Q1(i)Material cost - cash discount treatment under GST
0 marks hard
Case: 'Axe Trade', an unregistered supplier under GST, purchased material from Vye Ltd. which is a registered supplier under GST. During the month of June 2024, the Axe Traders has purchased a lot of 5,000 units on credit from Vye Ltd. The information related to the purchase are as follows: Listed price of one lot of 5,000 units - ₹ 2,50,000; Trade discount - @ 10% on listed price; CGST and SGST (Credit available) - 18% (9% CGST + 9% SGST); Cash discount - @ 10% (Will be given only if payment is made within 30 days.); Toll Tax paid ₹ 5,000; Freight and Insurance ₹ 17,220; Demurrage paid to transport…
If Axe Traders pays the supplier within 30 days of purchase, then, what is the total amount of cash discount received from the supplier and how it is treated to calculate material cost?
(A) ₹ 25,000 & it will not be deducted from the material cost
(B) ₹ 26,550 & it will be deducted from the material cost
(C) ₹ 26,550 & it will not be deducted from the material cost
(D) ₹ 22,500 & it will not be deducted from the material cost
Q1(ii)Material cost - other expenses calculation and treatment
0 marks hard
Case: 'Axe Trade', an unregistered supplier under GST, purchased material from Vye Ltd. which is a registered supplier under GST. During the month of June 2024, the Axe Traders has purchased a lot of 5,000 units on credit from Vye Ltd. The information related to the purchase are as follows: Listed price of one lot of 5,000 units - ₹ 2,50,000; Trade discount - @ 10% on listed price; CGST and SGST (Credit available) - 18% (9% CGST + 9% SGST); Cash discount - @ 10% (Will be given only if payment is made within 30 days.); Toll Tax paid ₹ 5,000; Freight and Insurance ₹ 17,220; Demurrage paid to transport…
What will be the amount of other expenses and how it is treated in material cost?
(A) ₹ 6,154.40 & it will be added with the material cost
(B) ₹ 6,280.00 & it will be added with the material cost
(C) ₹ 5,344.40 & it will be added with the material cost
(D) ₹ 5,453.47 & it will not be added with the material cost
Q1(iii)GST treatment in cost sheet for unregistered dealer
0 marks hard
Case: 'Axe Trade', an unregistered supplier under GST, purchased material from Vye Ltd. which is a registered supplier under GST. During the month of June 2024, the Axe Traders has purchased a lot of 5,000 units on credit from Vye Ltd. The information related to the purchase are as follows: Listed price of one lot of 5,000 units - ₹ 2,50,000; Trade discount - @ 10% on listed price; CGST and SGST (Credit available) - 18% (9% CGST + 9% SGST); Cash discount - @ 10% (Will be given only if payment is made within 30 days.); Toll Tax paid ₹ 5,000; Freight and Insurance ₹ 17,220; Demurrage paid to transport…
What is the amount of GST and how will it be treated in cost sheet of Axe Traders?
(A) ₹ 40,500 & it will not be added with material cost
(B) ₹ 40,500 & it will be added with material cost
(C) ₹ 45,000 & it will not be added with material cost
(D) ₹ 45,000 & it will be added with material cost
Q1(iv)Total material cost in cost sheet
0 marks hard
Case: 'Axe Trade', an unregistered supplier under GST, purchased material from Vye Ltd. which is a registered supplier under GST. During the month of June 2024, the Axe Traders has purchased a lot of 5,000 units on credit from Vye Ltd. The information related to the purchase are as follows: Listed price of one lot of 5,000 units - ₹ 2,50,000; Trade discount - @ 10% on listed price; CGST and SGST (Credit available) - 18% (9% CGST + 9% SGST); Cash discount - @ 10% (Will be given only if payment is made within 30 days.); Toll Tax paid ₹ 5,000; Freight and Insurance ₹ 17,220; Demurrage paid to transport…
What is the total material cost chargeable in the cost sheet of Axe Traders?
