ADL 56 Cost and Management Accounting V1

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ADL 56 Cost and Management Accounting V1

Assignment – A
Question 1: “Cost Accounting is an aid to management” discuss the main points in
support of this statement. Also explain briefly the limitation of Cost
Accounting.
Question 2. Prepare the Stores Ledger Accounts and discuss the effects of
adopting LIFO and FIFO on profits, with the help of the following figures:
DateDetails
Jan 1Opening Balance -10 Units (December 28 th purchase) @ Rs 30
Jan 10Purchase 10 Units @ Rs 33
Jan 12Issued – 10 units
Jan 31Closing Balance 10 units
Feb 3Purchase 10 units @ Rs 36
Feb 12Issued 10 units
Feb 28Purchased 10 units @ Rs 40

Sales during these two months amounted to Rs 1,000.
Question 3: A company has three production departments and two service
departments, and for a period the department distribution summar y has the
following details:

Prepare a statement sho wing the appo rtionment of two service departments’
expenses to production department by simultaneous Equation Method and Repeated
Distribution Method.
Question 4: From the following particulars of Rosa Ram Ltd. For three months
ending 31 March , 2005 prepare:
(a) Cost sheet for the period giving various costs, and (b) Profit and
Loss Account for the quarter showing profit per barrel.
Wages Rs 12,000, Coal and Oil 11,200, Cooperage , Corks and Shives Rs
4,000,Malts Rs 40,000,Hops 10,800 , Beer Duty Rs 2,80,000 Water Rs 1,000, Rent
and Taxes Rs.6,000, By product Rs 3,600, Sugar Rs 14,000, Preservatives Rs
1,600, Other Materials Rs 1,200 , Repairs Rs 1,800, Depreciation 1,200,
Administration Expenses Rs 24,000 , Selling and Distribution Expenses Rs.
30,000.
Opening stock for beer Rs 40,500 (300 barrels). Closing stock of beer Rs
67,500 (500 barrels). Beer sales Rs 4,98,000(2800 barrels). Beer brewed during
the period 3,000 barrels.
Question 5. What is Machine Hour Rate? What is the use of MHR? Explain the
calculation pro cedure o f it with imaginary figures.

 

Assignment – B
Question 1. What is Marginal Costing? How variable cost and fixed cost are are
treated in marginal costing vis-a- vis with Absorption Costing?
Question 2: S Ltd. furnishes you the following information relating to the half
year ending 30th June, 2007.
Fixed Expenses 50,000.
Sales Value 2,00,000.
Profit 50,000.
During the period half of the same year the company has projected the loss of Rs
10,000.
Calculate-
(a) P/V Ratio, break even point and margin of safety for the half year ending
30th June.
(b) Expected sales volume for second half of the year assuming that selling
price and fixed expenses remain unchanged in the second half.
(c) The break even point and marg in of safety for the who le year 2007.
Question 3. The standard material cost for 100 kgs of chemical D is made up of-
Chemical A- 30 Kgs @ Rs 4.00 per kg.
Chemical B- 40 Kgs @ Rs 5.00 per kg.
Chemical C-80 Kgs @ Rs 6.00 per kg.
In a batch of 500 kgs of chemical D was produced from a mix of –
Chemical A – 140 Kgs at a cost of Rs. 588.
Chemical B – 220 kgs at a cost of Rs 1,056.
Chemical C- 440 kgs at a cost of Rs 2,860.
How do the yield, mix and price factors contribute to the variance in the actual
cost per 100 kgs. of chemical D over the standard cost?
Case Study
East and West Enterprises is currently working at 50% capacity and produces
10,000 units..
At 60% capacity the raw material cost increases by 2% and the selling price
falls by 3%.
At 70% capacity the raw material cost increases by 4% and the selling price
falls by 5%.
At 50% capacity working the product costs Rs 180 per unit and is sold at Rs 200
per unit.
The unit cost of Rs 180 is made up as follows:
Material Rs 100
Wages Rs 30
Factory overhead Rs 20(40% fixed)
Administrative overhead Rs 30(50% fixed).
You are r equired to do the follo wing
(a) Divide the cost at 50 % level into fixed, variable and semi-variable.
(b) Prepare the cost sheet at 50% level and find out the profit.
(c) Estimate the profits of the company when it works at 60% and 70%
capacity.

