B.com Part 2 – COST ACCOUNTING 2005 (Regular)

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COST ACCOUNTING 2005 (Regular)

 

Time : 3 Hours                Max. Marks:100

 

Instructions: Attempt any FIVE questions.

1 .(a) Briefly describe the importance of Cost Accounting. (05) 1(b) GIVEN: The accounting department of Mirza Manufacturing Company provided the following Data for May 2005:

Sales Rs.825,000; marketing expenses 10% of sales; administrative expenses 5% of sales; Purchases Rs.375,000; factory overhead 2/3 of direct labour; Direct labour Rs.156,000.

Inventories Beginning Ending
Finished goods Rs.90,000 Rs. 1,00,000
Work in process 80,000 1,05,000
Materials 70,000 85,000

 

 

REQUIRED:

(i) Cost of goods manufactured statement.

(ii) Income Statement.     (07+08)

 

2.(a) GIVEN: MEER AND COMPANY use job order cost system. The following data summarize the operations relating to production

for June 2005: (11)

(a) Materials purchased on account Rs.104.000.

(b) Materials requisitioned Rs.99,000, of which Rs.3,000 was for general factory use.

(c) Factory labour used Rs.84,000, of which Rs.11000 was factory overhead

(d) Other costs for factory overhead were incurred on account Rs.17,000.

(e) Prepaid insurance expired for factory overhead was Rs.1,000

(f) Depreciation of factory equipment was Rs.9,000.

(g) Factory overhead cost applied to jobs Rs.40,000.

(h) Jobs completed Rs.210,000.

(i) Cost of goods sold Rs.197,000.

 

REQUIRED:

Entries in general journal to record the summarized operations.

 

2.(b) MATERIAL LOSSES:

NOT INCLUDED IN THE NEW COURSE

 

3.(a) Enumerate the various classification of cost. (05)

3.(b) GIVEN: The following information pertains to the good in the process No.3 for November 2005: (15)

Cost of goods in process inventory, November 1 (4000 units 100% complete as to materials, and 75% complete as to conversion cost) Rs.4,87,000

Cost of 14000 units transferred in form process No.2 7,00,000

 

Manufacturing costs added in process No.3:

Direct materials Rs.280,000

Direct labour 125,000

Factory overhead 375,000

On November 30, 5000 units are still in process No.3, Which are 100% complete as to materials and 50% complete as to conversion cost

 

REQUIRED:

(a)(i) Equivalent units of production.

(ii) Cost per unit

(iii) Cost of unit transferred to finished goods.

(iv) Cost of units in process on November 30.

 

(b) General journal entries to record:

(i) Transfer of 14000 units from process No.2 to process No.3.

(ii) Manufacturing Costs added in process No.3.

(iii) Transfer of 13000 units from process No.3 to finished goods

4. GIVEN: The standard costs and variances for July 2005 are as follows:

Standard Costs

Unfav. Variances

 

Fav. Variances

 

Direct materials Rs.900,000
Price Variance Rs.48,000
Quantity Variance Rs.30,000
Direct Labour Rs.1800,000
Rate Variance Rs.18,000
Efficiency Variance Rs.54,000
Factory overhead Rs.2700,000
Spending variance Rs.36,000
Volume variance Rs.24,000

 

 REQUIRED:  (06)

(a) Actual Costs for:

(i) Direct materials.

(ii) Direct labour.

(iii) Factory overhead.

 

(b) Entries in general journal: (14)

(i) To record the above information.

(ii) To close the variance accounts.

 

5. MATERIAL INVENTORY SYSTEM:

NOT INCLUDED IN THE NEW COURSE

 

6. ACCOUNTING FOR LABOUR COST:

NOT INCLUDED IN THE NEW COURSE

 

7.(a) DEPARTMENTALIZATION OF OVERHEAD:

NOT INCLUDED IN THE NEW COURSE

 

7.(b) OVERHEAD COST:

NOT INCLUDED IN THE NEW COURSE

8. Distinguish between the following: (20)

(i) Direct materials and indirect materials.

(ii) Direct labour and indirect labour.

(iii) Fixed factory overhead and variable factory overhead.

(iv) Prime cost and Conversion cost.

(v) Manufacturing costs and costs of goods manufacture.

(vi) Product Costs and period costs.

(vii) Actual factory overhead and standard factory overhead.

(viii) Producing department and services department.

(ix) Spoiled units and defective units.

(x) Capital expenditure and revenue expenditure.

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