Q1Inventory management - consumption calculation
0 marks easy
Following details are related to a manufacturing concern:
Re-order Level: 1,60,000 units
Economic Order Quantity: 90,000 units
Minimum Stock Level: 1,00,000 units
Maximum Stock Level: 1,90,000 units
Average Lead Time: 6 days
Difference between minimum lead time and maximum lead time: 4 days
Calculate:
Q2Incentive schemes - Rowan and Halsey plans
0 marks easy
A skilled worker is paid a guaranteed wage rate of ₹120 per hour. The standard time allowed for a job is 6 hours. He took 5 hours to complete the job. He is paid wages under Rowan Incentive Plan.
Q3Machine hour rate calculation
0 marks easy
The following particulars refer to process used in the treatment of material subsequently incorporated in a component forming part of an electrical appliance:
(i) The original cost of the machine used (Purchased in June 2018) was ₹10,00,000. Its estimated life is 10 years, the estimated scrap value at the end of its life is ₹10,000, and the estimated working time per year (50 weeks of 44 hours) is 2,200 hours. Out of which machine maintenance is estimated to take up 200 hours. Setting up time, estimated at 100 hours, is regarded as productive time.
(ii) Electricity used by the machine during production is 16 units per hour at cost of ₹7 per unit. No power is consumed during maintenance or setting up.
(iii) The machine requires a chemical solution which is replaced at the end of week at a cost of ₹2,000 each time.
(iv) The estimated cost of maintenance per year is ₹1,20,000.
(v) Two attendants control the operation of machine together with five other identical machines. Their combined weekly wages, insurance and employer's contribution to holiday pay amount to ₹9,000.
(vi) Departmental and general works overhead allocated to this machine for the current year amount to ₹20,000.
You are required to calculate the machine hour rate of operating the machine.
Q4Activity-based costing and overhead allocation
0 marks easy
L Limited manufactures three products P, Q and R which are similar in nature and are usually produced in production runs of 100 units. Product P and R require both machine hours and assembly hours, whereas product Q requires only machine hours. The overheads incurred by the company during the first quarter are as under:
Machine Department expenses: ₹18,48,000
Assembly Department expenses: ₹6,72,000
Setup costs: ₹90,000
Stores receiving cost: ₹1,20,000
Order processing and dispatch: ₹1,80,000
Inspect and Quality control cost: ₹36,000
The data related to the three products during the period:
Product P: 15,000 units produced and sold; 30,000 machine hours; 15,000 assembly hours; 1,250 customer orders; 40 requisitions
Product Q: 12,000 units produced and sold; 48,000 machine hours; - assembly hours; 1,000 customer orders; 30 requisitions
Product R: 18,000 units produced and sold; 54,000 machine hours; 27,000 assembly hours; 1,500 customer orders; 50 requisitions
Prepare a statement showing details of overhead costs allocated to each product type using activity-based costing.
Q5Cost sheet preparation and cost classification
0 marks easy
A Ltd. produces a single product X. During the month of July 2023, the company has produced 14,560 tonnes of X. The details for the month of July 2023 are as follows:
(i) Materials consumed: ₹15,00,000
(ii) Power consumed in operating production machinery: 13,000 Kwh @ ₹7 per Kwh
(iii) Diesels consumed in operating production machinery: 1,000 litres @ ₹93 per litre
(iv) Wages & salary paid: ₹64,00,000
(v) Gratuity & leave encashment paid: ₹44,20,000
(vi) Hiring charges paid for Heavy Earth Moving machines (HEMM) engaged in production: ₹13,00,000
(vii) Hiring charges paid for cars used for official purpose: ₹80,000
(viii) Reimbursement of diesel cost for the cars: ₹20,000
(ix) The hiring of cars attracts GST under RCM @5% without credit
(x) Maintenance cost paid for weighing bridge (used for weighing of final goods at despatch): ₹7,000
(xi) AMC cost of CCTV installed at weighing bridge and factory premises: ₹6,000 and ₹18,000 per month respectively
(xii) TA/DA and hotel bill paid for sales manager: ₹16,000
(xiii) The company has 180 employees works for 26 days in a month
Prepare a Cost sheet for the month of July 2023.
Q6Cost accounting vs financial accounting reconciliation
0 marks easy
The financial books of a company reveal the following data for the year ended 31st March, 2023:
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)
Cost records: Factory overheads absorbed at 70% of direct wages; Administration overheads recovered at 15% of factory cost; Selling and distribution overheads charged at ₹6 per unit sold; Opening stock of finished goods valued at ₹240 per unit; Work-in-process valued at factory cost.
