Q1(a)Labour turnover computation
5 marks medium
The labour turnover rates for the quarter ended 30th September, 2020 are computed as 14%, 8% and 6% under Flux method, Replacement method and Separation method respectively. If the number of workers replaced during 2nd quarter of the financial year 2020-21 is 36, COMPUTE the following:
Q1(b)Reconciliation of cost accounts and financial accounts
5 marks medium
A manufacturing company disclosed a net profit Rs. 10,20,000 as per their cost accounts for the year ended 31st March 2021. The financial accounts however disclosed a net profit of Rs. 6,94,000 for the same period. Factory Overheads under-absorbed: Rs. 80,000; Administration Overheads over-absorbed: Rs. 1,20,000; Depreciation in Financial Accounts: Rs. 6,50,000; Depreciation in Cost Accounts: Rs. 5,50,000; Interest on investments not in Cost Accounts: Rs. 1,92,000; Income-tax provided: Rs. 1,08,000; Interest on loan funds in Financial Accounts: Rs. 4,90,000; Transfer fees (credit): Rs. 48,000; Stores adjustment (credit): Rs. 28,000; Dividend received: Rs. 64,000. PREPARE a Reconciliation statement.
Q1(c)Inventory management - EOQ and stock levels
5 marks medium
A company manufactures 10,000 units of a product per month. The cost of placing an order is Rs. 200. The purchase price of the raw material is Rs. 20 per kg. The re-order period is 4 to 8 weeks. The consumption of raw materials varies from 200 kg to 900 kg per week, the average consumption being 550 kg. The carrying cost of inventory is 20% per annum. You are required to CALCULATE:
Q1(d)Standard cost variance analysis
5 marks medium
AK Ltd. has furnished the following standard cost data per unit of production: Material 10 kg @ Rs. 100 per kg; Labour 6 hours @ Rs. 55 per hour; Variable overhead 6 hours @ Rs. 100 per hour; Fixed overhead Rs. 45,00,000 per month (based on normal volume of 30,000 labour hours). Actual cost data for September 2020: Material used 50,000 kg at Rs. 52,50,000; Labour paid Rs. 15,50,000 for 31,000 hours; Variable overheads Rs. 29,30,000; Fixed overheads Rs. 47,00,000; Actual production 4,800 units. CALCULATE:
Q2(a)Process costing with by-products
10 marks hard
MP Ltd. produces Product-X, which passes through three processes: I, II and III. In Process-III a by-product arises, which after further processing at a cost of Rs. 85 per unit, product Z is produced. Information for September 2020: Process I: Normal loss 5%, Materials 1,40,000, Wages 42,000, Direct expenses 14,000, Output 6,600 units. Process II: Normal loss 10%, Materials 1,36,000, Wages 54,000, Direct expenses 16,000, Output 5,200 units. Process III: Normal loss 5%, Materials 84,200, Wages 48,000, Direct expenses 14,000, Output 4,800 units. Production overhead Rs. 2,88,000 absorbed as percentage of direct wages. Scrap sold at Rs. 10 per unit. Product-Z sold at Rs. 135 per unit with selling cost Rs. 15 per unit. Output of Z: 600 units. No opening or closing stock. You are required to PREPARE accounts for:
Q2(b)Overhead apportionment using simultaneous equations
10 marks hard
The following account balances and distribution of indirect charges are taken from accounts of a manufacturing concern for year ending 31st March 2021. Indirect Material: Rs. 2,50,000 (Production Departments X: 40,000, Y: 60,000, Z: 90,000; Service Departments A: 50,000, B: 10,000). Indirect Labour: Rs. 5,20,000 (X: 90,000, Y: 1,00,000, Z: 1,40,000, A: 1,20,000, B: 70,000). Supervisor's Salary: Rs. 1,92,000 (Z: 1,92,000). Other overheads: Fuel & Heat Rs. 30,000; Power Rs. 3,60,000; Rent & Rates Rs. 3,00,000; Insurance Rs. 36,000; Canteen Rs. 1,20,000; Depreciation Rs. 5,40,000. Departmental data provided (area, asset values, KWh, radiators, employees). Service dept. allocation: A distributed to X(30%), Y(30%), Z(20%), B(20%); B distributed to X(25%), Y(40%), Z(25%), A(10%). PREPARE overhead distribution statement showing total overheads of production departments after re-apportioning service departments using simultaneous equation method.
