Q1Inventory Management - EOQ and Stock Levels
0 marks easy
M/s Tanishka Materials Private Limited produces a product which names "ESS". The consumption of raw material for the production of "ESS" is 210 Kgs to 350 Kgs per week. Other information is as follows: Procurement Time: 5 to 9 Days; Purchase price of Raw Materials: ` 100 per kg; Ordering Cost per Order: ` 200; Storage Cost: 1% per month plus ` 2 per unit per annum. Consider 365 days a year.
Q2Labour Turnover Rate Calculation - Multiple Methods
0 marks easy
HR Ltd. is progressing in its legal industry. One of its trainee executives, Mr. H, in the Personnel department has calculated labour turnover rate 24.92% for the last year using Flux method. Following is the data provided by the Personnel department for the last year with employee records for various positions including Records clerk, Human Resource Manager, Legal Secretary, Staff Attorney, Associate Attorney, Senior Staff Attorney, Senior Records clerk, and Litigation attorney, with opening strength, joining, leaving, and closing figures, plus information about transfers from and to the Subsidiary Company. At the beginning of the year there were total 1,158 employees on the payroll of the company. The opening strength of the Legal Secretary, Staff Attorney and Associate Attorney were in the ratio of 3 : 3 : 2. The company has decided to abandon the post of Litigation attorney and consequently all the Litigation attorneys were transferred to the subsidiary company. The company and its subsidiary are maintaining separate set of books of account and separate Personnel Department.
Q3Absorption Costing - Pre-determined vs Department-wise Overh
0 marks easy
SE Limited manufactures two products- A and B. The company had budgeted factory overheads amounting to ` 36,72,000 and budgeted direct labour hour of 1,80,000 hours. The company uses pre-determined overhead recovery rate for product costing purposes. The department-wise break-up of the overheads and direct labour hours were as follows: Department Pie ` 25,92,000 90,000 hours ` 28.80; Department Qui ` 10,80,000 90,000 hours ` 12.00. Each unit of product A requires 4 hours in department Pie and 1 hour in department Qui. Also, each unit of product B requires 1 hour in department Pie and 4 hours in department Qui. This was the first year of the company's operation. There was no WIP at the end of the year. However, 1,800 and 5,400 units of Products A and B were on hand at the end of the year. The budgeted activity has been attained by the company.
Q4Activity Based Costing - Overhead Allocation
0 marks hard
Case: The profit margin of BABY Hairclips Company were over 20% of sales producing BROWN and BLACK hairclips. During the last year, GREEN hairclips had been introduced at 10% premium in selling price after the introduction of YELLOW hairclips earlier five years back at 10/3% premium. At present, all of the Plant's indirect expenses are allocated to the products at 3 times of the direct labour expenses. However, the manager is interested in allocating indirect expenses on the basis of activity cost to reveal real earner. He provides support expenses category-wise as follows: Indirect Labour 40,00,000…
The profit margin of BABY Hairclips Company were over 20% of sales producing BROWN and BLACK hairclips. During the last year, GREEN hairclips had been introduced at 10% premium in selling price after the introduction of YELLOW hairclips earlier five years back at 10/3% premium. However, the manager of the company is disheartened with the sales figure for the current financial year. Traditional Income Statement shows Sales and costs for Brown, Black, Yellow, and Green hairclips. At present, all of the Plant's indirect expenses are allocated to the products at 3 times of the direct labour expenses. However, the manager is interested in allocating indirect expenses on the basis of activity cost to reveal real earner. Support Expenses are provided category-wise including Indirect Labour, Labour Incentives, Computer Systems, Machinery depreciation, Machine maintenance, and Energy for machinery totaling ` 1,20,00,000. Incentives to be allocated at 40% of labour expenses. Indirect labours are involved mainly in three activities: about half in handling production runs, 40% in physical changeover from one color to another, and remaining 10% in maintaining records. Computer system costs are allocated 80% to production run activity and 20% to record keeping. Other overhead expenses for machinery are incurred to supply machine capacity. Activity Cost Drivers are provided for Brown, Black, Yellow, and Green hairclips including Sales Volume, Selling Price, Material cost, Machine hours per unit, Production runs, and Setup time per run.
Q5Cost Sheet Preparation
0 marks easy
CT Limited is engaged in producing medical equipment. It has furnished following details related to its products produced during a month: Raw materials Opening stock 1,000 units 90,00,000; Purchases 49,000 units 44,10,00,000; Closing stock 1,750 units 1,57,50,000. Works-in-progress Opening 2,000 units 1,75,50,000; Closing 1,000 units 94,50,000. Direct employees' wages, allowances etc. 6,88,50,000; Primary packaging cost (per unit) 1,440; R&D expenses & Quality control expenses 2,10,60,000; Consumable stores, depreciation on plant 3,42,00,000; Administrative overheads related to production 3,15,00,000; Selling expenses 4,84,30,800; Royalty paid for production 3,64,50,000; Cost of web-site (for online sale) maintenance 60,75,000; Secondary packaging cost (per unit) 225. There was a normal scrap of 250 units of direct material which realized ` 5,400 per unit. The entire finished product was sold at a profit margin of 20% on sales.
