Cost & Management Accounting

SUBJECT : COST & MANAGEMENT

1.     Discuss the different methods of calculating depreciation.

2.     Bring out the difference between FIFO and LIFO method.

3.     What are the components of the Standard Costs ?

4.     Differentiate between the Direct Labour Costs and Indirect Labour costs.

5.     Explain the methods of preparing the Cash Flow Statements.

6.     Discuss the various Accounting concepts & What are the various Accounting Principles ?

7.     What do you mean by depreciation & Explain the requirement of depreciation.

8.     Explain the causes of differences between the cash book and pass book.

COST & MANAGEMENT ACCOUNTANCY

COURSE: CFM                                                                            Total Marks: 80

N. B.: 1)     Attempt any Four Questions

                      All questions carries equal mark

1.     X is the manufacture of Mumbai purchased three chemicals A, B and C from U.P.The bill gave the following information:

Chemical A:	6000 kgs @ Rs. 4.20 per kg	Rs	25,200
Chemical B:	10000 kgs @ Rs. 3.80 per kg		38,000
Chemical C:	4000 kgs @ Rs. 4.75 per kg		19,000
VAT			2,055
Railway Freight			1,000
Total Cost			85,255

A shortage of 100 kgs in chemical A, of 140 Kgs in chemical B and Of 50 kgs in chemical C was noticed due to breakages. At Mumbai, the manufacture paid octroi duty @ 0.20 kg. He also paid hamali, Rs 20 for the chemical a, Rs 58.12 for chemical B and Rs 35.75 for chemical C. Calculate the stock rate that you would suggest for pricing issue of chemicals assuming a provision of 4 % towards further deterioration and also show the quantity (kgs) of chemicals available for issue.

2.     ABC Ltd has collected the following data for its two activities. It calculates activity cost rates based on cost driver capacity.

Activity	Cost driver	Capacity	Cost
Power	Kilowatt hours	50000 hrs	Kilowatt Rs 200000
Quality Inspection	Numbers of inspection	10000 inspection	Rs 300000

The Company makes three products, A, B and C.For the year ended March 31, 2004, the following consumption of cost drivers was reported:

Product	Kilowatt-hours	Quality Inspection
A	20000	7000
B	40000	5000
C	30000	6000

Compute the costs allocated to each product from each activity

Calculate the cost of unused capacity for each activity.

3.     Reliable company wishes to discontinue the sale of one of the products in vew of unprofitable operations. Following details are available with regard to turnover, cost and activity for the current year ending 31^st March.

	P
Sales Turnover	Rs.600000
Cost of sales	350000
Storage area (square meters)	40000
Number of cartons sold	200000
Number of bills raised	100000

Overhead costs and basis of apportionatement are:

Fixed Expenses

Administration wages & salaries

Salesmen salaries a & expenses

Rent and insurance

Depreciation

Unfixed Expenses

Products
Q	R	S
Rs.1000000	Rs.500000	Rs.900000
800000	370000	480000
60000	70000	30000
300000	150000	350000
120000	80000	100000

Basis of Apportionatement Rs.100000 Number of bill raised

120000   Sales turnover

60000   Storage area

20000   Number of cartons

Commission                                                                  3 % of sales

Packing material & wages                                             Re 1 per carton

Stationery                                                                      Re 0.50 per bill

You have to prepare

1. Staement showing summary of Selling & Distribution Costs to the products

2. Profit & Loss Statement showing contribution and profit or loss of each of the products to enable the Company take an appropriate decision on discontinuance of the sale of a product.

4.     The Tata Infrastructure Co. is involved in two contracts Contract 69 & Contract 96 during the current year. The following information relates to these contracts, which were started on January 1 and July 1, respectively.

		Contracts
	A	B
Contract Price	Rs.300000	Rs.400000
Direct material issued	55000	40000
Material returned to store	1500	2500
Direct Labour	36000	22000
Wages accrued on Dec 31	2000	2500
Plant installed (at cost)	30000	40000
Establishment Charges	20000	15000
Direct Expenses	20000	30000
Direct expenses accrued, December 31	2000	3000
Work certified by architect	320000	120000
Cost not work not yet certified	10000	30000
Material on site, 31 December	11000	5500
Cash received from contractees	60000	150000
Depreciation of plant p.a	12 %	34%

Prepare Contract & Contractees Account for Contract 69 & Contract 96.

5.     A company manufactures a product which involves two processes, namely, pressing and polishing. For the months of January, the following information is available:

Opening Stock	Pressing	Polishing
Inputs of unit in process	1200	1000
Units completed	1000	750
Unit under process	200	250
Material Cost	Rs.69000	Rs.17500
Conversion Cost	328500	82500

For incomplete unit in process, charge material costs at 100% and conversion costs at 60% in the pressing process and 50 % in the polishing process. Prepare a statement of cost and calculate the selling price per unit which will result in 25 % on the sale price.

6.     M/s Modern Company Ltd furnishes the following summary of Trading & Profit and Loss account for the current year ending March 31.

To Raw Material	140000	By sales (12000 units)			510000
To direct wages	72000	By finished stock (200 units)			6000
To production overheads	45000	By work in Process
To selling & distribution overheads	43500	Material	26800
To administration overheads	41010	Wages	11786		46586
To Preliminary Expenses w/off	3250	Production overheads	8000
To Goodwill w/off	2541	By interest on securities	(gross) 5000
To dividend (net)	4000
To income-tax	5870
To net profit	210415
	567586				567586

The Company manufactures a standard unit. The scrutiny of cost records for the same period shows that-

1.     factory overheads have been allocated to production at 20 percent on prime cost

2.     Administration overheads have been charged at Rs.3 per cent on units produced

3.     Selling & distribution expenses have been charged at Rs.4 per unit on unit sold.

You are required to prepare a statement of cost, to work out profit as per cost accounts, and to reconcile the same with that shown in the financial accounts.

SUBJECT : COST & MGMNT ACCOUNTING

Total Marks: 80

Note : All Questions are Compulsory

Each Question Carries Equal Marks

9.     Explain the significance of cost accounting in a manufacturing company.

10.                        How cost accounting is superior over financial accounting? Explain the techniques of costing and their application and suitability.

11.                        What is meant by cost accounting? Discuss in detail the advantages of the cost accounting.

12.                        “Cost accounting has become an essential tool of modern management”. comment.

13.                        What factors are considered for sound budgetary control?

14.                        What are the objectives, advantages and limitations of budgeting?

15.                        How to set up standard costs?

16.                        A company earned a profit of Rs. 50000 during the year 2008-09. If the marginal cost and selling price of a product are Rs. 7 and Rs. 10 respectively find out the amount of margin of safety

SUBJECT : COST ACCOUNTING

Total Marks: 80

Note : All Questions are Compulsory

Each Question Carries Equal Marks                            10 Marks

17.                        What is the procedure of profit on in completed contract?

18.                        How are joint products and by products recorded in process costing?

19.                        What is the method or procedure of reconciliation & advantages of reconciliation?

20.                        What are the advantages of marginal costing & limitations of marginal costing?

21.                        What are the preliminaries to the establishment of standard cost?

22.                        What are the scope and areas of cost audit?

23.                        Explain the advantages of cost accounting. What are the differences between cost accounting and Financial accounting

24.                        Cost accounting has become an essential tool of management. Mention the steps to be taken while installing cost accounting system in a manufacturing concern.