| 1. | (a) | State if each of the following statements is T(true) or F(false): | 1x5 | |
| | | (i) | The purpose of cost control account is to control the cost of production. | | (0) |
| | | (ii) | Overtime premium is always treated as a factory overhead. | | (0) |
| | | (iii) | When maximum stock level is fixed, the stock–in–hand should never exceed this level. | | (0) |
| | | (iv) | The use of actual overhead absorption may be suitably applied in small firms which are manufacturing a single product. | | (0) |
| | | (v) | A multi–product profit graph cannot show the BEP for all the products. | | (0) |
| | (b) | For each of the following industries, indicate whether a job order, process cost system or operating costing will be used: | 1x5 | |
| | | (i) | Men’s suit, | | (0) |
| | | (ii) | Cigarettes, | | (0) |
| | | (iii) | Cinema, | | (0) |
| | | (iv) | Text Book, | | (0) |
| | | (v) | Sugar. | | (0) |
| | (c) | Select the correct answer with a brief reasoning: | 2x5 | |
| | | (i) | A factory transferred out 8,800 completed units during May 2008. Opening Stock was 400 units 75% completed, Closing Stock was 800 units 50% completed. Assuming FIFO method, the equivalent production in May 2008 to which these data relate was: | (a) | 8,900 units, | (b) | 9,100 units, | (c) | 9,300 units | (d) | 9,500 units. |
| | (0) |
| | | (ii) | If the absorption rate is Rs. 130 per hour, the production hours are 300 and the under absorption being Rs. 3,000, actual expenses would be: | (a) | Rs. 36,000 | (b) | Rs. 39,000 | (c) | Rs. 42,000 | (d) | Rs. 30,000 |
| | (0) |
| | | (iii) | In a Flexible Budget format, the depreciation at the output level of 4500 units is Rs. 12000, the depreciation per units at 5000 units would be: | (a) | Rs. 12,000 | (b) | Rs. 2.67 | (c) | Rs. 2.40 | (d) | Rs. 13.350 |
| | (0) |
| | | (iv) | Depreciation charged in costing books is Rs. 12,500 and in financial books is Rs. 11,200. What will be the financial profit when costing profit is Rs. 5,000? | (a) | Rs. 5,000 | (b) | Rs. 3,700 | (c) | Rs. 6,300 |
| | (0) |
| | | (v) | If the opening and closing balances of Plant and Machinery are Rs. 2,00,000 and Rs. 2,76,000 respectively, depreciation during the year being Rs. 20,000 the additions made during the year are: | (a) | Rs. 76,000 | (b) | Rs. 96,000 | (c) | Rs. 56,000 | (d) | none of the above |
| | (0) |
| 2. | (a) | Briefly elucidate the objective of ‘Escalation Clause’ in Contract Costing. | 4 | (0) |
| | (b) | A Limited undertook a contract for Rs. 50,00,000 on 1st April 2006. On 31st March, 2007 when accounts were closed the following details were available: Materials purchased
Wages paid
General Expenses
Plant purchased
Materials on hand closing
Wages outstanding closing
Work certified
Cash Received
Work Uncertified
Dep. of Plant | Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Rs. | 10,00,000
4,50,000
1,00,000
5,00,000
2,50,000
50,000
20,00,000
15,00,000
1,50,000
50,000 |
The escalator clause in the contract was as follows: In the event of prices of materials and rate of wages increases by more than 5% the contract price would be increased accordingly by 25% of the rise in the cost materials and wages beyond 5% in each case. It was found that since the date of singing the agreement the prices of materials and wages rates increased by 25%. The value of the work certified does not take into account the effect of the above clause.
Prepare the contract account (Show the workings). | 12 | (0) |
| 3. | (a) | Distinguish between ‘Incentive to indirect workers’ and ‘Indirect incentives to direct workers’. | 6 | (0) |
| | (b) | A group of workers consisting 30 men above 30 years of age, 15 females above 30 years of age, and 10 youth of age between 20–30 are paid standard hourly rate as follows: Males..................Rs. 80/- per hour
Females..................Rs. 60/- per hour
Youth..................Rs. 40/- per hour In a normal working week of 40 hours, the group is expected to produce 2000 units of output. During a week, the group consisting of 40 males, 10 females and 5 youth produced 1600 units, they were paid wages @ Rs. 70/- for males, Rs. 65/- for females and Rs. 30/- for youth per hour.