(A) ₹ 3,14,000
(B) ₹ 2,73,500
(C) ₹ 2,72,673
(D) ₹ 3,13,874
Q1(v)Good units and cost per unit after normal shortage
0 marks hard
Case: 'Axe Trade', an unregistered supplier under GST, purchased material from Vye Ltd. which is a registered supplier under GST. During the month of June 2024, the Axe Traders has purchased a lot of 5,000 units on credit from Vye Ltd. The information related to the purchase are as follows: Listed price of one lot of 5,000 units - ₹ 2,50,000; Trade discount - @ 10% on listed price; CGST and SGST (Credit available) - 18% (9% CGST + 9% SGST); Cash discount - @ 10% (Will be given only if payment is made within 30 days.); Toll Tax paid ₹ 5,000; Freight and Insurance ₹ 17,220; Demurrage paid to transport…
The number of good units and cost per unit of the materials received are:
(A) 5,000 units & ₹ 62.80
(B) 5,000 units & ₹ 54.70
(C) 4,000 units & ₹ 78.50
(D) 4,000 units & ₹ 68.38
Q2(i)Standard costing - actual output from usage variance
0 marks hard
Case: ABC Pvt Ltd is engaged in the manufacture of a Product Q. The product has the following standard production requirements determined by the technical team of the company post satisfactory completion of test run: Raw Material Z – 2 units @ ₹ 2 per unit; Skilled labour – 2.5 hours @ ₹ 5 per hour; Fixed Overheads – ₹ 7.5 per unit. The input of Raw material Z has a yield of 80% every time when infused into production. The actual quantity of Raw material Z consumed for production during the year was 24,000 units. The Usage variance of Material Z was 2,000 Favourable. Further the actual amount of mat…
The Actual output of Product Q produced during the year is:
(A) 10,000 units
(B) 12,500 units
(C) 25,000 units
(D) 15,000 units
Q2(ii)Standard costing - material price and cost variance
0 marks hard
Case: ABC Pvt Ltd is engaged in the manufacture of a Product Q. The product has the following standard production requirements determined by the technical team of the company post satisfactory completion of test run: Raw Material Z – 2 units @ ₹ 2 per unit; Skilled labour – 2.5 hours @ ₹ 5 per hour; Fixed Overheads – ₹ 7.5 per unit. The input of Raw material Z has a yield of 80% every time when infused into production. The actual quantity of Raw material Z consumed for production during the year was 24,000 units. The Usage variance of Material Z was 2,000 Favourable. Further the actual amount of mat…
The Material price and material cost variance are:
(A) Price variance – 3,000 Adverse, Cost Variance – 5,000 Adverse
(B) Price variance – 3,000 Favourable, Cost Variance – 5,000 Favourable
(C) Price variance – 3,000 Favourable, Cost Variance – 8,000 Adverse
(D) Price variance – 5,000 Adverse, Cost Variance – 3,000 Favourable
Q2(iii)Standard costing - standard hours, net actual hours, idle ti
0 marks hard
Case: ABC Pvt Ltd is engaged in the manufacture of a Product Q. The product has the following standard production requirements determined by the technical team of the company post satisfactory completion of test run: Raw Material Z – 2 units @ ₹ 2 per unit; Skilled labour – 2.5 hours @ ₹ 5 per hour; Fixed Overheads – ₹ 7.5 per unit. The input of Raw material Z has a yield of 80% every time when infused into production. The actual quantity of Raw material Z consumed for production during the year was 24,000 units. The Usage variance of Material Z was 2,000 Favourable. Further the actual amount of mat…
The Standard Hours, Net Actual hours and the idle time are:
(A) Standard Hours – 27,500; Net Actual Hours – 28,000 hours; Idle Time – 2,000 hours
(B) Standard Hours – 22,500; Net Actual Hours – 28,500 hours; Idle Time – 1,500 hours
(C) Standard Hours – 24,000; Net Actual Hours – 29,000 hours; Idle Time – 1,000 hours
