Q1Economic Order Quantity, inventory management, stock levels
0 marks easy
A Ltd. produces a product 'X' using a raw material 'D'. To produce one unit of X, 4 kg of D is required. As per the sales forecast conducted by the company, it will be able to sale 20,000 units of X in the coming year. The following are the information related to the raw material D: (i) The Re-order quantity is 400 kg. less than the Economic Order Quantity (EOQ). (ii) Maximum consumption per day is 40 kg. more than the average consumption per day. (iii) There is an opening stock of 2,000 kg. (iv) Time required to get the raw materials from the suppliers is 4 to 8 days. (v) The purchase price is ` 250 per kg. There is an opening stock of 1,800 units of the finished product X. The carrying cost of inventory is 14% p.a. To place an order company has to incur ` 1,340 on paper and documentation work. From the above information FIND OUT the followings in relation to raw material D:
Q2Wage payment systems, Halsey scheme, Rowan scheme, bonus cal
0 marks easy
JBL Sisters operates a boutique which works for various fashion houses and retail stores. It has employed 26 workers and pays them on time rate basis. On an average an employee is allowed 8 hours for boutique work on a piece of garment. In the month of December 2020, two workers M and J were given 15 pieces and 21 pieces of garments respectively for boutique work. The following are the details of their work: M - Work assigned 15 pcs., Time taken 100 hours; J - Work assigned 21 pcs., Time taken 140 hours. Workers are paid bonus as per Halsey System. The existing rate of wages is ` 60 per hour. As per the new wages agreement the workers will be paid ` 72 per hour w.e.f. 1st January 2021. At the end of the month December 2020, the accountant of the company has wrongly calculated wages to these two workers taking ` 72 per hour.
Q3Machine hour rate, absorption costing, overhead allocation
0 marks easy
A manufacturing unit has purchased and installed a new machine at a cost of ` 24,90,000 to its fleet of 5 existing machines. The new machine has an estimated life of 12 years and is expected to realise ` 90,000 as scrap value at the end of its working life. Other relevant data are as follows: (i) Budgeted working hours are 2,496 based on 8 hours per day for 312 days. Plant maintenance work is carried out on weekends when production is totally halted. The estimated maintenance hours are 416. During the production hours machine set-up and change over works are carried out. During the set-up hours no production is done. A total 312 hours are required for machine set-ups and change overs. (ii) An estimated cost of maintenance of the machine is ` 2,40,000 p.a. (iii) The machine requires a component to be replaced every week at a cost of ` 2,400. (iv) There are three operators to control the operations of all the 6 machines. Each operator is paid ` 30,000 per month plus 20% fringe benefits. (v) Electricity: During the production hours including set-up hours, the machine consumes 60 units per hour. During the maintenance the machine consumes only 10 units per hour. Rate of electricity per unit of consumption is ` 6. (vi) Departmental and general works overhead allocated to the operation during last year was ` 5,00,000. During the current year it is estimated to increase by 10%. Required: COMPUTE the machine hour rate.