4 hours were lost due to abnormal idle time.
Calculate: | (iii) | Labour efficiency variance; |
| (iv) | Labour mix variance; |
| (v) | Labour idle time variance. |
| 2x5 | (0) |
| 4. | ABC Ltd. and MNO Ltd. Sell identical product in identical markets. Their budgeted income statement for the year 2007–2008 are as follows: | ABC | MNO | Sales
Less Variable Cost
Contribution
Less Fixed Cost
Budgeted Profits | Rs. 5,00,000
Rs. –4,00,000
1,00,000
20,000
80,000 | 6,00,000
–1,80,000
4,20,000
2,70,000
1,50,000 |
Calculate: | (a) | BEP for each company; |
| (b) | Sales at which each company will earn a profit of Rs. 60,000; |
| (c) | Sales at which both company will have same profits; |
| (d) | Which company will earn more when
(i) Heavy Demand
(ii) Low Demand. |
| 4x4 | (0) |
|
| 5. | You are given the following figures: Current Ratio = 2.5
Liquid Ratio = 1.5
Net Working Capital = Rs. 3,00,000
Stock turnover ratio (Cost of sales/closing
stock = 6 times
Gross profit ratio 20% | Fixed Assets Turnover ratio (on cost 0f assets) = 2 times
Average debt collection period = 2 months
F. Assets/Net – worth = 0.08.
Reserves and surplus/capital =- 0.50 |
Draw up the Balance Sheet with above details and also show the working clearly. | 16 | (0) |
| 6. | A transport company operates a bus service on 25 kms. long route. Purchase price of the Chassis was Rs. 8.5 lakhs and it was furnished at a cost of Rs. 1.5 lakhs. It will have residual value of Rs. 2 lakhs at the end of 5 years of normal working life. Annual Road Tax amount to Rs. 24,000, while Insurance premium is valued at 2.5% of the total cost of the Bus. Annual repairs is estimated at Rs. 30,000. Garage rent is payable @ Rs. 4,000 per month. Tyre & Tube will cost 50 paise per km. Salaries of one Driver and one Conductor will be Rs. 3,500 and Rs. 2,500 per month respectively. In addition, They will receive 10% of the collection as commission, which will be shared between the Driver and Conductor in the ratio of 60 : 40. Other Administrative salaries and expenses will cost Rs. 47,000 per annum. Diesal Oil and lubricants will cost @ Rs. 4.50 per km. The bus will make 4 round trips per day for 25 days in a month, carrying 42 passengers in each trip. Assuming 20% Profit on takings, prepare | (a) | Operating Statement for a year, indicating Fixed and variable cost, and |
| (b) | Cost per passenger–kilometer, with working notes. |
| 12+4 | (0) |
| 7. | Sterling Industries Ltd. manufactures a product Z by making and assembling three components A, B and C. The components are made in a machine shop using three identical machines each of which can make any of the three components. However the total capacity of the three machines is only 12,000 machine hours per month and is just sufficient to meet the current demand. Labour for assembling is available according to requirements. Further details are given below: | Components | Machine hours
required per unit | Variable cost
per unit | Market price at
which the component
can be purchased if
required |
A
B
C
Assembling |
4
5
6
— | Rs.
48
60
80
30 (per unit of Z) | Rs.
64
75
110
— |
Fixed costs per month amount to Rs. 50,000. Product Z is sold at Rs. 300 per unit. From the next month on wards the company expects the demand for Z to rise by 25%. As the machine capacity is limited, the company wants to meet the increase in demand by buying such numbers of A, B or C which is most profitable.
You are asked to find out the following: | | |
| | (a) | Current demand and Profit made by the company. | 4 | (0) |
| | (b) | Which component and how many units of the same should be bought from the market to meet the increase in demand. | 8 | (0) |
| | (c) | Profit made by the company if suggestion in ‘b’ is accepted. | 4 | (0) |
| 8. | Write short notes on any four of the following: | 4x4 | |
| | (a) | Integrated Accounts; | | (0) |
| | (b) | Obsolescence; | | (0) |
| | (c) | Uniform costing; | | (0) |
| | (d) | Turnover ratios; | | (0) |
| | (e) | Value of an industrial product; | | (0) |
| | (f) | Marginal costing for decision making. | | (0) |
