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1. (a) "Limitations of financial accounting have made the management realize the
importance of cost accounting." Comment.
(b) Distinguish between (any two):
() Cost centre and cost unit
(iü) Direct and indirect costs.
(ii) Cost of production and cost of sales (5,10)
OR
(a) Explain the meaning and relevance of cost accounting standards in the
preparation of cost statements
(b) "Cost classification based on variability, controllability and traceability are
used by the enterprises for different objcctives" In the light of this statement
explain the different cost classification. (5,10)
2. (a) Write a note on Economic Order Quantity (EO0).
(b) From the following information, calculate labour turnover rate and flux rate :
No. of workers as on 01.01.2022 7,600
No. of workers as on 31.12.2022 8,400
During the year, 80 workers left while 320 workers were discharged, 1,500
workers were recruited during the year of whom 300 workers were recruited
because of exits and the rest were recruited in accordance with expansion
plans. (5,10)
(a) What do you mean by labour turnover? Also explain the different methods
of measuring it.
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product which requires a component
(b) A company manufactures a special the year 2022:
following particulars are available for
"A". the
Annual Demand 10,000 units
Cost of placing an order 2 250 per order
Cost per unit of"A" R 500
|Carrying cost p.a. 20%
provided
The company has been offered a discount of 5% on purchase of "A"
the order size is 5000 components at a time.
You are required to calculate
() Economic Order Quantity
ii) Advise whether discount order can be accepted or not? (5,10)
of all machinery
3. (a) A machine was purchased for Rs. 5 lakh. The total cost
particulars
inclusive of the new machine was Rs. 75 lakh. The following further
are available :
Expectcd life of the machine 10 years
Scrap value at the end of ten years Rs. 5,000
year Rs. 2,000
Repairs and maintenance for the machine during the
Expected number of working hours of the machine per year 4,000 hours
Insurance-oremium annually for all the machines Rs. 4.500
25
Electricity consumption for the machine per hour (a 75 paise per unit)
units
ft
Area occupied by the machine 100 sa.
Area occupicd by other machines 1500 sg. ft
Rent per month of the department Rs. 800
Lighting charges for 20 points for the whole department, out of which three
points are for the machine Rs. 120 per month
Compute the machine hour rate for the new machine on the basis of the data
given above. (15)
OR
(a) Explain the meaning of classification, allocation, apportionment,
reapportionment and absorption of overheads.
(b) What do you mean by under/over absorption of overheads? What are its
causes? How do you account for them? (5,10)
4. (a) The following information relates to a building contract for Rs. 10,00,000
for two years, i.c., 2021 and 2022:
2021 2022
Rs Rs
Materials issued 3,00,000 84,000
Direct wages 2,30,000 1,05,000
Direct expenses 22,000 10,000
Indirect expenses 6,000 1,400
Work certified 7,50,000 10,00,000
Work uncertified 8,000
Materials at site 5,000 7,000
Plant issued 14,000 2,000
Cash received from contractee 6,00,000 10,00,000
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plant at the end of 2021 and 2022 was Rs. 7,000 and Rs. 5,000,
The value of
respectively.
Contractee's Account for two years
Prepare (i) Contract Account, and (ii)
2021 and 2022 taking into consideration such profit for transfer to profit
and loss accounts as you think proper. (15)
OR
for February 2021 :
The following data are available in respect of Process I
a total cost of Rs. 4,000
() Opening stock of work-in-progress: 800 units at
Labour
(ii) Degrec of completion of opening work-in-progress: Materials 100%,
60% Overheads 60%.
units
(iiü) Input of materials at a total cost Rs. 36,800 for 9,200
(iv) Direct wages incurred Rs. 16,740
(v) Production overheads Rs. 8,370
(vi) Units scrapped: 1,200 units.
100%, Labour 80%,
The stage of completion of these units was: Materials
Overheads 80%o.
(vii) Closing work-in-process: 900 units.
100%, Labour 70%,
The stage of completion of these units was: Materials
Overheads 70%. Firm uses FIFO method of inventory valuation.
process
(viii) 7,900 units were completed and transferred to next
put in)
(ix)) Normal loss is 8% of the total input (opening stock plus units
(x) Scrap value is Rs. 4 per unit
