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

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COST ACCOUNTING 2006 (Regular)

 

Time : 3 Hours                Max. Marks:100

 

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

SECTION “A” (Advanced Accounting) 60 Marks

 

1.(a) Describe the role of Cost accounting in a Manufacturing concern.

1.(b) Briefly describe the major used to account for manufacturing costs.

 

2. ELEMENTS OF COSTS

A manufacturing presents the following details about the various expenses for the month of june-2006.

 

Purchase 80,000
Opening stock of Raw material 5,000
Carriage-in 3000
Import duty 7,000
Closing stock of raw material 15,000
Factory rent 3,000
Bad debts 500
Printing and statitionery 700
Carriage-out 1,700
Indirect material 800
Power 4,000
Depreciation – office furniture 200
Repair of plant and machinery 1,3000
Salesman’s expenses 500
Advertising expenses 5,000
Direct wages 46,000
General manager’s salary 18,000
Factory manager’s salary 13,000
Depreciation plant and machinery 1,400
Audit fees 1,300
Research and development cost 3,000
Legal expenses 800

 

REQUIRED:

Classify the above expenses under the various elements of costs, showing separately the Total Expenditure.

 

3. PROCESS COSTING:

 

The following information was taken from the books and records of the Standard Manufacturing Company for the year ended Dec 31, 2005. (20)

 

Units

Costs

Sales during the year 8,000 ?
Opening Inventory of Finished Goods 1,800 14,500
Closing Inventory
Work in Process 100 ?
Finished Goods 2,000 ?
Manufacturing Costs
Direct Material 30,000
Direct Labour 20,000
Factory Overhead 16,000

 

 

The Foreman has submitted the following costs for the closing Work in Process.

 

Inventory

Material Cost 2,700

Direct Labour Cost 1,000

 

The Company’s past experience showed that FOH Cost tend to fluctuate closely in Proportion to Direct Labour Cost.

 

REQUIRED:

(i) Determine the number of units manufactured during the year.

(ii) Compute the estimated cost of Work-in-Process.

(iii) Determine the Cost of each unit.

(iv) Determine the Ending inventory of Finished Goods and the Cost of Sales.

 

4. FACTORY LEDGER & GENERAL LEDGER:

NOT INCLUDED IN THE NEW COURSE

 

5. JOB ORDER COTING:

The following data relate to Irfan Manufacturing Company for its operation for the year ended Dec.31, 2005.         (20)

Raw Material purchased on account Rs. 2,00,000

 

Material Issued to Factory:

Direct 140,000

Indirect 20,000

 

Labour used:

Direct Labour for production 240,000

For general use 24,000

Other FOH incurred on account Rs.180,000.

 

90% of the FOH have been applied on the work-in- process account on the basis of Direct Labour Cost.

 

Good valued Rs. 516,000 were transferred from Factory to Godown as complete. Finished Goods costing Rs.66,000 were in the ending inventory and the rest were sold at

20% above cost.

 

REQUIRED:

(i) Give general Journal Entries to record the above transactions and setup work-in-process, Finished Goods and Factory Overhead account.

(ii) To Close the Factory overhead accounts.

 

6. PROCESS COSTING:

Kamran Manufacturing uses Process cost System. The cost of process 2 for the month of May were as under:

 

Cost from preceding process Rs. 60,000

Cost Added by the process:

Material 65,448

Labour 23,328

FOH 12,312

 

Following information was obtained from the departments Quantity Schedule.

Units Received 7,500

Units transferred 6,000

Units still in process1,500

The degree of completion of work in process was 50% of the units were 40% complete 20% of the units were 30% complete and the balance of the units was 20% complete.

 

REQUIRED

(i) Prepare cost of production report for department 2 for May 2006.

(ii) General Journal entries to record:

(a) Transfer of 7500 units from preceding department to process 2.

(b) Manufacturing Cost added in process 2 during May 06.

(c) Transfer of 6000 units from process 2 to finished goods warehouse.

 

7. MATERIAL LOSSES:

NOT INCLUDED IN THE NEW COURSE

 

8. Describe briefly the following: (20)

(i) Manufacturing Cost

(ii) Distribution Cost

(iii) Administrative Cost

(iv) Standard Cost

(v) Historical Cost

(vi) Variable Cost

(vii) Fixed Cost

(viii) Variance

(ix) Spoiled Units

(x) Defective Units.

 

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