Q4Activity-based costing, absorption costing, overhead allocat
0 marks easy
The following budgeted information relates to N Ltd. for the year 2021: Products X, Y, Z with Production and Sales (units): 1,00,000, 80,000, 60,000; Selling price per unit (`) 90, 180, 140; Direct cost per unit (`) 50, 90, 95; Machine department (machine hours per unit): 3, 4, 5; Assembly department (direct labour hours per unit): 6, 4, 3. The estimated overhead expenses for the year 2021 will be Machine Department ` 73,60,000 and Assembly Department ` 55,00,000. Overhead expenses are apportioned on basis of machine hours for Machine Department and labour hours for Assembly Department. After a detailed study of the activities the following cost pools and their respective cost drivers are found with specific amounts and quantities. As per an estimate the activities will be used by the three products with given set-ups, customer orders, and purchase orders. You are required to PREPARE a product-wise profit statement using:
Q5Cost sheet preparation, prime cost, factory cost, cost of go
0 marks easy
RTA Ltd. has the following expenditures for the year ended 31st December, 2020: Raw materials purchased ` 5,00,00,000; Freight inward ` 9,20,600; Wages paid to factory workers ` 25,20,000; Royalty paid for production ` 1,80,000; Amount paid for power & fuel ` 3,50,000; Job charges paid to job workers ` 3,10,000; Stores and spares consumed ` 1,10,000; Depreciation on office building ` 50,000; Repairs & Maintenance for Plant & Machinery ` 40,000 and Sales office building ` 20,000; Insurance premium for Plant & Machinery ` 28,200 and Factory building ` 18,800; Expenses paid for quality control check activities ` 18,000; Research & development cost ` 20,000; Expenses for pollution control and engineering & maintenance ` 36,000; Salary paid to Sales & Marketing managers ` 5,60,000; Salary paid to General Manager ` 6,40,000; Packing cost for primary packing ` 46,000 and for re-distribution ` 80,000; Fee paid to independent directors ` 1,20,000; Performance bonus paid to sales staffs ` 1,20,000; Opening stock: Raw materials ` 10,00,000, Work-in-process ` 8,60,000, Finished goods ` 12,00,000; Closing stock: Raw materials ` 8,40,000, Work-in-process ` 6,60,000, Finished goods ` 10,50,000; Amount realized by selling of scrap and waste ` 48,000. From the above data you are requested to PREPARE Statement of Cost for RTA Ltd. for the year ended 31st December, 2020, showing:
Q6Cost accounting, financial accounting reconciliation, overhe
0 marks easy
The financial books of a company reveal the following data for the year ended 31st March, 2020: Opening Stock: Finished goods 625 units ` 1,06,250, Work-in-process ` 92,000; Raw materials consumed ` 16,80,000; Direct Labour ` 12,20,000; Factory overheads ` 8,44,000; Administration overheads (production related) ` 3,96,000; Dividend paid ` 2,44,000; Bad Debts ` 36,000; Selling and Distribution Overheads ` 1,44,000; Interest received ` 76,000; Rent received ` 92,000; Sales 12,615 units ` 45,60,000; Closing Stock: Finished goods 415 units ` 91,300, Work-in-process ` 82,400. The cost records provide: Factory overheads are absorbed at 70% of direct wages; Administration overheads are recovered at 15% of factory cost; Selling and distribution overheads are charged at ` 6 per unit sold; Opening Stock of finished goods is valued at ` 240 per unit; The company values work-in-process at factory cost for both Financial and Cost Profit Reporting. Required:
Q7Job costing, overhead recovery rates, pricing
0 marks easy
SM Motors Ltd. is a manufacturer of auto components. Following are the details of expenses for the year 2019-20: Opening Stock of Material ` 15,00,000; Closing Stock of Material ` 20,00,000; Purchase of Material ` 1,80,50,000; Direct Labour ` 90,50,000; Factory Overhead ` 30,80,000; Administrative Overhead ` 20,50,400. During the FY 2020-21, the company has received an order from a car manufacturer where it estimates that the cost of material and labour will be ` 80,00,000 and ` 40,50,000 respectively. The company charges factory overhead as a percentage of direct labour and administrative overheads as a percentage of factory cost based on previous year's cost. Cost of delivery of the components at customer's premises is estimated at ` 4,50,000. You are required to:
Q8Process costing, equivalent production, normal loss, cost ac
0 marks easy