 

 

Assignment – C
1. Costing is a technique of—————-
(a) Ascertainment of cost.
(b) Ascertainment of expend iture.
(c) Ascertainment of revenue.
(d) Control of cost.
(e) Both (a) and (d).
2. The method of costing used in refiner y is
(a) Jo b.
(b) Process.
(c) Standard.
(d) Contract.
3. In automobile industry , cost unit is ———-
(a) Qualit y.
(b) Number.
(c) Weight.
(d) (a) and (b).
4. Ordering cost and carrying cost are equal at ———–level.
(a) Reorder.
(b) Average.
(c) EOQ.
(d) Danger.
5. Broadly speaking any expenditure over and above ———————-is
known as overheads.
(a) Indirect costs.
(b) Fixed cost.
(c) Prime cost.
(d) Facto ry cost.
6. Which of the following is not a technique of costing?
(a) Marginal Costing.
(b) Standard Costing.
(c) Activity Based Costing.
(d) Incremental Costing.
7. Which of the fo llowing statements are not correct?
(a) Variable overhead cost is a direct cost.
(b) Fixed overhead is a committed cost.
(c) Overhead cost is the aggregate of indirect material, indirect labour and
other indirect expenses.
(d) Variable overhead is a discretionary cost.
8. Office telephone expense is an example of.
(a) Variable cost.
(b) Semi- variable cost.
(c) Fixed cost.
(d) Sunk cost.
9. ——————————-is a contract, provides that the contract
price would be suitably enhanced on the happening of a specified contingency.
(a) Change to term.
(b) Repetitive.
(c) Ar bitrage.
(d) Esca lat ion.
10. Specific order costing includes.
(a) Jo b.
(b) Contract.
(c) Batch
(d) (a) and (b) of above.
(e) All of the above.
11. When the co mpletion of the contr act is less then 1/4, the total
expenditure on the contract is transferred to ————————-Account.
(a) Pro fit & Loss.
(b) Contra tees.
(c) Work-in-progress.
(d) None of the above.
12. ————————————– is the most important point to be
determined in industries where batch costing is employed.
(a) Economic Order Quantity.
(b) Batch number.
(c) Economic Batch Quantity.
(d) Expir y date.
13. The method of costing applied in furniture industry is —————-
costing.
(a) Process.
(b) Jo b.
(c) Operation.
(d) Batch.
14. The method of costing applied in steel industry is —————- costing.
(e) Process.
(f) Jo b.
(g) Operation.
(h) Batch.
15. When actual loss is more than estimated lo ss, the difference between the
two is considered to be ————————–.
(a) Normal lo ss.
(b) Estimated loss.
(c) Abnormal lo ss.
(d) Provisional lo ss.
16. ——————————–is spread on good items of production.
(a) Abnormal lo ss.
(b) Normal lo ss.
(c) Abnormal gain.
(d) Both (a) and (c).
(e) None of the above.
17. Which of the following is an example of abnormal cost?
(a) Loss due to handling.
(b) Loss due to shrinkage.
(c) Loss due to leakag e.
(d) Loss due to evaporation.
(e) Loss due to lock out.
18. The costs incurred up-to the point of separation is
called———————costs.
(a) Common.
(b) Normal.
(c) Abnormal.
(d) Relevant.
(e) None of the above.
19. The stage of production at which separate products are identified is known
as————————– stage.
(a) Milestone.
(b) Identification.
(c) Split off.
(d) Common.
20. The most impo rtant criterion for distinguishing between scrap, by-product
and joint product is —————————————of the products.
(a) Weight.
(b) Importance.
(c) Order of finality.
(d) Relative sales value.
21. ——————————–is an example of variable cost.
(a) Rent of factory building.
(b) Direct material.
(c) Telephone charges.
(d) Depreciation.
22. ——————————is an example of fixed cost.
(a) Rent of factory building.
(b) Direct material.
(c) Telephone charges.
(d) Supervisor’s salary.