(D) Standard Hours – 25,000 hours; Net Actual Hours – 28,000 hours; Idle Time – 2,000 hours
Q2(iv)Standard costing - labour efficiency and rate variance
0 marks hard
Case: ABC Pvt Ltd is engaged in the manufacture of a Product Q. The product has the following standard production requirements determined by the technical team of the company post satisfactory completion of test run: Raw Material Z – 2 units @ ₹ 2 per unit; Skilled labour – 2.5 hours @ ₹ 5 per hour; Fixed Overheads – ₹ 7.5 per unit. The input of Raw material Z has a yield of 80% every time when infused into production. The actual quantity of Raw material Z consumed for production during the year was 24,000 units. The Usage variance of Material Z was 2,000 Favourable. Further the actual amount of mat…
Labour Efficiency variance and Labour rate variance are:
(A) Labour Efficiency Variance – 30,000 Favourable; Labour rate Variance – 25,000 Adverse
(B) Labour Efficiency Variance – 25,000 Favourable; Labour rate Variance – 30,000 Adverse
(C) Labour Efficiency Variance – 25,000 Adverse; Labour rate Variance – 30,000 Favourable
(D) Labour Efficiency Variance – 30,000 Adverse; Labour rate Variance – 25,000 Favourable
Q2(v)Standard costing - fixed overhead volume variance
0 marks hard
Case: ABC Pvt Ltd is engaged in the manufacture of a Product Q. The product has the following standard production requirements determined by the technical team of the company post satisfactory completion of test run: Raw Material Z – 2 units @ ₹ 2 per unit; Skilled labour – 2.5 hours @ ₹ 5 per hour; Fixed Overheads – ₹ 7.5 per unit. The input of Raw material Z has a yield of 80% every time when infused into production. The actual quantity of Raw material Z consumed for production during the year was 24,000 units. The Usage variance of Material Z was 2,000 Favourable. Further the actual amount of mat…
Fixed Overhead volume variance is:
(A) Fixed Overhead volume variance – 1,00,000 Favourable
(B) Fixed Overhead volume variance – 50,000 Adverse
(C) Fixed Overhead volume variance – 1,00,000 Adverse
(D) Fixed Overhead volume variance – 50,000 Favourable
Q3Overhead absorption - over/under absorption calculation
0 marks easy
The accountant for Brilliant Tools Ltd applies overhead based on machine hours. The budgeted overhead and machine hours for the year are ₹ 1,30,000 and 8,000 hours, respectively. The actual overhead and machine hours incurred were ₹ 1,37,500 and 10,000 hours. The cost of goods sold and inventory data compiled for the year is as follows: Direct Material ₹ 25,000; Cost of Goods Sold ₹ 2,25,000; Units: WIP 50,000 and Finished Goods 75,000. What is the amount of over/under absorbed overhead for the year?
(A) Over absorbed by ₹ 25,000
(B) Under absorbed by ₹ 25,000
(C) Over absorbed by ₹ 32,500
(D) Under absorbed by ₹ 32,500
Q4Process costing - abnormal gain valuation
0 marks easy
The following information is available in respect of Process I: Raw material purchased and introduced 10,000 units @ ₹ 5 per unit; Raw Material received from store 4,000 units @ ₹ 6 per unit; Direct Labour ₹ 40,000; Overheads ₹ 28,000; Output of Process is 13,500 units; Normal wastage 5% of inputs; Scrap value of wastage ₹ 4 per unit. The value of Abnormal Gain is:
(A) ₹ 2,062.68
(B) ₹ 2,135.34
(C) ₹ 2,103.70
(D) ₹ 2,093.2
Q5Service costing - hotel room rent computation
0 marks easy
A hotel has 200 rooms (120 Deluxe rooms and 80 Premium rooms). The normal occupancy in summer is 80% and winter 60%. The period of summer and winter is taken as 8 months and 4 months respectively. Assume 30 days in each month. Room rent of Premium room will be double of Deluxe room. Hotel is expecting a profit of 20% on total revenue, total cost for the year is ₹ 2,66,11,200. Calculate the room rent to be charged for Premium room.