A company produces a component, which passes through two processes. During the month of November, 2020, materials for 40,000 components were put into Process-I of which 30,000 were completed and transferred to Process-II. Those not transferred to Process-II were 100% complete as to materials cost and 50% complete as to labour and overheads cost. The Process-I costs incurred were Direct Materials ` 3,00,000, Direct Wages ` 3,50,000, Factory Overheads ` 2,45,000. Of those transferred to Process II, 28,000 units were completed and transferred to finished goods stores. There was a normal loss with no salvage value of 200 units in Process II. There were 1,800 units remained unfinished in the process with 100% complete as to materials and 25% complete as regard to wages and overheads. Costs incurred in Process-II are: Packing Materials ` 80,000, Direct Wages ` 71,125, Factory Overheads ` 85,350. Packing material cost is incurred at the end of the second process as protective packing to the completed units of production. Required:
Q9Service costing, transportation cost allocation, differentia
0 marks easy
VPS is a public school having 25 buses each plying in different directions for the transport of its school students. In view of large number of students availing of the bus service, the buses work two shifts daily both in the morning and in the afternoon. The buses are garaged in the school. The workload of the students has been so arranged that in the morning, the first trip picks up senior students and the second trip plying an hour later picks up junior students. Similarly, in the afternoon, the first trip takes the junior students and an hour later the second trip takes the senior students home. The distance travelled by each bus, one way is 8 km. The school works 22 days in a month and remains closed for vacation in May and June. The bus fee, however, is payable by the students for all the 12 months in a year. Detailed annual expenses provided include driver's salary, cleaner's salary, license fees, insurance premium, repairs and maintenance, bus purchase price, life, scrap value, and diesel cost. The school follows differential transportation fees based on distance travelled: 2 km (25% of Full), 4 km (50% of Full), 8 km (Full). Due to a pandemic, lockdown imposed on schools from April 2020 to December 2020. Drivers and cleaners were paid 75% of their salary during the lockdown period. Repairing cost reduced to 75% for the year 2020. Required:
Q10Standard costing, variances, material variance, labour varia
0 marks easy
LM Limited produces a product 'SX4' which is sold in a 10 Kg. packet. The standard cost card per packet of 'SX4' is: Direct materials 10 kg @ ` 90 per kg ` 900; Direct labour 8 hours @ ` 80 per hour ` 640; Variable Overhead 8 hours @ ` 20 per hour ` 160; Fixed Overhead ` 250; Total ` 1,950. Budgeted output for a quarter of a year was 10,000 Kg. Actual output is 9,000 Kg. Actual costs for this quarter are: Direct Materials 8,900 Kg @ ` 92 per Kg. ` 8,18,800; Direct Labour 7,000 hours @ ` 84 per hour ` 5,88,000; Variable Overhead incurred ` 1,40,000; Fixed Overhead incurred ` 2,60,000. You are required to CALCULATE:
Q11Marginal costing, P/V ratio, break-even analysis, contributi
0 marks easy
Aditya Limited manufactures three different products. The current product mix information is: Products S, T, U with Sales Mix 35%, 35%, 30%; Selling Price ` 300, ` 400, ` 200; Variable Cost ` 150, ` 200, ` 120; Total Fixed Costs ` 18,00,000; Total Sales ` 60,00,000. The company has currently under discussion, a proposal to discontinue the manufacture of Product U and replace it with Product M, when the following results are anticipated: Products S, T, M with Sales Mix 50%, 25%, 25%; Selling Price ` 300, ` 400, ` 300; Variable Cost ` 150, ` 200, ` 150; Total Fixed Costs ` 18,00,000; Total Sales ` 64,00,000. Required:
Q12Budgeting, production budget, material purchase budget, sale
0 marks easy
RS Ltd manufactures and sells a single product and has estimated sales revenue of ` 302.4 lakh during the year based on 20% profit on selling price. Each unit of product requires 6 kg of material A and 3 kg of material B and processing time of 4 hours in machine shop and 2 hours in assembly shop. Factory overheads are absorbed at a blanket rate of 20% of direct labour. Variable selling & distribution overheads are ` 60 per unit sold and fixed selling & distribution overheads are estimated to be ` 69,12,000. Other relevant details include Purchase Price: Material A ` 160 per kg, Material B ` 100 per kg; Labour Rate: Machine Shop ` 140 per hour, Assembly Shop ` 70 per hour; Finished Stock Opening 2,500 units, Closing 3,000 units; Material A Opening 7,500 kg, Closing 8,000 kg; Material B Opening 4,000 kg, Closing 5,500 kg. Required:
Q13Cost-plus contracts, joint cost apportionment, cost classifi
0 marks easy
Miscellaneous questions on cost accounting topics.