23. ——————————is an example of semi-variable cost.
(a) Rent of factory building.
(b) Direct material.
(c) Telephone charges.
(d) Supervisor’s salary.
(e) Both (c) and (d).
24. ————————- and variable costs are same.
(a) Marginal cost.
(b) Average cost.
(c) Budgeted cost.
(d) Standard cost.
(e) Differential cost.
25. Conversion cost doesn’t include—————.
(a) Direct Material.
(b) Direct labour.
(c) Facto ry overhead.
(d) Both (a) and (b).
26. Fixed costs are also called……
(a) Standard costs.
(b) Imputed costs.
(c) Capacity costs.
(d) Sunk costs.
27. —————————–are relevant costs for decision making.
(a) Differential Costs.
(b) Incremental Fixed costs.
(c) Variable costs.
(d) Imputed costs.
(e) None of the above
(f) All of the above.
28. —————————–are irrelevant costs for decision making.
(a) Differential Costs.
(b) Incremental Fixed costs.
(c) Variable costs.
(d) Imputed costs.
(e) Sunk costs.
(f) All of the above.
29. The profit in marginal costing differs from absorption costing method mainly
because of:
(a) Fixed Cost treatment.
(b) Variable cost treatment.
(c) Difference in stock valuation.
(d) Over or under absorption of overheads.
(e) Both (c) and (d).
30. Muskan Ltd which makes only one product sells 10,000 units of its product
making a loss of Rs 10,000. The var iable cost per unit of the product is Re 8
and the fixed cost is Rs 30,000. What is the Contribution per unit?
(a) Rs 8.
(b) Rs 2.
(c) Rs 3.
(d) None of the above.
31. What is the Break even point in the above case(Question 30., if the sales
price, variable cost and fixed cost remain the same.
(a) 15000 units.
(b) 12000 units.
(c) 20000 units.
(d) None of the above.
32. Standard costing is more widely used method
in——————————–
industr y.
(a) Contract.
(b) Transport.
(c) Process.
(d) None of the above.
33. Which of the below is not one type of standard?.
(a) Current.
(b) Basic.
(c) Normal.
(d) Idea l.
34. Variance is comparison of ——————— with standards.
(a) Estimated.
(b) Calculated.
(c) Ac tua l.
(d) Ideals.
35. The process of compar ing profits reflected by cost accou nting reco rds and
financial accounting records and to know the reason of difference is known as:
(a) Audit.
(b) Verification.
(c) Examination.
(d) Reconciliation.
(e) Investigation.
36. Which of the fo llowing items co uld be reason/r easons of the d ifference
between two sets of books of acco unts (Financial/Cost).
(a) Stock valuation method.
(b) Absor ption of overheads.
(c) Interest on debentures.
(d) Goodwill written off.
(e) All of the above.
37. If the opening stock was valued at Rs 4000 in financial accounts and Rs 5000
in cost accounts, what will the impact of the transaction?
(a) Cost account pro fit is more by Rs 1000.
(b) It gets off-set during the year, hence no impact.
(c) Financial accounts profit is more by Rs 1000.
(d) None of the above.
38. The technique which does not take into account the past trends in preparing
the budgets is ————————-.
(a) Incremental Budgeting.
(b) Performance Budgeting.
(c) Zero Based Budgeting.
(d) Target Budgeting.
(e) None of the above.
39. Which is the following statement is not true about budgeting?
(a) Budgeting is a forecasting technique.
(b) Budgeting is different from standard costing.
(c) It is done pr ior to defined period of time.
(d) Budgeting is only financial statement.
(e) It is financial/and or quantitative statement.
40. A budget prepared for the entire firm/company is
called—————-budget.
(a) Functional.
(b) Master.
(c) Flexible.
(d) Fixed.
(e) None of the above.

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