Cost Accounting

Instructions:
Each section is divided into 10 groups. Groups are formed on the basis
of roll nos. like, 1-6, 7-12, 13-18 and so on till 55-60. The submissions
are to be done as a group.
All students in each section are required to participate and solve the
questions asked. One or two students in each group will be asked
to come up and solve the problem on the board and he/she has to
clarify doubts in class. Marks are assigned accordingly.
Answer all the questions below.
Assignment submission date: 7th Dec 2015. All are required to abide
by the date and there will be no extension of time whatsoever the
reasons may be.

Questions

1. A manufacturing co uses 2 identical large and 4 identical small

machines. Each large machine occupies a quarter of the workshop and
employs 3 workers, each small machine occupies half the space of the
large machine and employs 2 workers. The workers are paid by piece
work.

Each of the 6 machines is estimated to work 1440 hours pa. The

effective working hours for life is 12000 hours for each large machine
and 9000 hours for each small machine. Large machines cost 20 L
each and small ones cost 4L each. Scrap values are 1L and 10000
respectively.

Repairs and maintenance are estimated to cost 2L for each large

machine and 12000 for each small machine during its effective life.

Power consumption costs 5 per unit and amounts to 20 units per hour
for large and 5 units for small machine.

The manager is paid 5L a year and the workshop supervision takes

away half his time which is divided equally among the 6 machines.

Rent of workshop 10 L pa

Welfare measures to employees 1.8 L pa.

 Taking a period of 3 months as a basis, calculate MHR for large and
small machines.

2. A manufacturer has shown an amount of Rs. 16190 in his books as

establishment which includes the following expenses:

Agents commission-- Rs. 5750

Warehouse wages-- Rs. 1800
Warehouse repairs-- Rs. 510
Lighting of office-- Rs. 70
Office salaries-- Rs. 1130
Directors remuneration-- Rs. 1400
Traveling expenses-- Rs. 760
Rent, rates and insurance of warehouse-- Rs. 310
Rent, rates and insurance of office-- Rs. 230
Lighting of warehouse-- Rs. 270
Printing and stationery-- Rs. 1500
Trade magazines-- Rs. 70
Donations-- Rs. 150
Bank charges-- Rs. 100
Discount allowed-- Rs. 1970
Bad debts-- Rs. 170

From the above information, prepare a statement showing the following (in
separate totals):
Selling expenses
Distribution expenses
Administration expenses
Expenses which you will exclude form total cost

3. Prepare a cost statement.

Direct Materials 1000000
Consumable stores 250000
Direct Wages 300000
Managers Salary 500000
Wages of Foremen 250000
Directors fees 125000
Electric power 50000
Office Stationery 5000
Lighting: Factory 150000
Lighting: Office 50000
Telephone Charges 125000
Postage and Telegrams 2500
Storekeepers wages 100000
Salesmens salary 125000
 Travelling expenses 50000
Rent: Factory 500000
Rent: Office 250000
Advertising 125000
Warehouse charges 50000
Repairs to Factory plant 35000
Sales 189500
Carriage outward 37500
Transfer to Reserves 100000
Dividend 200000
Discount on shares written off 50000
Depreciation Factory Plant 500
Depreciation Premises 12500

4. ABC Ltd., a manufacturing company, incurred the following expenses

during a certain period. You are required to prepare a statement
showing the subdivision of total cost.

Materials used on jobs 1,20,540

Wages traceable to jobs 86,650
Salaries of sales men 1,26,00
Directors fees 15,100
Carriage inwards on raw 10,000
materials 860
Carriage outwards 2,800
Factory rent and rates 8,300
Works salaries 20,400
Hire of crane for job no, 132 1,300
Consumable stores
Depreciation of plant 3,800
Depreciation of delivery vans 1,600
Insurance on finished goods 2,500
Lubrication oil 250
Bad debts 300
Commission to salesmen 2,850
Cost of idle time in factory 510
Auditors fees 3,800
Dividends paid 6,800
Lighting of showroom 1,500
Office salaries and expenses 7,000
Income tax 8,600
 5. The following figures are taken from the books of a manufacturing
company for the year ended on March 31, 1995. Prepare a cost sheet
showing clearly the cost per unit under the various elements and also
the profit or loss per unit.

