Costing External Previous Year Question Paper Year 2005 : IIIrd Year Part I

Q. I. Explain briefly the following:
(i) Cost centre;
(ii) Normalloss;
(iii) Breii’.-even analysis;
(iv) Piece rate system of payment
Answer :

Q. 2. Distinguish between :
(a) Perpetual and Periodic Inventory System;
(b) Normal and Abnormal Idle Time.
(c) Cost Allocation and Cost Apportionment;
(d) Marginal Contribution and Profit.
Answer :

Q. 3. (a) For the coming year, a manufacturing company has budgeted as under:
Contribution/Sales (C/S) Ratio = 45%
Margin of Safety Ratio = 33â…“%
Fixed Costs = Rs, 5,85,000

Required: Determine Total Sales-volume for the coming year and Profit thereon. 10

(b) Ayush Ltd. produces a Herbal Shampoo which is made by subjecting certain crude herbs to two successive processes: A and B, The following data in respect of processing have been obtained from the accounting records of the company for a cost period:

Particulars – Process A – Process B
Inputs (units) – 50,0.00 – 46,000
Normal loss – 10% – ?

Costs Incurred: – Rs. – Rs.
Materials (Herbs) – 9,00,000 – 1,96,000
Direct labour – 4,26,000 – 2,47,000
Production overhead – 2,84,000 – 1,78,000
Realisable scrap value/unit – 7 – 20

The output of process A is transferred direct to Process B. The output of Process B was 43,200 units, which were sold at Rs. 60 per unit showing a profit of 20% on cost.

You are required to prepare the Process Cost Accounts assuming that there was no closing stock of W.I.P. and finished goods.
Answer :

Q. 4. (a) What do you mean by under absorption and over-absorption ofoverheads ? 5
(b) What are the advantages of centralised store-keeping ? 5

(c) From the understated particulars, you are required to prepare a monthly cost sheet of Soap Manufacturers Ltd. showing therein:

(i) Prime cost;
(ii) Works cost;
(iii) Cost of production;
(iv) Cost of sales; and
(v) Profit per unit.

Opening Inventory (1-1-2004);

Raw materials – 6,000
Work-in-progress – 9,620
Finished goods (1,000 units) – 13,680

Closing Inventory (31-1-2004):
Raw materials – 7,000
Work-in-progress – 8,020
Finished goods – ?
Donations to home for destitutes – 2,100
Raw-materials pruchased – 72,000
Import duty on raw materials purchased – 14,400
Productive wages – 18,000
Machine hours worked – 21,600 hours
Machine hour rate – Rs. 1.50
Chargeable expenses – Rs. 2,000
Office and Administration expenses – Re. 1 per unit
Selling expenses – Re. 0.90 per unit
Units sold – 8,000 units
Units produced – 8,200 units
Profit on sale – 10%
Answer :

Q. 5. (a) What is labour turnover ? How is it measured ? 5

(b) A company manufactures 5,000 units of a product per month. Cost of placing an order is Rs. 100. The purchase price of raw material is Rs. 10 per kg. The reorder period is 4 to 8 weeks. The consumption of raw materials varies from 100 kg to 450 kg per week, the average consumption being 275 kg, the carrying cost of inventory is 20% per annum.

You are required to calculate:
(i) Reorder quantity
(ii) Reorder level. 5

(c) A manufacturing company disclosed a net loss of Rs. 3,47,000 as per their cost accounts for the year ended March 31,2004. The financial accounts however disclosed a net loss of Rs. 5,10,000 for the same period. The following information was revealed as a result of scrutiny of the figures of both the sets of accounts :

Factory overheads under-absorbed – 40,000
Administration overheads over-absorbed – 60,000
Depreciation charged in Financial Accounts – 3,25,000
Depreciation recovered in Cost Accounts – 2,75,000
Interest on investments not included in Cost Accounts – 96,000
Income-tax provided – 54,000
Interest on loan funds in Financial Accounts – 2,45,000
Answer :

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