| 1. | (a) | Match the statement in Column I with the appropriate statement in Column II: | Column I | Column II | | (i) | JIT System | (A) | Decision Making | | (ii) | Output Costing | (B) | Decision Package | | (iii) | Variance Anaylsis | (C) | Management by exception | | (iv) | Differential Costing | (D) | Coal Industry | | (v) | ZBB | (E) | Control of inventory |
| 1x5 | (0) |
| | (b) | State whether the following statements are True or False: | 1x5 | |
| | | (i) | Marginal costing is useful for long term planning. | | (0) |
| | | (ii) | Cost of floppy disk used for office computer is administration overhead. | | (0) |
| | | (iii) | No distinction is made between direct and indirect materials in process costing. | | (0) |
| | | (iv) | ABC analysis is based on the unit price of materials. | | (0) |
| | | (v) | Opportunity cost is the value of the benefit sacrified in favour of an alternative course of action. | | (0) |
| | (c) | Fill up the blanks suitably: | 1x5 | |
| | | (i) | Re—order Level is ______________ usage multiplied by _________________lead time. | | (0) |
| | | (ii) | ______________cost is the difference in total cost that results from two alternative courses of action. | | (0) |
| | | (iii) | The Flux rate method of labour turnover considers employees __________________and employees_____________. | | (0) |
| | | (iv) | ________________arises when the actual process loss is less than the normal predetermined process loss. | | (0) |
| | | (v) | ___________costing is a must for Inter–firm comparison. | | (0) |
| | (d) | In the following cases,one out of four answers is correct. You are required to indicate the correct answer and give brief workings: | 2x5 | |
| | | (i) | A company uses material A for production of product Z.The supplier of Material A quotes a delivery period of 2 to 3 weeks .If the company uses 500 to 800 units of Material A per week according to activity levels,the Re—order Level of Material A will be (A)
(B)
(C)
(D) | 1,000 units
1,500 units
2,400 units
None of the above. |
| | (0) |
| | | (ii) | Monthly cost of maintenance of machinery in a company for 12,000 machine hours run is Rs.1,70,000 and for 18,500 hours it is Rs.3,02,500.Cost of maintenance for 14,000 hours will be | (A) | Rs.1,90,000 | | (B) | Rs.1,80,000 | | (C) | Rs.1,85,000 | | (D) | None of the above. |
| | (0) |
| | | (iii) | In two consecutive periods,sales and profit were Rs.1,60,000 and Rs.8,000 respectively in the first period and Rs.1,80,000 and Rs.14,000 respectively during the second period.If there is no change in fixed cost between the two periods,then what would be profit if sales are Rs.2,00,000? | (A) | Rs.16,000 | | (B) | Rs.18,000 | | (C) | Rs.20,000 | | (D) | Rs.22,000 |
| | (0) |
| | | (iv) | The budgeted annual sales of a firm is Rs.80 lakhs and 25% of the same is cash sale. If the average amount of debtors of the company is Rs.5 lakhs, the average collection period of cerdit sales is (A)
(B)
(C)
(D) | 2 months
1 month
15 days
None of the above |
| | (0) |
| | | (v) | A hospital is opened for 365 days,but bed occupancy is 25 patients per day in 120 days and 20 beds occupied in another 80 days.Extra beds occupied during the year is 400.patient–days of the hospital is (A)
(B)
(C)
(D) | 4,000
5,000
3,500
4,500 |
| | (0) |
| 2. | (a) | Distinguish between job evaluation and Merit rating. | 5 | (0) |
| | (b) | The management of Zenith Co Ltd.are worried about their increasing labour turnover in their factory and before analysing the causes,they want to have an idea of the profit foregone as a result of labour turnover in the last year
Last year,sales amounted to Rs.83,03,300/– and P/V ratio was 1/5.The total number of actual hours worked by the direct labour force was 4.45 lakhs.As result of delays by personnel department in filling up the vacancies due to labour turn over,60,000 potentially productive hours were not worked.The actual direct labour hours included 30,000 hours attributable to training new recruits,out of which half of the hours were un productive.The costs consequent on labour turnover revealed on analysis the following: | Rs | | Settlement costs due to leaving | 43,250 | | Recruitment costs | 34,520 | | Selection and placement costs | 42,610 | | Training costs | 69,270 | | Total | 1,89,650 |
Assuming that the potential production lost as a consequence of a labour turnover could have been sold at the prevailing prices,find out the profit foregone last year as a result of labour turnover. | 10 | (0) |
| 3. | (a) | M/s Moon light Co.Ltd fixes the interdivitional transfer prices for its products on the basis of cost plus an estimated return on investment in its divisions.The relevant particulars of the budget for the Division ‘x’ for the year 2010–11 is given below: | particulars | Amount (Rs) | | Fixed Assets | 6,00,000 | | Current Assets (other than Cash at Bank) | 3,00,000 | | Cash at Bank | 1,00,000 | | Yearly fixed cost for the division | 9,00,000 | | Variable cost per unit | 10 | | Budgeted volume of production per year (in units) | 5,00,000 | | Desired return on Investment | 30% |
you are required to determine the transfer price for Division ‘x’. | 7 | (0) |
| | (b) | The following cost data pertaining to the year 2010–11 have been collected from the books of ABC power Co.Ltd. prepare a cost sheet indicating the cost of generation of power per unit of KWH.