(A) ₹ 450 per room day
(B) ₹ 900 per room day
(C) ₹ 380 per room day
(D) ₹ 760 per room day
Q6Service costing - insurance cost per unit measurement
0 marks easy
ALC Ltd. is an insurance company. It launched a new term insurance policy named as Protection Plus. The total cost for the policy during the year is ₹ 1,60,00,000. Total number of policies sold is 410 and total insured value of policies is ₹ 920 crore. What is the cost per rupee of insured value?
(A) ₹ 0.0017
(B) ₹ 0.18
(C) ₹ 575
(D) ₹ 2.24
Q7Budgetary control - production budget with inventory reducti
0 marks easy
A business manufactures a single product and is preparing its production budget for the year ahead. It is estimated that 2,00,000 units of the product can be sold in the year and the opening inventory is currently 25,000 units. The inventory level is to be reduced by 40% by the end of the year. What is production budget in units?
(A) 1,95,000 units
(B) 1,90,000 units
(C) 1,84,000 units
(D) 1,75,000 units
Q8Employee cost - labour turnover rate methods
0 marks easy
The labour turnover rates for the quarter ended 30th June, 2024 are computed as 14%, 8% and 6% under Flux method, Replacement method and Separation method respectively. If the number of workers replaced during 1st quarter of the financial year 2024-25 is 36, COMPUTE the following:
Q9Overhead absorption - comprehensive machine hour rate
0 marks easy
From the details furnished below you are required to compute a comprehensive machine-hour rate:
Original purchase price of the machine (subject to depreciation at 10% per annum on original cost): ₹ 12,96,000
Normal working hours for the month (the machine works for only 75% of normal capacity): 200 hours
Wages to Machine-man: ₹ 800 per day (of 8 hours)
Wages to Helper (machine attendant): ₹ 500 per day (of 8 hours)
Power cost for the month for the time worked: ₹ 1,30,000
Supervision charges apportioned for the machine centre for the month: ₹ 18,000
Electricity & Lighting (fixed in nature) for the month: ₹ 9,500
Repairs & maintenance (machine) including consumable stores per month: ₹ 17,500
Insurance of Plant & Building (apportioned) for the year: ₹ 18,000
Other general expense per annum: ₹ 18,000
The workers are paid a fixed dearness allowance of ₹ 4,500 per month. Production bonus payable to workers in terms of an award is equal to 10% of basic wages and dearness allowance. Add 10% of the basic wage and dearness allowance against leave wages and holidays with pay to arrive at a comprehensive labour-wage for debit to production.
Q10Activity Based Costing vs Absorption Costing
0 marks easy
SOFTHUG is a global brand created by Green-lush Ltd. The company manufactures three range of beauty soaps: SOFTHUG-Gold, SOFTHUG-Pearl, and SOFTHUG-Diamond. The budgeted costs and production for the month of May 2024 are as follows:
Production: SOFTHUG-Gold 4,000 units; SOFTHUG-Pearl 3,000 units; SOFTHUG-Diamond 2,000 units.
Resources per unit — Essential Oils: Gold 60 ml @ ₹200/100ml, Pearl 55 ml @ ₹300/100ml, Diamond 65 ml @ ₹300/100ml; Cocoa Butter: all 20g @ ₹200/100g; Filtered Water: all 30 ml @ ₹15/100ml; Chemicals: Gold 10g @ ₹30/100g, Pearl 12g @ ₹50/100g, Diamond 15g @ ₹60/100g; Direct Labour: Gold 30 min @ ₹10/hr, Pearl 40 min @ ₹10/hr, Diamond 60 min @ ₹10/hr.
Green-lush Ltd. followed an Absorption Costing System absorbing production overheads using direct labour hour rate; budgeted overheads were ₹ 1,98,000.