Q6Cost Accounting System - Profit Reconciliation
0 marks easy
The financial books of a company reveal the following data for the financial year ending on 31st March, 2022: Opening Stock Finished goods 875 units 1,48,750, Work-in-process 64,000. During the year 01.04.2021 to 31.3.2022: Raw materials consumed 15,60,000, Direct Labour 9,00,000, Factory overheads 6,00,000, Goodwill written off 2,00,000, Administration overheads 5,90,000, Dividend paid 1,70,000, Bad Debts 24,000, Selling and Distribution Overheads 1,22,000, Interest received 90,000, Rent received 36,000, Sales 14,500 units 41,60,000. Closing Stock Finished goods 375 units 82,500, Work-in-process 77,334. The cost records provide: Factory overheads are absorbed at 60% of direct wages; Administration overheads are recovered at 20% of factory cost; Selling and distribution overheads are charged at ` 8 per unit sold; Opening Stock of finished goods is valued at ` 208 per unit; The company values work-in-process at factory cost for both Financial and Cost Profit Reporting.
Q7Batch Costing - Selling Price Determination
0 marks easy
PS Ltd. manufactures articles in predetermined lots simultaneously. The following costs have been incurred for Batch No. 'PS143' in the month of March, 2022: Units produced 1,000 units; Direct materials cost ` 2,00,000; Direct Labour Department A 800 labour hours @ ` 100 per hour; Department B 1,400 labour hours @ ` 120 per hour. Factory overheads are absorbed on labour hour basis: Department A @ ` 140 per hour; Department B @ ` 80 per hour. Administrative overheads are absorbed at 10% of selling price. The firm expects 25% gross profit (sales value minus factory cost) for determining the selling price.
Q8Contract Costing - Notional Profit/Loss
0 marks easy
A contractor prepares his accounts for the year ending 31st March each year. He commenced a contract on 1st July, 2021. The following information relates to the contract as on 31st March, 2022: Material issued 12,55,000; Wages 28,28,000; Salary to Foreman 4,06,500. A machine costing ` 13,00,000 has been on the site for 4.8 months, its working life is estimated at 7 years and its final scrap value at ` 75,000. A supervisor, who is paid ` 40,000 p.m. has devoted one-half of his time to this contract. All other expenses and administration charges amount to ` 6,82,500. Material in hand at site costs ` 1,77,000 on 31st March, 2022. The contract price is ` 1,00,00,000. On 31st March, 2022 2/3rd of the contract was completed. The architect issued certificates covering 50% of the contract price, and the contractor had been paid ` 37,50,000 on account.
Q9Process Costing - Multiple Processes
0 marks easy
SM Pvt. Ltd. manufactures their products in three consecutive processes. Process A: Transferred to next Process 60%, Transferred to warehouse for sale 40%. Process B: Transferred to next Process 50%, Transferred to warehouse for sale 50%. Process C: Transferred to warehouse for sale 100%. In each process, there is a weight loss of 2% and scrap of 8% of input of each process. The realizable value of scrap of each process is: Process A @ ` 2 per ton; Process B @ ` 4 per ton; Process C @ ` 6 per ton. The following particulars relate to April, 2022: Process A Materials used 1,000 Tons @ ` 20, Direct Wages ` 4,000, Direct Expenses ` 3,160. Process B Materials used 260 Tons @ ` 15, Direct Wages ` 3,000, Direct Expenses ` 2,356. Process C Materials used 140 Tons @ ` 10, Direct Wages ` 2,000, Direct Expenses ` 1,340.
Q10Joint Product Costing - Net Realizable Value Method
0 marks easy
JP Ltd. uses joint production process that produces three products at the split-off point. Joint production costs during the month of July, 2022 were ` 33,60,000. Product information for the month of July is as follows: Product A: Units produced 3,000, Sales price at the split-off ` 200, Sales price after further processing ` 300, Costs to process after split-off ` 6,00,000. Product B: Units produced 6,000, Sales price after further processing ` 350, Costs to process after split-off ` 6,00,000. Product C: Units produced 9,000, Sales price after further processing ` 100, Costs to process after split-off ` 6,00,000. Product C is a by-product and the company accounts for the by-product at net realizable value as a reduction of joint cost. Further, Product B & C must be processed further before they can be sold.
