B.com Part 2 – COST ACCOUNTING 2006 (Private)

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COST ACCOUNTING 2006 (Private)

 

Time : 3 Hours                Max. Marks:100

 

Instructions: Attempt FIVE questions, THREE from Section-I and TWO from Section-II.

1 .(a) Briefly describe the objective of cost Accounting (06+14)

(b) Discuss the elements of Cost involved in each product.

 

2. MANUFACTURING COST: (20)

The following data relates to the operation of Salman Manufacturing Company for the year ended Dec.31, 2005.

 

Sales 6,08,600

Machinery repair expenses 7,500

Sales Return & Allowances 8,000

Factory insurance 7,000

Purchases of Raw Material 3,15,500

Bad debts expense 1,500

Purchases Return & Allowances 13.000

Factory Rent & Taxes 20,200

Sales Discount 2,600 4

Selling & Administrative expenses 35,000

Purchases Discount 2,500

Direct Labour 90,000

Freight In 5,000

Factory Supplies expenses 1,300

Import duty 3,000

Office Supplies Expense 500

Foreman’s Salary 30,000

Indirect Labour 15,000

 

INVENTORIES

1.1 20O5

31.12.2005

Raw Material 30,000 68,000
Goods Process 40,000 ?
Finished goods 70,000 56,000

Factory Manager estimated work in process as follows:

Raw Material 20,000

Direct Labour 30,000

 

The Company assigns FOH on the basis of Direct Labour Cost.

 

REQUIRED:

(a) Determine FOH Rate.

(b) Compute the Cost of W.I.P. on Dec. 31. 2005.

(c) Prepare Statement of Cost of Goods Manufactured & Income statement for 2005,

 

3. MATERIAL COSTING: (20)

NOT INCLUDED IN THE NEW COURSE

 

4. ACCOUNTING FOR LABOUR COST: (20)

NOT INCLUDED IN THE NEW COURSE

 

5. PROCESS COST SYSTEM (20)

Mansoor Industries Limited uses a process cost system of three processes, the following data relates to its process-01

 

Beginning Inventory Rs.1,60,000

Raw Material used Rs.2,50,000

Direct Labour Cost used Rs.3,68,000

Factory Overhead Cost applied Rs.2 76000

 

The data extracted from a quantity schedule relating to the above processes are as follows:

Units in Process Beginning 1,30,000 Units

(100% completed as to Material 70% as to conversion cost).

Units placed in production 4,75,000 Units

Units Completed 4.00,000 Units

Units still in process at the end 90% complete as to Material and 50% complete as to conversion cost.

 

REQUIRED:

Compute the Equivalent Production units, the unit cost, the total cost of unit completed and the total cost of units in process at end.

 

6. MATERIAL LOSSES: (20)

NOT INCLUDED IN THE NEW COURSE

 

7.(a) GENERAL LEDGER/ FACTORY LEDGER:

NOT INCLUDED IN THE NEW COURSE

 

7.(b) STANDARD COSTING: (10)

The standard and actual cost Data of Ahmed Limited is as follows;

 

STANDARD

Direct Material 10,000 units @ Rs.4 per unit

Direct Labour 5,000 hours @ Rs.6 per hours

 

ACTUAL

Direct Material 9,800 units @ Rs.3.50 per unit

Direct Labour 6,000 hours @ Rs.6.50 per hours

 

REQUIRED:

(i) Material Price Variance & Material Quantity Variance

(ii) Labour Rate Variance and Labour time variance

(iii) General Journal Entries to record the above information and to close the variance accounts.

 

8a) JOB ORDER COST SYSTEM: (15)

Master sons uses job order cost system Factory Overhead is charged to individual Jobs through the use of predetermined overhead rate-based on Direct Labour Cost.

 

The following appears in the Company’s Goods in process Account for the month of Jan 2006

Debit to Account

Balance Jan. 01, 2006 Rs.10,300

Raw Matenal Rs.15,000

Direct Labour Rs.9,000

FOH Rs.11,700

Total  Rs.46,000

 

 Credit to Account

Transferred to Finished goods Accounts Rs 34.000

Balance Jan. 31, 2006 Rs.12,000

 

REQUIRED

(1)Determine the overhead application rate used by the company.

(2) Assuming that the Direct Labour Charged to the job still in process at Jan. 31, amounts to Rs.3,000. Compute the amount of FOH and amount of Raw Material which have been charged to these jobs as of Jan. 31, 2006.

(3) Prepare General Journal Entries to record.

 

(i) The Manufacturing Cost (Material Labour & O.H.)

(ii) The transfer of production completed during Jan. 31, to the Finished Goods inventory accounts.

(iii) The Credit sales of total of finished goods completed at 30% above cost,

 

(b) Karachi products Limited applies FOH @ 150% of the Direct Labour During the current period, Company incurred Rs.1,60,000 of Direct Labour cost and 2,32,000 of Factory Overhead Cost.

What is the amount of Over or Under applied Factory Overhead? (05)

 

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