Green-lush Ltd. is now considering adopting an Activity Based Costing system. Additional information on budgeted overheads and cost drivers: Forklifting cost ₹ 58,000 (cost driver: weight of material lifted); Supervising cost ₹ 60,000 (cost driver: direct labour hours); Utility cost ₹ 80,000 (cost driver: number of machine operations). Number of machine operations per unit: SOFTHUG-Gold 5, SOFTHUG-Pearl 5, SOFTHUG-Diamond 6. (Note: Mass of 1 litre of Essential Oils = 0.8 kg; Mass of 1 litre of Filtered Water = 1 kg; Mass of output = mass of all input materials combined.)
Q11Cost sheet - material consumed, prime cost, cost of producti
0 marks easy
From the following data of Appu Ltd., CALCULATE (i) Material Consumed; (ii) Prime Cost and (iii) Cost of production.
(i) Repair & maintenance paid for plant & machinery: ₹ 9,80,500
(ii) Insurance premium paid for inventories: ₹ 26,000
(iii) Insurance premium paid for plant & machinery: ₹ 96,000
(iv) Raw materials purchased: ₹ 64,00,000
(v) Opening stock of raw materials: ₹ 2,88,000
(vi) Closing stock of raw materials: ₹ 4,46,000
(vii) Wages paid: ₹ 23,20,000
(viii) Value of opening Work-in-process: ₹ 4,06,000
(ix) Value of closing Work-in-process: ₹ 6,02,100
(x) Quality control cost for products in manufacturing process: ₹ 86,000
(xi) Research & development cost for improvement in production process: ₹ 92,600
(xii) Administrative cost for Factory & production: ₹ 9,00,000; Others: ₹ 11,60,000
(xiii) Amount realised by selling scrap generated during manufacturing process: ₹ 9,200
(xiv) Packing cost necessary to preserve goods for further processing: ₹ 10,200
(xv) Salary paid to Director (Technical): ₹ 8,90,000
Q12Cost accounting system - reconciliation of cost and financia
0 marks easy
A manufacturing company disclosed a net loss of ₹ 3,47,000 as per their cost accounts for the year ended March 31, 2024. The financial accounts however disclosed a net loss of ₹ 5,10,000 for the same period. The following information was revealed as a result of scrutiny of the figures of both sets of accounts:
(i) Factory Overheads under-absorbed: ₹ 40,000
(ii) Administration Overheads over-absorbed: ₹ 60,000
(iii) Depreciation charged in Financial Accounts: ₹ 3,25,000
(iv) Depreciation charged in Cost Accounts: ₹ 2,75,000
(v) Interest on investments not included in Cost Accounts: ₹ 96,000
(vi) Income-tax provided: ₹ 54,000
(vii) Interest on loan funds in Financial Accounts: ₹ 2,45,000
(viii) Transfer fees (credit in financial books): ₹ 24,000
(ix) Stores adjustment (credit in financial books): ₹ 14,000
(x) Dividend received: ₹ 32,000
PREPARE a memorandum Reconciliation Account.
Q13Batch costing - cost and profit per batch
0 marks easy
A jobbing factory has undertaken to supply 300 pieces of a component per month for the ensuing six months. Every month a batch order is opened against which materials and labour hours are booked at actual. Overheads are levied at a rate per labour hour. The selling price contracted for is ₹ 8 per piece. From the following data CALCULATE the cost and profit per piece of each batch order and overall position of the order for 1,800 pieces.
