| 1. | A company is manufacturing and selling three products X, Y and Z. The details of production and sales for the year ended 31.12.2001 were as follows: | Products |
No. of units sold
Selling Price (Rs. per unit)
Direct materials (Rs. per unit)
Direct labour (Rs. per unit)
Variable overhead (Rs. per unit)
Allocated fixed overhead (Rs. per unit) | X
10,000
40
16
8
8
5 | Y
12,000
36
15
6
6
5 | Z
16,000
32
14
7
7
5 |
Since product Z is causing loss, the management is considering the following options for next year: | (a) | Stop production of Z and continue for production of X and Y as before. | | (b) | Stop production of Z. Reduce selling price of X by 5%. It is expected that sales of X will increase by 50%. | | (c) | Stop production of Z and increase production of Y by 20% and sell the entire production by incurring an extra sales promotion expenditure of Rs. 10,000. | | (c) | Introduce a new production W in the place of Z. Expected sales of W will be about 9,000 units at Rs. 30 per unit. The cost profile of W is given below: |
Direct materials: Rs. 10; Direct labour: Rs. 6 and Variable overhead: Rs. 6.
Additional facilities are not required for (b), (c) and (d).
You are required to analyse the current working results on marginal costing lines, examine each of the options under consideration and suggest the best option, together with your comments on each. | 20 | (1) |
| 2. | From the records of a company distributing petrol, the following information is available, for the month of March, 2002: Sales for the month
Opening stock as on 1.3.2002
Purchases:
March 5
March 27
Closing stock as on 31 March, 2002
General Administration expenses
for the month of March, 2002 | :
:
:
:
:
: | Rs. 79,10,000
1,25,000 litres @ Rs. 30.00 per litre.
1,50,000 litres @ Rs. 31.10 per litre
1,00,000 litres @ Rs. 31.20 per litre
1,30,000 litres
Rs. 1,72,000 |
From the information given above, work out the following using FIFO and FIFO method of inventory valuation, assuming pricing of issues being done at the end of month, after all receipts during the month:
(a) Value of closing stock as on 31.3.2002
(b) Cost of sales for March, 2002.
(c) Profit or loss for March, 2002. | 16 | (1) |
| 3. | The summarised Balance Sheets of a company as at the end of 31.3.2001 and 31.3.2002 are given below: | Liabilities | 31.3.2001
Rs | 31.3.2002
Rs | Assets | 31.3.2001
Rs | 31.3.2002
Rs | Equity Capital
12% Debenture
General Reserve
Profit and Loss
Account
Dividend
Trade Creditors | 10,00,000
10,00,000
2,00,000
5,20,000
1,00,000
1,80,000 | 10,00,000
12,00,000
2,50,000
6,30,000
1,20,000
1,70,000 | Fixed Assets
less: Depreciation
Current Assets
Stock
Debtors
Cash & Bank balance |
18,40,000
3,25,000
5,40,000
2,95,000 |
23,70,000
2,80,000
5,60,000
1,60,000 | | 30,00,000 | 33,70,000 | | 30,00,000 | 33,70,000 |
Additional information: | (i) | During the year ended 31.3.2002 depreciation on fixed assets, amounting to Rs. 1,80,000 was written off. | | (ii) | Dividend for the year ended 31.3.2001 was paid in the next year. |
Prepare the Funds Flow Statement of the company for the year ended 31.3.2002 together with the relevant accounts such as Fixed Assets and Profit & Loss Account | 16 | (1) |
| 4. | (a) | Contract works may be different stages of completion at the end of an accounting period. Explain clearly how you will compute profits in respect of such incomplete contract works. | 8 | (0) |
| | (b) | From the following information, prepare the Contract Account for the year ended 30.9.2002. Appropriation Account and Work–in–Progress as on the above date: Contact price
Work Certified
| : Rs.
: Rs.
| 50 lakhs
20 lakhs
|
(cash)
received 90%
of value
certified) | Materials at sight on 30.9.2002
Depreciation on Plant and Machinery | : Rs.
: Rs. | 30,000
75,000 |
| | During the year the following expenses were incurred in respect of the above contract: | Materials sent to site
Wages paid to workers at sight
Site Expenses
Power and Fuel
Office Expenses
Rates and Taxes | : Rs.
: Rs.
: Rs.
: Rs.
: Rs.
: Rs. | 14,00,000
2,55,000
5,000
1,25,000
12,000
15,000 | |
| 8 | (0) |
|
| 5. | A company manufactures its product by passing the units of raw material through three distinct process A, B and C during the month of July 2002, 1,000 units of input raw material costing Rs. 12 per unit were introduced in process A. Further details regarding production and costs are given below: Production
Process A
Process B
Process C |
Output
(units)
900
800
780 |
Normal loss
(% of input)
10%
8%
5% |
Value of
scrapped unit
2
3
5 | | Costs incurred for processing |
Process A
Process B
Process C | Material
Rs.
8,000
7,416
1,800 | Labour
Rs.
4,000
3,600
2,000 | Overhead
Rs.
3,200
3,600
2,000 |
There was no Work–in–progress at the beginning or end or the month. Prepare the process accounts and accounts relating to abnormal loss/gain, if any, for the month. | 16 | (1) |
| 6. | S.K.F. Industries makes use of standard costing to control its variable production cost. Its fixed costs are controlled through a budgetary control system.
The standard variable works cost of the product manufactured by the company is given below:
Direct material : 4 kg. @ Rs. 40/kg
Direct labour : 5 hrs. @ Rs. 16/hr.
Variable overhead (75% of direct labour)
Standard variable works cost per unit | | Rs.
160
80
60
300 |
During a week,the firm manufactured 120 units of the product.the details of actual costs incurred were as follows: Actual costs incurred
Direct material :
Direct labour :
Variable overhead : |
500 kg. @ Rs. 38
Time recorded in Time office
Time spent on production
Actual wages paid
Rs. 7,500 |
: 620 hrs.
: 580 hrs.
Rs. 11,200
|
Calculate the total cost variance and analyse it in as much detail as possible. | 16 | (1) |
| 7. | (a) | What do you understand by J.I.T. System? | 4x4 | (0) |
| | (b) | What is meant by :Flexible budgeting? How is it prepared? Give any two applications | | (0) |
| | (c) | What are the limitations of ‘Ratio Analyses’? | | (2) |
| | (d) | ‘Uniform Cost Accounting is a prerequisite for Inter–firm–Comparison’ — Explain. | | (0) |
| 8. | Write short notes on any four of the following: | 4x4 | |
| | (a) | Labour Turnover; | | (0) |
| | (b) | Administration Overheads; | | (0) |
| | (c) | Integrated Accounts; | | (1) |
| | (d) | Margin of Safety; | | (0) |
| | (e) | Cost Reduction. | | (0) |
