Q3(a)Operations management - Economic batch quantity, run size op
10 marks hard
XYZ Ltd. has obtained an order to supply 48000 bearings per year from a concern. On a steady basis, it is estimated that it costs ₹ 0.20 as inventory holding cost per bearing per month and the set-up cost per run of bearing manufacture is ₹ 384.
You are required to:
(i) compute the optimum run size and number of runs for bearing manufacture.
(ii) compute the interval between two consecutive runs.
(iii) find the extra costs to be incurred, if company adopts a policy to manufacture 8000 bearings per run as compared to optimum run size.
(iv) give your opinion regarding run size of bearing manufacture.
Assume 365 days in a year.
Q4Cost Accounting - Control Accounts
10 marks hard
The following balances were extracted from a Company's ledger as on 30th June 2018:
Raw material control a/c: Debit ₹ 2,82,450
Work-in-progress control a/c: Debit ₹ 2,38,300
Finished stock control a/c: Debit ₹ 3,92,500
General ledger adjustment a/c: Credit ₹ 9,13,250
Total: Debit ₹ 9,13,250, Credit ₹ 9,13,250
The following transactions took place during the quarter ended 30th September, 2018:
(i) Factory overheads – allocated to work-in-progress: ₹ 1,36,350
(ii) Goods finished – at cost: ₹ 13,76,200
(iii) Raw materials purchased: ₹ 12,43,810
(iv) Direct wages – allocated to work-in-progress: ₹ 2,56,800
(v) Cost of goods sold: ₹ 14,26,500
(vi) Raw materials – issued to production: ₹ 13,60,430
(vii) Raw materials – credited by suppliers: ₹ 27,200
(viii) Raw materials losses – inventory audit: ₹ 6,000
(ix) Work-in-progress rejected (with no scrap value): ₹ 12,300
(x) Customer's returns (at cost) of finished goods: ₹ 45,000
You are required to prepare:
(i) Raw material control a/c
(ii) Work-in-progress control a/c
(iii) Finished stock control a/c
(iv) General ledger adjustment a/c
Q4Cost Accounting - Transport/Operating Costing
10 marks very hard
Case: M/s XY Travels has been given a 25 km. long route to run an air-conditioned luxury Bus. The cost of bus is ₹ 2,00,000. It has been insured @ 3% premium per annum while annual fuel tax amounts to ₹ 36,000. Annual repairs will be ₹ 50,000 and the bus is likely to last for 5 years. The driver's salary will be ₹ 2,40,000 per annum and the conductor's salary will be ₹ 1,80,000 per annum in addition to 10% of the takings as commission (to be shared by the driver and the conductor equally). Office and administration overheads will be ₹ 3,18,000 per annum. Diesel and oil will be ₹ 1,500 per 100 km. Th…
M/s XY Travels has been given a 25 km. long route to run an air-conditioned luxury Bus. The cost of bus is ₹ 2,00,000. It has been insured @ 3% premium per annum while annual fuel tax amounts to ₹ 36,000. Annual repairs will be ₹ 50,000 and the bus is likely to last for 5 years. The driver's salary will be ₹ 2,40,000 per annum and the conductor's salary will be ₹ 1,80,000 per annum in addition to 10% of the takings as commission (to be shared by the driver and the conductor equally). Office and administration overheads will be ₹ 3,18,000 per annum. Diesel and oil will be ₹ 1,500 per 100 km. The bus will make 4 round trips carrying on an average 40 passengers on each trip.
Assuming 25% profit on takings and considering that the bus will run on an average 25 days in a month, you are required to:
(i) prepare operating cost sheet (for the month),
(ii) calculate fare to be charged per passenger km.
Q5Cost accounting - Fixed cost and break-even analysis
5 marks medium
You are required to:
(i) calculate fixed cost and break-even point.
(ii) calculate the volume of sales to earn profit of 20% on sales.
(iii) if management is willing to invest ₹ 10,00,000 with an expected return of 20%, calculate units to be sold to earn this profit.
(iv) Management expects additional sales if the selling price is reduced to ₹ 44. Calculate units to be sold to achieve the same profit as desired in note (iii).
Q5Production budget, Purchase budget, Cost accounting
10 marks very hard
An electronic gadget manufacturer has prepared sales budget for the next few months. In this respect, following figures are available: January 5000 units, February 6000 units, March 7000 units, April 7500 units, May 8000 units. To manufacture an electronic gadget, a standard cost of ₹ 1,500 is incurred and it is sold through dealers at a uniform price of ₹ 2,000 per gadget to customers. Dealers are given a discount of 15% on selling price. Apart from other materials, two units of batteries are required to manufacture a gadget. The company wants to hold stock of batteries at the end of each month to cover 30% of next month's production and to hold stock of manufactured gadgets to cover 25% of the next month's production. 3250 units of batteries and 1200 units of manufactured gadgets were in stock on 1st January.
Q5Labour costing, Employee cost analysis
10 marks hard
Case: M/s ABC Private Limited employee costing data
Following data have been extracted from the books of M/s ABC Private Limited: Salary (each employee, per month) ₹ 30,000; Bonus 25% of salary; Employer's contribution to PF, ESI etc. 15% of salary; Contribution at employees' welfare activities ₹ 6,61,500 per annum; Total leave permitted during the year 30 days; No. of employees 175; Normal idle time 70 hours per annum; Abnormal idle time (due to failure of power supply) 50 hours; Working days per annum 310 days of 8 hours.
Q6Cost Accounting - Responsibility centres, Materials manageme
20 marks very hard
Answer any four of the following:
Q6(b)Cost accounting - Activity based costing vs absorption costi
10 marks hard
M/s HMB Limited is producing a product in (0) batches each of 1500 units is a year and incurring overhead on:
Material procurement: ₹ 22,50,000
Maintenance: ₹ 17,30,000
Setup: ₹ 6,84,500
Quality control: ₹ 5,14,800
Total: ₹ 51,39,300
The company is using currently the method of absorbing overheads on the basis of prime cost. Now it wants to shift to activity based costing.
Activity Driver details:
Material orders: 9080
Maintenance hours: 2250
No. of set-ups: 40
No. of inspections: 25
The company has produced a batch of 1500 units and has incurred ₹ 26,38,700 and ₹ 3,75,200 on materials and wages respectively. The usage of activities of the said batch are as follows:
Material orders: 48 orders
Maintenance hours: 810 hours
No. of set-ups: 40
No. of inspections: 25
You are required to:
(i) find out cost of product per unit on absorption costing basis for the said batch.
(ii) determine cost driver rate, total cost and cost per unit of output of the said batch on the basis of activity based costing.
Q11Cost Accounting - Service Department Allocation, Overhead Di
0 marks hard
Case: Mr. NOP Limited power plant cost allocation scenario
Mr. NOP Limited has its own power plant and generates its own power. Information regarding power requirements and power used are as follows: Needed capacity production (Horse power hours): Production Dept. A=20,000, B=25,000; Service Dept. X=15,000, Y=10,000. Used during quarter ended September 2018: Production Dept. A=16,000, B=20,000; Service Dept. X=12,000, Y=8,000. During the quarter ended September 2018, costs for generating power amounted to ₹ 12.60 lakhs out of which ₹ 4.20 lakhs was considered as fixed cost. Service department X renders services to departments A, B, and Y in the ratio of 6:4:2 whereas department Y renders services to department A and B in the ratio of 4:1. The direct labour hours of department A and B are 67500 hours and 48750 hours respectively.