,700 | 1,550 |
Prepare: Process Accounts, Normal Loss Account, Abnormal Loss Account and Abnormal Gain Account.
Question 3 (b) The ABC Ltd. Has undertaken the construction of a bridge over the River Yamuna for a Corporation. The value of the Contract is Rs. 15,00,000 subject to retention of 20% until one year after certified completion of the contract and final approval of the Corporation’s Engineer.
The following are the details as shown in the books on December 31, 2020:
| Labour on site | 4,05,000 |
| Materials purchased | 4,20,000 |
| Materials sent from stores | 81,200 |
| Plant | 12,100 |
| Direct Expenses | 23,000 |
| General overheads allocated to the contract | 37,100 |
| Materials on hand on December 31, 2020 | 6,300 |
| Wages accrued on December 31, 2020 | 7,800 |
| Direct expenses accrued on December 31, 2020 | 1,600 |
| Work not yet certified at cost | 16,500 |
| Amount certified by the Corporation’s Engineer | 11,00,000 |
| Cash received on account | 8,80,000 |
Prepare: (a) Contract Account (b) Contractee’s Account and (c) Show how it would appear in the Balance Sheet?
Question 4 (a) The following information has been taken from the costing records of a company in respect of job number 123:
Materials = Rs. 4,010
Wages:
Department A: 60 hours @ Rs. 3 per hour
Department B: 40 hours @ Rs. 2 per hour
Department C: 20 hours @ Rs. 5 per hour
Overheads for the three departments are estimated as follows:
Variable Overheads
Department A: Rs. 5,000 for 5,000 hours
Department B: Rs. 3,000 for 1,500 hours
Department C: Rs. 2,000 for 500 hours
Fixed Overheads: Rs. 14,000 for 7,000 hours
You are required to calculate the cost of job number 123 and also calculate the price to be charged so as to yield a profit of 25% on the selling price.
Question 4 (b) The following figures are given:
Sales (25,000 units) = 65,00,000
Materials = 25,00,000
Wages = 15,00,000
Factory overheads = 10,00,000
Office & Administration overheads = 5,50,000
Selling & Distribution overheads = 3,00,000
Closing stock of finished goods (1,200 units) = 2,20,000
Closing stock of WIP = 1,40,000
Goodwill w/o = 3,30,000
Income Tax paid = 50,000
Cost account manual states that the factory overheads are to be recovered at 100% of Labour. Administration overheads at 10% of works cost and selling & distribution overheads @ Rs. 10 per unit sold. Prepare Statement of Reconciliation, Cost Sheet and Profit & Loss A/c.
Question 4 (c) Explain the advantages of integrated accounts.
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