Total unit generated are 15,00,000. | Rs | | Operating Labour | 16,500 | | Plant Supervision | 5,250 | | Lubricant & supplies | 10,500 | | Repairs & Maintence | 21,000 | | Capital Cost | 1,50,000 | | Administrative Overhead | 9,000 |
Coal consumed per KWH 1.5 lbs. and cost of coal delivered to the power station is Rs.33.06 per metric tonne.Depreciation rate chargeable is 4% pre annum and interest on capital is to be taken at 7%
[Given:1 Metric tonne=2,204.62 lbs.] | 8 | (0) |
| 4. | (a) | Write a brief note on Management Accounting. | 5 | (0) |
| | (b) | A company produces a single product which is sold presently in the market at Rs.75 per unit.The present production and sales are 40,000 units per month representing 50% of the capacity available.The cost data of the product are as under: | Rs | | Variable Cost per unit | 50 | | Fixed Cost per month | 10 lakhs |
To utilise the idle capacity and improve profitability,the management has two proposales on hand as under. | (i) | to increase sales by selling to a chain stores 30,000 units at Rs.55 per unit,retaining existing sales at the exisiting price. | | (ii) | to reduce selling price as advised by the sales Department as under: |
Reduced selling price
per unit by | | Expected Increase
in sale | | Rs.5 | | 10,000 units | | Rs.8 | | 30,000 units | | Rs.11 | | 35,000 units |
Prepare a table to present the results of the above proposals and give your comments. | 4+4+2 | (0) |
|
| 5. | (a) | Draw up a flexible budget for overhead expenses on the basis of the following data and determine the overhead rate at 70% , 80% and 90% plant capacity level: | At 80% capacity
Rs. | Variable overheads:
Indirect labour
Indirect material
Semi–variable overheads:
Power(30% fixed, 70% variable)
Repair and maintenance (60% fixed,40%variable)
Fixed overhead:
Depreciation
Insurance
Others |
12,000
4,000
20,000
2,000
11,000
3,000
10,000 | | Total overheads | 62,000 | | Estimated direct labour hours | 1,24,000 |
| 10 | (0) |
| | (b) | Write notes on Chargeable Expenses. | 5 | (0) |
| 6. | (a) | ABC Ltd. is following Activity Based Costind.Budgeted overheads and cost driver volumes are as follows: | Cost Pool | Budgeted/Overheads
Rs. | Cost Driver | Budgeted Volume | Material Procurement
Material handling
Maintenance
Set–up
Quality Control
Machinery | 11.60 lakhs
5.00 lakhs
19.40 lakhs
8.30 lakhs
3.52 lakhs
14.40 lakhs | No . of orders
No. of movement
Maintenance hours
No. of set–ups
No .of inspection
No. of machine hours | 2,200
1,360
16,800
1,040
1,800
48,000 |
The company has produced a batch of 5,200 components, its material cost was Rs.2.60 lakhs and labour cost Rs.4.90 lakhs. Usage activities of the said batch are as follows: | Material order — 52, Material movements — 36, Maintenance hours — 1,380, Set – ups — 50, Quality Control Inspection — 56 and Machine hours — 3,600 |
Calculate: | (i) | Cost driver rates that are used for tracing appropriate amount of overheads to the said batch. |
| (ii) | The cost of batch of component. |
| 5+5 | (0) |
| | (b) | Distinguish between By–Products and joint products. | 5 | (0) |
| 7. | (a) | List out the expenses which are of purely financial nature and recorded in Financial Accounts only and not recorded in Cost Accounts. | 5 | (0) |
| | (b) | In a factory three products A,Band C are produced from a single process. Each Product can be sold at the end of each process or can be further processed independently to produce separate products, which are marketed under different namesX,Y,Z respectively. Details for a period are given below: | Product | Initial Output
(units) | Sales Price
Rs. | Futher Processing Cost
Rs. | Rejection rate | A
B
C
X
Y
Z | 5,000
8,000
10,000
| 24 per unit
10 per unit
30 per unit
44 per unit
18 per unit
48 per unit | 14 per unit
6 per unit
16 per unit
—
—
— | —
—
—
5%
10%
8% |
Initial total process Cost Rs. 4 lakhs.
Futher processing costs are incurred at the commencement of the second stage of operations.
You are required to | (i) | Calculate the apportionment of total cost to products A,B and C using sales value, |
| (ii) | State whether further process should be undertaken for each product or not. |
| 4+6 | (0) |
| 8. | Write short notes on any three of the following: | 5x3 | |
| | (a) | Profit Centre, | | (0) |
| | (b) | Budgetary Control, | | (0) |
| | (c) | Cost Control and Cost Reduction, | | (0) |
| | (d) | Material Purchase Budget, | | (0) |
| | (e) | FSND Analysis. | | (0) |