Direct materials 25,00,000 Branch office 30,000

Direct labor 8,00,000 expenses
Depreciation of Depreciation of 10,000
factory building 16,000 office building
Insurance: Depreciation of staff
cars

Staff cars 2,000 Electricity (including 15,000

Office building 1,500 Rs. 5,000) for
Factory building 2,000 administrative 35,000
Delivery van- office) 18,000
maintenance and Advertisement 4,20,000
running expenses 12,000 Sundry factory 4,000
Salaries (including expenses
that of Sales Sales promotion 60,000
Manager Rs. 20,000 Office
and Factory Chief 2,75,000 administration 8,000
Engineer expenses 50,000
(Rs.25,000) 15,000 Expenses for
Finished goods participating in
warehouse industrial exhibition
expenses Sales (10,000 units)
Units produced--
10,000
6. STG Mfg. Co. manufactures two types of pens P and Q. The cost data
for the year ended on June 30, 1995 is as follows:

Direct materials 4,00,000

Direct wages 2,24,000
Production overhead 96,000
7,20,000
It is further ascertained that:

(i) Direct materials of type P costs twice as much direct materials of

type Q
(ii) Direct wages for type Q were 60% of those for type P
(iii) Productions overhead was of the same rate for both types
(iv) Administration overhead for each was 200% of direct labor
(v) Selling costs were 50 paise per pen for both types
(vi) Production during the year:
 Type P 40000 Type Q 120000
(vii) Sales during the year:
Type P 36000 Type Q 100000
(viii) Selling prices were Rs. 14 per pen for type P and Rs. 10 per pen
for type Q.
Prepare a statement showing per unit cost of production total cost, profit and
also total sales value and profit separately for the two types of pen P and Q.

7. The following is the summary of the receipts and issues of material in a

factory during December 2012. Prepare Store Ledger according to FIFO, LIFO,
Weighted average methods.
December 2012.

1. Opening balance 500 units @ Rs.25 per unit

3. Issue 70 units
4. Issue 100 units
8. Issue 80 units
13. Received from supplier 200 units @ Rs.24.50 per unit
14. Returned to store 15 units @ Rs.24 per unit
16. Issue 180 units.
20. Received from supplier 240 units @ Rs.24.75 per unit
24. Issue 304 units.
25. Received from supplier 320 units @ Rs.24.50 per unit
26. Issue 112 units
27. Returned to store 12 units @ Rs.24.50 per unit
28. Received from supplier 100 units @ Rs.25 per unit
It was revealed that on 15th there was a shortage of 5 units and another on
27th of 8 units.

8. The Store Ledger Account for Material X in a manufacturing concern

reveals the following data for the quarter ended on 30th September
Date Particulars Receipts Issue
Quantity Price in Rs. Quantity
Price in Rs.
July 1 Balance b/d 1,600 2.00
July 9 Receipts 3,000 2.20
July 13 Issue 1,200
2.556
Aug. 5 Issue 900 1.917
Aug. 17 Receipts 3,600 2.40
Aug. 24 Issue 1,800 4.122
Sept. 11 Receipts 2,500 2.50
Sept. 27 Issue 2,100 4.971
Sept. 29 Issue 700 1.656

Physical verification on September 30th revealed an actual stock of 3, 800

units. You are required to
[a] Indicate the method of pricing employed above.
[b] Complete the above account by making complete entries you would
consider necessary including adjustments, if any, giving explanations
for such adjustments.

9. The following transactions in respect of Material Y occurred during the six

months ended
30th June 2013.
Month Purchased [Units] Price Per Unit in Rs.
Issued [Units]
January 200 25 Nil
February 300 24 250
March 425 26
300
April 475 23 550
May 500 25 800
June 600 20 400

The Chief Accountant is of the view that the value of closing stock remains the
same, which ever method of pricing of material issues is used. Do you agree? Why
or why not? Detailed Stores ledgers are required to be prepared on the basis of
FIFO, LIFO and Weighted average to prove or disprove the chief accountants
viewpoints.

10. A company produces a single product in three sizes, A, B and C.

Prepare a statement showing the selling and distribution expenses
apportioned over three sizes on the basis indicated and express the
total appropriated to each size as,

I] Cost per unit sold

II] A percentage of sales turnover and
III] Cost per cubic meter of product sold.
The expenses and basis of apportionment are as follows:

Expenses Amount (Rs.) Basis of

Apportionment
Sales salaries 10,000 Direct charge
Sales commission 6,000 Sales
turnover
Sales office expenses 2,096 Number of
orders
Advertising - specific 22,000 Direct charge
 Advertising - general 5,000 Sales
turnover
Packing 3,000 Size of product
Delivery expenses 4,000 Size of
product
Warehouse expenses 1,000 Size of
product
Credit collection expenses 1,296 Number of
orders

Data relating to the three sizes:

Particulars Total A B C
Number of salesmen 10 4 5 1
Number of orders 1,600 700 800 100
% of specific 100 30 40 30
advertising
Number of units sold 8,240 3, 440 3, 200 1, 600
Sales turnover Rs. Rs. Rs. Rs.
2,00,000 58,000 80,000 62,000
Capacity in cubic m. 5 8 17
per unit