Q3(a)Product profitability and budgeting
10 marks hard
Z Ltd. information for year ended 31st March 2021: Direct materials Rs. 17,50,000; Direct wages Rs. 12,50,000; Variable factory overhead Rs. 9,50,000; Fixed factory overhead Rs. 12,00,000; Other variable costs Rs. 6,00,000; Other fixed costs Rs. 4,00,000; Profit Rs. 8,50,000; Sales Rs. 70,00,000. Two products manufactured: X (8,000 units @ Rs. 600/unit, material Rs. 140/unit, wages Rs. 90/unit, other variable Rs. 40/unit) and Y (4,000 units @ Rs. 550/unit, material Rs. 157.50/unit, wages Rs. 132.50/unit, other variable Rs. 70/unit). Variable factory overheads absorbed as percentage of direct wages. For FY 2021-22: demand for X and Y expected to fall by 20% and 10% respectively; direct wages cost to rise by 20%; other fixed costs to rise by 10%; products to be sold at 20% discount. You are required to:
Q3(b)Transportation and vehicle operating cost analysis
10 marks hard
GMCS Ltd. collects raw milk from farmers and processes it into dairy products. It operates tankers parked in garage at plant. Vehicle data: Ramgarh (4 vehicles, 3 trips/day, 24 km one-way, Rs. 5,600 fees/month, purchased 2 years ago @ Rs. 11,02,000 each); Pratapgarh (3 vehicles, 2 trips/day, 34 km one-way, Rs. 6,400 fees/month, purchased last year @ Rs. 13,12,000 each); Devgarh (5 vehicles, 4 trips/day, 16 km one-way, purchased 5 years ago @ Rs. 9,25,000 each). Two-year free servicing warranty on all vehicles. Mileage: 10 kmpl for first 2 years, 8 kmpl for next 2 years, 6 kmpl afterwards. Depreciation 10% p.a. straight-line. Tank capacity 10,000 litres, average utilization 70%. Costs: Driver Rs. 24,000/month per vehicle; Cleaner Rs. 12,000/month per vehicle; Garage parking Rs. 4,200/month per vehicle; Servicing Rs. 15,000 per 5,000 km; Diesel Rs. 78/litre. Take 30 days per month. You are required to CALCULATE:
Q4(a)Cost statement preparation
10 marks hard
A Ltd. expenditures for year ended 31st March 2021: Raw materials purchased Rs. 10,00,00,000; Freight inward Rs. 11,20,600; Factory wages Rs. 29,20,000; Royalty Rs. 1,72,600; Power & fuel Rs. 4,62,000; Job charges Rs. 8,12,000; Stores and spares Rs. 1,12,000; Office building depreciation Rs. 56,000; Plant & Machinery repairs Rs. 48,000; Sales office repairs Rs. 18,000; Plant & Machinery insurance Rs. 31,200; Factory building insurance Rs. 18,100; Quality control Rs. 19,600; R&D for production improvement Rs. 18,200; Pollution control Rs. 26,600; Sales & Marketing managers Rs. 10,12,000; General Manager Rs. 12,56,000; Primary packing Rs. 96,000; Secondary packing Rs. 1,12,000; Independent directors fees Rs. 2,20,000; Sales staff bonus Rs. 1,80,000. Opening stock: Raw materials Rs. 18,00,000; WIP Rs. 9,20,000; Finished goods Rs. 11,00,000. Closing stock: Raw materials Rs. 9,60,000; WIP Rs. 8,70,000; Finished goods Rs. 18,20,000. Scrap and waste realized Rs. 86,000. PREPARE Statement of cost showing (i) Prime cost, (ii) Factory cost, (iii) Cost of Production, (iv) Cost of goods sold, and (v) Cost of sales.
Q4(b)Costing methods: machine-hour rate vs activity-based costing
10 marks hard
ABY Ltd. manufactures four products A, B, C, D using same plant. December 2020 production: Product A (1,440 units, Rs. 84 material/unit, Rs. 20 labour/unit, 4 machine hours/unit); Product B (1,200 units, Rs. 90 material/unit, Rs. 18 labour/unit, 3 machine hours/unit); Product C (960 units, Rs. 80 material/unit, Rs. 14 labour/unit, 2 machine hours/unit); Product D (1,008 units, Rs. 96 material/unit, Rs. 16 labour/unit, 1 machine hour/unit). Production runs of 48 units per batch, sales batches of 24 units. Overheads: Machine dept Rs. 2,52,000; Set-up costs Rs. 80,000; Store receiving Rs. 60,000; Inspection Rs. 40,000; Material handling Rs. 10,368. Machine dept apportioned to set-up, receiving, inspection as 4:3:2. Set-up costs per production run (batch); Store receiving per requisition (50 per product); Inspection per production run; Material handling per order executed (192 total orders, 24 units per order). Required:
Q5(a)Break-even analysis and CVP
10 marks hard
Manufacturing unit information: Sales 80,000 units @ Rs. 50 = Rs. 40,00,000; Material consumed Rs. 16,00,000; Variable Overheads Rs. 4,00,000; Labour Charges Rs. 8,00,000; Fixed Overheads Rs. 7,20,000; Total costs Rs. 35,20,000; Net Profit Rs. 4,80,000. CALCULATE:
Q5(b)(i)Job costing - allocation of direct expenses
5 marks medium
A Ltd. is an engineering manufacturing company producing job orders on customer specifications. During last month completed three jobs A, B, C. Additional expenditures incurred (beyond direct materials and labour): Office and administration Rs. 6,00,000; Product blueprint cost for job A Rs. 2,80,000; Machinery hire for job B Rs. 80,000; Office attendants salary Rs. 1,00,000; Software license for job C graphics Rs. 1,00,000; Marketing manager salary Rs. 2,40,000. Required: CALCULATE direct expenses attributable to each job.
Q5(b)(ii)Batch costing and order profitability
5 marks medium
A jobbing factory has undertaken to supply 200 pieces per month for 6 months. Batch order opened each month with materials and labour at actual. Overheads levied per labour hour. Contracted selling price Rs. 80/piece. Monthly data January-June: Output (pieces), Material cost (Rs.), Direct wages (Rs.), Direct labour hours. January: 210, 6,500, 1,200, 240. February: 200, 6,400, 1,400, 280. March: 220, 6,800, 1,500, 280. April: 180, 6,300, 1,400, 270. May: 200, 7,000, 1,500, 300. June: 220, 7,200, 1,600, 320. Chargeable expenses and direct labour hours by month provided separately. Required: COMPUTE cost and profit per piece of each batch order and overall position for 1,200 pieces.
Q6(a)By-product costing - NRV method
5 marks medium
DISCUSS the Net Realisable Value (NRV) method of apportioning joint costs to by-products.
Q6(b)Service costing vs product costing
5 marks medium
DIFFERENTIATE between Service costing and Product costing.
Q6(c)Variance analysis - controllable vs uncontrollable
5 marks medium
DISCUSS the Controllable and un-controllable variances.
Q6(d)Cost centers - standard vs discretionary
5 marks medium
DISCUSS the Standard and Discretionary Cost Centres.