Q11Service Costing - Transport Cost per Passenger-km
0 marks easy
Royal Transport Services runs fleet of buses within the limits of Jaipur city. The following are the details which were incurred by the company during October, 2021: Cost of each Bus 24,00,000; Garage Rent 1,00,000; Insurance 25,000; Road tax 20,000; Manager's Salary 60,000; Assistant's Salary (Two) 32,000 each; Supervisor's Salary (Three) 24,000 each; Driver's Salary (Twenty-Five) 20,000 each; Cleaner's Salary (Twenty) 5,000 each; Office Staff's Salary 1,00,000; Consumables 1,20,000; Repairs & Maintenance 90,000; Other Fixed Expenses 72,000; Diesel (10 Kms per Litre) 80 per litre; Oils & Lubricants 1,45,000; Tyres and tubes 35,000; Depreciation 10% p.a. on Cost. Capacity: 12 Buses 60 Passengers; 13 Buses 50 Passengers. Each bus makes 4 round trips a day covering a distance of 10 Kilometers in each trip (One Way) on an average. During the trips 80% of the seats are occupied. The annual records show that 5 buses are generally required to be kept away from roads each day for repairs. Cost sheet to be prepared on the basis of 25 buses.
Q12Standard Costing - Variance Analysis
0 marks easy
Ahaan Limited operates a system of standard costing in respect of one of its products 'AH1' which is manufactured within a single cost centre. Details of standard per unit are as follows: The standard material input is 20 kilograms at a standard price of ` 24 per kilogram; The standard wage rate is ` 72 per hour and 5 hours are allowed to produce one unit; Fixed production overhead is absorbed at the rate of 100% of wages cost. During the month of April 2022, the following was incurred: Actual price paid for material purchased @ ` 22 per kilogram; Total direct wages cost was ` 43,92,000; Fixed production overhead cost incurred was ` 45,00,000. Analysis of variances: Direct material price ` 4,80,000 Favourable; Direct material usage ` 48,000 Favourable; Direct labour rate ` 69,120 Adverse; Direct labour efficiency ` 33,120 Favourable; Fixed production overhead expenditure ` 1,80,000 Adverse.
Q13(a)Marginal Costing - Special Order Decision
0 marks easy
RPP Manufacturers is approached by an international customer for one-time special order similar to one offered to its domestic customers. Per unit data for sales to regular customers is provided: Direct material ` 693, Direct labour ` 315, Variable manufacturing support ` 504, Fixed manufacturing support ` 1092, Total manufacturing costs ` 2604, Markup (50%) ` 1302, Targeted selling price ` 3906. It is provided that RPP Manufacturers has excess capacity.
Q13(b)Marginal Costing - Machine Selection Decision
0 marks hard
Case: The lab corner of Newlife Hospital Trust operates two types of specialist MRI scanning machine- MR10 and MR59. Machine MR10: Running hours 1,100, Variable running costs excluding special technology 68,750, Fixed Costs 50,000. Machine MR59: Running hours 2,000, Variable running costs excluding special technology 1,60,000, Fixed Costs 2,43,750. A brain scan is normally carried out on machine type MR10. This task uses special technology costing ` 100 each and takes four hours of machine time. Because of the nature of the process, around 10% of the scans produce blurred and therefore useless resul…
The lab corner of Newlife Hospital Trust operates two types of specialist MRI scanning machine- MR10 and MR59. Following details are estimated for the next period: Machine MR10 Running hours 1,100, Variable running costs excluding special technology 68,750, Fixed Costs 50,000. Machine MR59 Running hours 2,000, Variable running costs excluding special technology 1,60,000, Fixed Costs 2,43,750. A brain scan is normally carried out on machine type MR10. This task uses special technology costing ` 100 each and takes four hours of machine time. Because of the nature of the process, around 10% of the scans produce blurred and therefore useless results.
Q14Budgetary Control - Performance Ratios
0 marks easy
Following information is available for DK and Co.: Standard working hours 9 hours per day of 5 days per week; Maximum capacity 50 employees; Actual working 40 employees; Actual hours expected to be worked per four week 7,200 hours; Std. hours expected to be earned per four weeks 9,000 hours; Actual hours worked in the four-week period 6,750 hours; Standard hours earned in the four-week period 7,875 hours. The related period is of 4 weeks. In this period there was a one special day holiday due to national event.
Q15(a)Cost Classification - Hospital
0 marks easy
Health Wealth Hospital is interested in estimating the cost for each patient stay. The hospital offers general health care facility i.e. only basic services. Following costs need to be classified: Electronic monitoring, Meals for patients, Nurses' salaries, Parking maintenance, Security.
Q15(b)Cost Control vs Cost Reduction
0 marks easy
Differentiate between Cost Control and Cost Reduction.
Q15(c)Differences between Cost Accounting and Management Accountin
0 marks easy
Though Cost Accounting and Management Accounting is used synonymously but there are a few differences. Elaborate those differences.
Q15(d)Cost Units by Industry
0 marks easy
What are cost units? Write the cost unit basis against each of the following Industry/Product- Automobile, Steel, Cement, Chemicals, Power and Transport.