Q7Job costing and overhead recovery rates
0 marks easy
SM Motors Ltd. is a manufacturer of auto components. Following are the details of expenses for the year 2022-23:
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 FY 2023-24, the company has received an order from a car manufacturer where the cost of material and labour is estimated at ₹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 at customer's premises is estimated at ₹4,50,000.
Q8Process costing and equivalent units
0 marks easy
The following information is furnished by ABC Company for Process - II of its manufacturing activity for the month of April 2023:
(i) Opening Work-in-Progress: Nil
(ii) Units transferred from Process I: 55,000 units @ ₹3,27,800
(iii) Expenditure debited to Process – II: Consumables ₹1,57,200; Labour ₹1,04,000; Overhead ₹52,000
(iv) Units transferred to Process III: 51,000 units
(v) Closing WIP: 2,000 units (Consumables 80%; Labour 60%; Overhead 60%)
(vi) Units scrapped: 2,000 units, sold at ₹5 per unit
(vii) Normal loss: 4% of units introduced
Q9Joint product costing and cost apportionment
0 marks easy
A factory producing article A also produces a by-product B which is further processed into finished product. The joint cost of manufacture is: Material ₹5,000; Labour ₹3,000; Overhead ₹2,000 (Total ₹10,000)
Subsequent costs - Product A: Material ₹3,000; Labour ₹1,400; Overhead ₹600 (Total ₹5,000). Product B: Material ₹1,500; Labour ₹1,000; Overhead ₹500 (Total ₹3,000)
Selling prices: A ₹16,000; B ₹8,000
Estimated profit on selling prices: A 25%; B 20%
Assuming that selling and distribution expenses are in proportion of sales prices, show how you would apportion joint costs of manufacture and prepare a statement showing cost of production of A and B.
Q10Service costing and tariff determination
0 marks easy
P Holiday Resorts offers three types of rooms: Deluxe Room (100 rooms, 90% occupancy); Super Deluxe Room (60 rooms, 75% occupancy); Luxury Suite (40 rooms, 60% occupancy).
Rent of 'super deluxe' room is 2 times of 'deluxe room' and 'luxury suite' is 3 times of 'deluxe room'.
Annual expenses: Staff salaries ₹680.00 lakhs; Lighting, Heating and Power ₹300.00 lakhs; Repairs, Maintenance and Renovation ₹180.00 lakhs; Linen ₹30.00 lakhs; Laundry charges ₹24.00 lakhs; Interior decoration ₹75.00 lakhs; Sundries ₹30.28 lakhs.
An attendant for each occupied room paid ₹500 per day. Depreciation: Building @5% on ₹900 lakhs; Furniture and fixtures @10% on ₹90 lakhs; Air conditioners @10% on ₹75 lakhs.
Profit @ 25% on total takings. Assume 360 days in a year.
Ascertain the tariff to be charged to customers for different types of rooms.
Q11Standard costing and labour variances
0 marks easy
The following information has been provided by a company:
Number of units produced and sold: 6,000
Standard labour rate per hour: ₹8
Actual hours required: 17,094 hours
Labour efficiency: 105.3%
Labour rate variance: ₹68,376 (A)
You are required to calculate:
Q13Sales budgeting and budgetary control
0 marks easy
XY Co. Ltd manufactures two products X and Y and sells them through East and West divisions.
For 2022-23:
Budgeted Sales - X: East 400 units @ ₹9; West 600 units @ ₹9. Y: East 300 units @ ₹21; West 500 units @ ₹21
Actual Sales - X: East 500 units @ ₹9; West 700 units @ ₹9. Y: East 200 units @ ₹21; West 400 units @ ₹21
Market analysis reveals X is underpriced; increasing price by ₹1 will find ready market. Y is overpriced; reducing price by ₹1 will increase demand. Management has agreed to these changes.
Based on price changes and sales reports, Divisional Managers estimate percentage increase in sales over budgeted sales:
X: East +10%, West +5%
Y: East +20%, West +10%
With intensive advertisement, additional sales are possible:
X: East 60 units, West 70 units
Y: East 40 units, West 50 units
Prepare Sales Budget for 2023-24 incorporating above estimates and show the Budgeted Sales and Actual Sales of 2022-23.