Batch data:
January: Output 310 units, Material cost ₹ 1,150, Direct wages ₹ 120, Direct labour hours 240
February: Output 300 units, Material cost ₹ 1,140, Direct wages ₹ 140, Direct labour hours 280
March: Output 320 units, Material cost ₹ 1,180, Direct wages ₹ 150, Direct labour hours 280
April: Output 280 units, Material cost ₹ 1,130, Direct wages ₹ 140, Direct labour hours 270
May: Output 300 units, Material cost ₹ 1,200, Direct wages ₹ 150, Direct labour hours 300
June: Output 320 units, Material cost ₹ 1,220, Direct wages ₹ 160, Direct labour hours 320
Other details (monthly chargeable expenses and total direct labour hours):
January: ₹ 12,000 chargeable expenses, 4,800 DLH
February: ₹ 10,560 chargeable expenses, 4,400 DLH
March: ₹ 12,000 chargeable expenses, 5,000 DLH
April: ₹ 10,580 chargeable expenses, 4,600 DLH
May: ₹ 13,000 chargeable expenses, 5,000 DLH
June: ₹ 12,000 chargeable expenses, 4,800 DLH
Q14Process costing - equivalent units and FIFO method
0 marks easy
The following data are available in respect of Process-I for June 2024:
(1) Opening stock of work in process: 600 units at a total cost of ₹ 4,20,000.
(2) Degree of completion of opening WIP: Material 100%, Labour 60%, Overheads 60%.
(3) Input of materials at a total cost of ₹ 55,20,000 for 9,200 units.
(4) Direct wages incurred: ₹ 18,60,000.
(5) Production overhead: ₹ 8,63,000.
(6) Units scrapped: 200 units. Stage of completion — Materials 100%, Labour 80%, Overheads 80%.
(7) Closing work in process: 700 units. Stage of completion — Material 100%, Labour 70%, Overheads 70%.
(8) 8,900 units were completed and transferred to the next process.
(9) Normal loss is 4% of the total input (opening stock plus units put in).
(10) Scrap value is ₹ 60 per unit.
You are required to:
Q15Joint products and by-products - NRV method joint cost alloc
0 marks easy
Three products X, Y and Z along with a by-product B are obtained in a crude state which require further processing at a cost of ₹ 5 for X, ₹ 4 for Y, and ₹ 2.50 for Z per unit before sale. The by-product is however saleable as such to a nearby factory. The selling prices for the three main products and by-product, assuming they should yield a net margin of 25 percent of cost, are fixed at ₹ 13.75, ₹ 8.75, ₹ 7.50 and ₹ 1.00 respectively — all per unit quantity sold.
During a period, the joint input cost including the material cost was ₹ 90,800 and the respective outputs were: X 8,000 units; Y 6,000 units; Z 4,000 units; B 1,000 units.
The by-product should be credited to the joint cost and only the net joint costs are to be allocated to the main products.
CALCULATE the joint cost per unit of each product and the margin available as a percentage on cost.
Q16Service costing - BOT highway toll fee computation
0 marks easy
BK Infra Ltd. built and operates a 110 km long highway on the basis of Built-Operate-Transfer (BOT) model for a period of 25 years. A traffic assessment has been carried out to estimate the traffic flow per day: Two wheelers 44,500; Car and SUVs 3,450; Bus and LCV 1,800; Heavy commercial vehicles 816.
Estimated cost of the project (₹ in lakh): Site clearance 170.70; Land development and filling work 9,080.35; Sub base and base courses 10,260.70; Bituminous work 35,070.80; Bridge, flyovers, underpasses, Pedestrian subway, footbridge, etc. 29,055.60; Drainage and protection work 9,040.50; Traffic sign, marking and road appurtenance 8,405.00; Maintenance, repairing and rehabilitation 12,429.60; Environmental management 982.00; Total Project cost 1,14,495.25. An average cost of ₹ 1,120 lakh per year has to be incurred on administration and toll plaza operation.
Weights assigned to vehicle types (based on weight, size, time saving): Two wheelers 5%; Car and SUVs 20%; Bus and LCV 30%; Heavy commercial vehicles 45%.
[Note: Concession period is a period for which an infrastructure is allowed to operate and recover its investment.]
Q17Marginal costing - margin of safety, composite break-even
0 marks easy
RS Ltd. manufactures and sells a single product X whose selling price is ₹ 100 per unit and the variable cost is ₹ 60 per unit.
Q18Budgetary control - production budget and material purchase
0 marks easy
Raja 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:
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
Q19Theory - NRV method, service costing, variances, cost centre
0 marks easy
Answer the following: