MASTER MINDS Cost Sheet Q.No:1.

(a) Value of materials purchased = RS. 36,50,000 Hint: Purchases = consumption Opening stock + closing stock. (b) Rate of Profit = 17.33% Hint: Rate of Profit = Pr ofit X 100 Sales

Materials Q.No:1. EOQ =

Hint: 2 X1000 X400 4 EOQ = = 448 units. 2AS , A = 1000, S = 400, C = 4 C

Q.No:2. Decide where order is to be placed, i.e. order is placed at EOQ. Hint: Calculate EOQ = 2AS = 108 units. C

Prepare statement for four options i.e. Monthly, Quarterly, Half yearly and EOQ, compare cost, where cost is lowest, at that order is to be placed.

Q.No:3. Place orders at EOQ. Even though there is a discount at single order.
Hint: EOQ = 2AS C

Calculate total cost at EOQ and at single order. Compare cost between EOQ and single order As per EOQ, total cost = 20400

As per single order, cost = 20440 So Place order at EOQ.

Q.No:4. Place order at EOQ, because cost is lower at EOQ to compare present policy.
Hint: Calculate cost as per present policy Ordering Cost (15000) + Carrying Cost (10000) = 25,000/Calculate EOQ i.e. = 4900 Pieces Calculate cost at EOQ i.e. Ordering Cost (12245/-) + Carrying Cost (12250/-) = 24,495/So cost is lower at EOQ. So place the order at EOQ point.

Q.No:5. Calculation of Inventory Levels.

ROL = 1350 Unit, Maximum Level = 2475 units, Minimum level - 855 Average stock level = 1665 units or 1455 units Hint: First Calculate EOQ = 1200 units Reorder Level: Maximum usage 45 X Maximum Delivery Time. X 30 = 1350 units.

Minimum Level: ROL - (Normal usage X Average Lead Time) 1350 - (33 units X 15 days) = 855 units

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MASTER MINDS
Maximum Level: ROL + ROQ (Minimum Usage X Minimum Lead Time) = 1350 + 1200 (15 units X 5 days) = 2475 units. Average Stock Level = units = Minimum Level + ROQ = 855 + 600 = 1455 unit Minimum Level + Maximum Level 855 + 2475 = = 1665 2 2

Q.No:6.

(a) Minimum Stock level of M = 3000 Kg Hint: Minimum Stock Level = Reorder level (Avg usage X Avg. Lead Time) (b) Maximum Stock Level of N = 15400 kgs. Hint: Maximum Stock Level = ROL + ROQ (Minimum Usage X Minimum Lead Time) (c) Reorder Level Of Q = 15,000kgs Hint: Reorder Level = Max usage X Max lead Time

Q.No:7. Revised issue Rate of Material I = 2.45

Material II = 1.96 Hint: Write Format: Cost of Material Insurance Freight Sales Tax Total Cost XXX XXX XXX XXX XXX

Calculate no. Of Units: Units Purchased Loss in Transits = XXXX = XXXX XXXX Insurance, Sales Tax allocated on the basis of Cost of Material Freight allocated on the basis of quantity of material

Q.No:8. Total Cost of Material = 1,16,560

Hint: Cost of Port = 4000 X 28 Clearing Charges Freight = 1, 12,000 = = 2,800 1,760 1, 16,560 Calculation of Units: Total units Normal Loss 1000 60 = 940 1,16,560 Cost per unit = = Rs. 124 940 Material Issued to production = 900 X 124 = 1, 11, 600

940 40 (Abnormal Loss ) = 900

Q.No:9. Replacement price substitute as material issue price at the Time of Material issued.
Q.No:10. Closing Stock = 2400 units at cost 32, 760

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MASTER MINDS
Hint: All Material issued at standard price i.e. RS.12.

Q.No:11. FIFO Method (i) Inventory on June 30th = 3, 88, 500 Hint: 3000 X 2.85 = 85, 500 = 3,03,000 3, 88,500 (ii) Cost of Goods Sold = 7, 84, 500 Hint: Opening Stock + Purchases Closing Stock. LIFO Method (i) Inventory on June 30th = 3, 88, 500 Hint: 1, 00,000 X 3.00 3000 X 2.85 = 3,00,000 = 85, 500 3, 85,500 (ii) Cost of Goods Sold = 787500 Hint: Opening Stock + Purchases Closing Stock. Weighted Average Method Closing Stock = 3, 90, 000 Hint: Cost of Goods Sold = 7, 83, 000.

1, 00,000 X 3.03

Opening Stock + Purchases Closing Stock. Q.No:12. Tender b should be accepted Hint: Compare cost of two Tenders, accept lowest cost Tender. a b cost cost = 24,000 = 23,200

Calculate ROQ ROQ = 50,000 Hint: 80, 000 35,000 + (10,000 X month) Reorder point = 5000kg

Q.No:13. (a)

Hint: Reorder point = (Max. Consumption X Max. Lead Time) + Safety Stock (b) Prepare statement showing total cost to consider discount (c) 20 orders to be placed. Hints: Calculate EOQ = EOQ = 2000 Kg At EOQ = 2000 Kg ordering cost and carrying cost are the same. So 40000 2000 = 20 orders. 2AS C

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MASTER MINDS

Operating costing
Q.No:1. Cost per Passenger Km = Rs. 0.2471 Hint: Cost per passenger Km = Cost = Given Passenger Km = 56 X 50 X 75% (50 Km X 2 Trips) = 5,62,500 Passengers Km. Q.No:2. Charge per round trip : 88.22 Hint: Operating cos tperMonth RoundTrip = 8,822.21 100Trip Cost 139000 = Passenger .Km 5,62,500

Q.No:3. Bus fare to be charged for each passengers = Rs.150 per trip per Passenger = 0.0375 X 40 Km Hint: Calculate cost per each passenger Km = TotalCost No.ofPassenge rKm 9000 = 0.0375 Rs. Km 2,40,000

= Calculate total cost per month i.e.

Total cos t 12m

Q.No:4. (a) Cost per absolute Ton- Kilometer =

Hint: Total cos t AbsoluteT.Km

8944 = 0.20 per T.K 44,720

Absolute Ton-Km = Outward Journey + Inward Journey = 20960 + (b) Profit = 3224 Hint: Revenue collection Total cost 13368 10144 = 3224 23760 = 44720

Calculate Absolute Ton Km A 140K C 160K B

Q.No:5. Fare to be collected per passenger Km = Rs. 0.08 Hint: Total cos t No.ofpassenge rkms = 11,520 1,44,000 = 0.08

Total cost = Cost + Delivery Commission + Profit = 11,520 Passenger Kms = 25 days X 6 Two Way Trip X 2 X 20 km X 24 Seat = 1,44,000

Q.No:6. Rent to be charged per room per day = 30days = RS. 187.50Ps.
Hint: Rent to be charged per room per day = 90,000 16Rooms = Total Cost No.of Rooms

5625

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MASTER MINDS
No. of Rooms = 20 X 80 % = 16 Rooms Total Cost = 60,000 + Profit = 90,000 28,41,000 = 3.16 per unit. 9,00,000Unit

Q.No:7. Unit cost of Electricity generated =

Hint: Total cost No. of units Total cos t No.Unitsgenerated = 28, 41,000

= 10, 00,000 1, 00,000 = 9, 00,000

Q.No:8. The cost per ton is however for 10 Ton capacity truck. Hence it is beneficial if the
Company switch over from existing carrier at Rs. 50 per Tonnes to our fleet of 10 Tonnes Trucks at Rs. 29.88 per Tonne. Hint: Total Cost Total Quantity Cost per Ton = = 10 Ton Truck 7, 17, 094 24,000 Tonnes 7,17,094 24000 29.88 8 Ton Truck 7, 58, 367 24,000 Tonnes 7,58,367 24000 31.59

So 10 Tonnes Truck is Selected. Q.No:9. Absolute Ton Km = 5600 Ton Km Hint: = 20 T X 80 Km + 12 T X 120 Km + 16 T X 160 Km = 1600 + 1440 + 2560 = 5600 T.Km Commercial Ton Km = 5760 T.Km Hint: ( 20 + 12 + 16 ) Tonnes X (80 + 120 + 160) Km 3

= 16 Tonnes X 360 Km = 5760T.Km

Labour
Basic + Bonus Q.No:1. Wages to - A = B C Hint: 450 = = = 720 330 300 = = 150 480 110 240 330

Wages =

Basic + Bonus

Bonus to be apportioned on the basis of wages Ratio. Q.No:2. There is an increase in production per worker. There is an increase in the labour cost per unit. This may due to increase in the wage rate. Hint: Prepare a statement for 2 years and compare wage cost per unit, production per worker, earning per worker.

Q.No:3. Wages paid to Ram = 120, 150 charted to the job, remaining 15 Rs. Charged to production O,H

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MASTER MINDS
Hint: Actual wage rate per hour = WageperDay Actualwork inghours = 120 = 15 /8 7H

Effective working hours per day = 8H - 1H (Normal Idel Time) = Effective wage rate per costing purpose = Raju: Dev: 120 7 = 17.14 Rs.

Raju is not directly engaged in production Charged to Job Charged to P&L = = 6 X 17.14 1 X 17.14 = 104.4 = 17.4

Q.No:4. Total Monthly Remuneration to P Q R Hint: = = = 800 1120 240

1. First Calculate Basic Wages on the basic rate per unit 2. Calculate Efficiency Ratio = Actualprod uction X 100 S tan daradRatio

3. Calculate Incentives P Q R = = = No Incentive (100% 85% ) X (110% - 85% ) X 1 X 40% = Rs. 120 5%

1 X 40 X 120 = Rs. 240 5%

Q.No:5. Cost per 8 Hours of a day = 173.04 Hint: Total cos tpermonth No.ofHours = 4326 200Hr X 8 = 173.04

Q.No:6. Cost per day of 8 hours = 129.55 Hint: Q.No:7. Earnings (Wages + Bonus) Hint: Calculate Actual Conversion Cost Calculate Standard Conversion Cost Determine differences and Calculate Bonus. Q.No:8. Effective Hourly rate to A B C D = = = = Ex. A = = 5 per Hr 5.50 per Hr 6.60 per Hr 8.25 per Hr 75 =5 15 225 Total cos t No.ofDays A 4800 = 3238.75 25 B 5016

Hint:

TotalwageE arned No.ofHoursTak en A

Conversion cost to

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MASTER MINDS
B = 186 C = 166 D = 146 Conversion Cost = Wages + O.H, Ex. A = 75 + 10 X 5 = 225 A B Hint: = = 30 Hrs. 25 Hrs.

Hint:

Q.No:9. Time Taken by

Write the formula as per Rowan system and Substitute the given Figures.

Q.No:10. Earnings under Halsey Scheme Earnings per hour Earnings as per Rowan Plan Earnings per Hr. Hint:

= = = =

94.50 94.50 = 2.10 Per Hr. 45Hr 101.25 101.25 = 2.25 Per Hr. 45Hr

Calculate Standard Time, Actual time, Time Saved. Write Formula and Substitute under Two systems Halsey = T x R + (Time saved x R) Rowan = T x R + T.S x (T x R) S tan dardTime = 540 48Hrs. 540 = 11.25 /- Per Hr. = 48 Hrs.

Q.No:11.

Earnings under Halsey Plan Hourly Rate of Earning Hint: =

Calculate Time Taken i.e.

Write Formula under Roman Plan, and Substitute the Given information. Alternative Q.No:12. (a) Wages under Halsey Scheme Hint: I = II 30 III 27 IV 24 21

Time Taken X Rate per Hour + (Time Saved X Rate per hour) I II III IV

Wages under Rowan =

30

28.80 25.20 19.20 Timesaved (Time taken X Rate per Hr.) S tan dardTime

Hint: Time Taken X Rate per Hr. + Q.No:13. Standard Time Hint: = 3200Hr. =

Budgetedun its UnitperHour

19200 = 3200 Standard Time. 6Units

Total Hours per Week = 60 Workers X 40 Hr. = 2400Hr. No. of Hours required after introduction of Bonus Plan to produce 19200 = Savings 19200 8UnitsPerHr = 2400 Hr.

= 3200 2400 = 800Hr.

Prepare Statement for Present, Halsey and Rowan Plan. Calculate effect on the profit. Wages Payable under Halsey _____ 28,000

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MASTER MINDS
Rowan _____ Profit is high in Halsey Plan. 30,000

Q.No:14.

Total Earnings under Beadux System = 51.25 Earnings = Basics + = 40 + Bonus 11.25 = 51.25

Beadux Point system = T x R + Beadux points saved X 75% X Rate per Hr. Basic Bonus = 8 X 5 = 40 = 75% of points saved X Rate per Beadux point = 180 X 75% X Q.No:15. Earnings of Shyam _______ Earnings of Ram _______ 5Hr 60 = 11.25

562.5 742.5 1023.751 = 6.25 3.125 9.375

Earnings of Mohan _______ Hint:

Rate of Earnings of Shyam Rs.50 Basic = = 8Hr 6.25 D.A. = = 2

9.375 Rate of Earnings of Ram = 11.25. per Hr Basic = D. A 60 = 8H 7 .5 = = 2 7.50 3.75

11.25 Rate of Earnings of Mohan = 13.125 per hr Basic = D. A 70 = 8H 8.75 = = 2 8.75 4.375 13.125 Q.No:16. (a) Total amount of bonus for the week = 100/Hints: Bonus = Excess Pr oduction 100 s tan dardproduc tin 2,00,000 x100x 1 = 10% = 2 1,00,000
1 2

Total Amount of Bonus = 500 x 2 x 10% = 1002 (b) Total Earnings of works A = 103.60 B = 100.80 Hint: Total Earnings = Basic wages + Bonus

Q.No:17.

Cost of labour Turnover. Per Employee = 120

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MASTER MINDS
Hint: Preventive cost per Employee : total preventive cos t 86,000 = = 86 Average no.of Employees 10,000 total Re placement cos t 34000 34 = = Average no.of Employees 1000 120

Replacement cost per Employee = Q.No:18. Separations Method = 11.43% Hint: Replacement Method = Separations Method =

No of Employees Re placed 20 x100 = 100 = 11.43% A.vg. No of employees 175

Hint:

No of Employees resigned & Disch arg ed 2015 100 = 100 Avg No of Employees 175 = 14.29% Flux Method = 57.15% = 55 100 = 31.43% 75

No Employee Newly recruited 100 Avg No of Employees New Recruitment = No of Employees accessed 100 20 + 55 = 100 Avg No of Employees 175

Hint: Q.No:19.

Labour Turnover Rate : 51%, 3.75%. 15%, Hint: Under Separations Method = 5% Under Replacement Method = 3.75% Under New recruitment Method = 15% Labour Flux rate = 23.75% Hint : No of Seprations + No of accessors Avg No of wor ker s

Q.No:20. Work of Rakhal is more useful Hint: by preparing cost statement these two Employees Cost per unit to Rakhal = 23 Cost per unit of Upendra = : 24 Comparing these two, cost per unit to rakhal is less then Cost per unit of Upendra

Overheads
Q.No:1. (a) Variable O.H per Unit = Rs 4 Hint: Variable O.H. per unit= = Change in manufactur ing cos t Change in machine Hours 52,00,000 32,000 = Rs.4 permachine 8,00,000 3,00,000

Fixed O.H: Total OH Variable portion = 52,00,000 (8.00.000 4 ) = 20,00,000 (b) O.H at activity level of 5,00,000 MH = 40,00,000 Hint: V = 2000,000 F= 20,00,000 40,00,000

Q.No:2. Labour Hour rate for 3 departments

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MASTER MINDS
A = 3.00 Hint: B: 2.50 C : 4.00 allocate given Expenditure on the basis given Calculate No of labour Hours Dept A = 6000H Hint: B = 8000H C=4000, H

Calculate labour hour rate : A= B= C= 18000 =3 6000 20000 = 2.5 8000 16000 =4 4000

Total OH No of Lobour Hrs

Q.No:3. Total O.H. to x = 7,44,000, y = 6, 64, 500, z = 4.92,000 Hint: Prepare statement, show the allocation of expenses of boiler House, and Expenses of pump Room given Ratio to x, y, z Department

Q.No:4. O.H rate of each production Department: P1 = 10.91 P2 = 11.35 Hint: P3 = 10.22

Calculate x, y values on simultaneous Equation method. i.e X = 16,000 + 0.1y Y = 24,000 x 0.2y

after solving the Equation we get x = 18775 x = 27,755 Q.No:5. Fixed Expenses apportioned to Legal Personal Variable Expenses apportion to Legal Personal Hint: 92929 859798 278788 368485 MCD 462814 462211 PED 231407 513586

Fixed Expenses apportioned on the basis at budgeted capacity i.e X = 7,20,000 + 0.05 y ---- (1) Y = 9,50,000 + 0.10 x ---- (2) Variable Expenses apportioned on the basis of actual usage i.e X = 4,00,000 + 0.05 Y ---- (1) Y = 12,00,000 + 0.20 X ---- (2) after solving We get values then opposite to concerned department

Q.No:6. Sales man Y performance is the best Hint: Allocate the expenses on the basis given Expenses total Profit : : X = 2800, Y = 1750, Z = 1450

X = 400,

Y = 1050,

Z = 550

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MASTER MINDS
Both compare, sales man Y less expenditure, more profit. So, Ys performance is the best.

Q.No:7. Selling Distribution cost to Departments to

A B C

= = =

11,611 11,150 7828

Hint:

apportion the selling and distribution cost on the basis given Apportionment of packing O.H.: A B C = = = 4000 3000 250

Base for packing ratio = space X unit sold X Time for packing Base for storage cost = space per unit X unit sold X Average Time for storage A Profit 4389 B 850 C 4172

Q.No:8. Zone wise selling O.H. as % sales A = 10.49% B = 10.49% C = 10.54% D = 11.12% Hint: % on sales A = C = = SellingO.H X 100 Sales B = D = 5,03,877 X100 = 10.49% 48,00,000 2,23,591 X100 = 11.12% 20,00,000

3,77,743 X100 = 10.49% 36,00,000 1,68,789 X100 = 10.54% 16,00,000

Apportion all expenses on the basis given. Q.No:9. Profit of 3 stages: I =6200 profit. Hint: II = 1,59,500 III = 1,07,000

Calculate sales revenue, deduct all expenses from sales revenue we got

Q.No:10. Factory cost of each type of Fan Table Fan Ceiling Fan Car Fan Hint: ________ ________ ________ 384/300/182/-

First convert all Fans into car Fans O.H. recovery rate : TotalO.H 180,000 , = = 72 per unit. No.ofCarFans 2500

Q.No:11. F.O.H = 25% Hint:

A.O.H = 75%

X is the % F.O.H Y is the % of A.O.H

(1) (2)

Cost of production to 1st order : 22,000 + 100x + 220y + xy 2nd order:

= 42,875 _______

32,000 + 140x + 320y + 1.4 xy = 62,125 _______ y = 75%

After solving the equations we get x = 25%, These % apply to order I, order II, we get

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MASTER MINDS
F.O.H ______ A.O.H ______ Profit _______ 2500 18,775 8575 26,625 7455 3500

Q.No:12. (a) Machine hour rate = 30

Hint: Machine hour rate = TotalO.H 5,04,000 = TotalMachi neHours 16,800 = 30

Machine Hours = Normal working Hours - Hours lost due to maintenance in a year.

(b) O.H. over absorbed = 58,000 60,000

Wages under absorbed = 16,400 16,000 =

= 2000 400

Q.No:13. (a) Six Methods:

30L O.H. = 3. Hint: 10L DirectMaterialCost 30L TotalO.H. Based on Direct Labour cost = = 6. Hint: 5L LabourCost 30 TotalO.H. Based on Prime cost = = 2. Hint: 15 Pr imeCost 30L Based on Machine Hour rate= = 200 Per Machine Hr. Hint: 15000 Based on Direct Material cost = TotalO.H. No.ofMachineHrs. Based on Labour Hour rate = Production Unit Method (b) O.H. cost for Each Method. Multiply the recovery rates with given Figures. Q.No:14. O.H. under Recovery Hint: = 80,000 = 446380 366380 = 80,000 30L = Rs.120 Per Labour Hr. 25000 30L = = 10,000 per Job. 300Jobs

Actual O.H. recovered

Total Product = 7000 + 800 + 200 = 8000 Under recovery 50% charge to PSL Remaining 50% i.e. 40,000 charged to Unit on the basis calculating supplementary, rate. Supplementary rate = 40,000 = Rs. 5 per Unit 8,000Units 45,000

Q.No:15. (a) Under recovery of Production O.H. =

Hint:

POH actually incurred O.H. recovered Under Re cov eredO.H. 30,000 = = Rs. 1.25 per Unit Equivalent Units 24,000 1/3 TO P & L

Calculate Supplementary rate to charge Units i.e. Rate =

45000 2/3 to Units

(b) Prepare costing P & L A/C

Estimations Actual

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MASTER MINDS Q.No:16. (a) O.H. Rate =

3,60,000 3,38,500 = 2.5 = 2.782 1,44,000 1,21,500 TotalO.H. Hint: O.H. rate = No.ofLabourHo urs

(b) Un absorbed F.O.H = 34250 Hint: O.H. incurred recovered: 3,38,000 - 3,03,750 = 34,250 Q.No:17. Over/Under recovery of O.H. A B C D Hint: = 1700 = (300) = 800 = 100 Over/Under recovery = Incurred - O.H. recovered.

Q.No:18. (a) Blanket recovery rate = 12.73 Per Machine Hr.

Hint: EstimatedT otalO.H. 5,60,000 = EstimatedT otalM.H 44,000

Charged to job A = 150 Hrs. X 12.73 per Hr = 1910 (b) Departmental recovery Rate: F = 12.50 M = 12.00 A = 15.55 F = 11.25 Hint: TotalO.H. MachineHou rs

O.H charged job AU/ Departmental Recovery Method: F = 375 M = 480 A = 1088 F = 112 Hint: Machine Hours X Departmental O.H. Recovery rate. Q.No:19. O.H Recovery under Present (i.e. 25% on Prime cost) O.H PA = (100) O.H PB = 100 O.H PC = (50) Recovery = O.H Absorbed Incurred Suggested method is : O.H. recovered based on Direct Labour Cost Recovery Rate = ActualO.H. Labour cos t B = 65%, C = 87.5%

Recovery Rate to A = 66.67%,

Q.No:20. Machine O.H. rate = 60,00

Hint: 22500 = 15.00 1500 TotalFixedCh arg es Time Standard Charges = EffectiveH ours Fixed standing Charges =

Calculate variable Expenses, then add to Fixed Charges We get comprehensive Machine Hour Rate = 60.00

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MASTER MINDS
Q.No:21. Machine Hour rate = 31.914 Hint: Standard Charges = 0.789 Variable Charges (1) = 12.375 (2) = 18.75 (1) (2) Depreciation Electricity

Q.No:22. Comprehensive Machine Hour rate = 14.841 Hint: No. Working Hours = 2400 Hrs. TotalMachi neHours 12000 = = 2400 No.ofMachines 5 Standing Charges = 6.925 = TotalS tan dingCh arg es 16620 = = 6.925 No.ofHours 24000 Depreciation Power Repairs Comprehensive Machine Hour Rate 2.083 5.00 0.833 14.841

Machine Expenses

Q.No:23. (a) Multiple Machine Hr. rate of

Operating Time Setting Time = = 6.84 per Hr. 7.84 per Hr.

Hint: Multiple Machine hour rate = Common cost + Set up cost Common Cost per hour = Totalcommo n cos t 19375 = = 4.84 per hr. No.ofHours 4000

Calculate setup cost separately. (b) Job A cost Job B cost Setup time rate Running time rate Hint: = = 1516 1408 = 52.50 = 152.50

Q.No:24. Two Tier Machine Hour rate

4000 = 20 per Hr. 200Hr. 4000 Machine Expenses = Dep = = 20 per Hr. 200 5040 Repairs = = 28 per Hr. 180 3960 Consumable Stock = = 22.50 180 9000 Power = = 50 per Hr. 180 2500 Wages = = 12.50 per Hr. 200 Prepare Statement for setup time rate and Running time rate. Standard Charges per Hr. =

ABC
Q.No:1. Indirect Selling and Distribution cost to

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MASTER MINDS
Product A Product B Hint: Item = = 24, 55, 000 14, 33, 000 Base Inventory Value Avg. Inventory Storage Annual Sales Unit Effort of salesman Annual Sales Value No. of Invoices. Pr ofit Sales

Insurance Charges Storage Cost Packing Forwarding Charges Salesman Salary Salesman Commission Invoicing Cost Profitability of Two Products: Product A Product B Hint: Less: Less: = = 5,45,000 17,67,000

Profit % On Sales =

Actual Sales Cost of Sales Selling and Distribution cost Profit

xxxx xxxx xxxx xxxx

Product A Product B

= =

5,45,000 X100 = 10.9% 50,00,000 17,67,000 X100 = 22.09% 80,00,000

Q.No:2. (a) O.H. absorbed on the basis of Labour Hrs = 15 per Hr.
Hint: 2,85,000 TotalOH cos t = 19,000 TotalDirec tLabourHr.s = 15 per hr.

O.H recovered = Product L = 1HR. X 15 per Hr. = 15 Per Unit. Product M = 2 Hr. X 15 per Hr. = 30 per Unit. On the basis at machine hours Product L.P.U = Product M.P.U = 163000 = 32.6 per hr. 5000 122000 = 17.3 per hr. 7000 Product M = 7000 X 1 = 7000 22000 Hr. Using ABC costing The O.H are absorbed using Cost Drivers* 2,20,000 = 10 per Machine Hr. 22,000 = = 20,000 = 400 per setup. 50Setuo

(b)

Machine Hours = Product L = 500 X 3 = 15000

Machine Hour Driven Cost Recovering Rate = Setup Driven cost Recovering Rate Order Driven Cost Recovering Rate

45,000 = 600 per Order. 758days

Reconciliation
Q.No:1. Loss as per costing records : 1,72,400

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MASTER MINDS
Loss as per Financial records Q.No:2. Profit as per Financial records Profit as per costing records Hint: No. of Units Produced : : : 2,080 33,542 1,87,000 = F.G

Sales = Opening F.G + Production Closing Finished Goods, By substituting the values we get production = 14,000 units. Prepare statement reconciling the profits as per costing records with the profits as per Financial records. Profit as per cost accounts i.e. 1,87,000, we get profit aw per Financial A/C, 33,542.

Q.No:3. Profit as per costing P & L. a/c 91200

Profit as per Financial a/c Hint: 72450 Distribution Expenditure over recovered in costing books FOH under recovered in costing books AOH under recovered in costing books.

Q.No:4. Profit as per costing P & L a/c 11,000

Profit as per Costing books Hint: FOH 32,700 45,000 50,000 26,000 19,300 18,000 20,000 as per P & L as per costing books AOH as per P & L as per costing books S.D.OH as per P & L as per costing books Prepare reconciliation Statement. Q.No:5. Prepare Memorandum Reconciliation A/C Profit as per Financial accounts Profit as per Costing books = = = = 3, 72,000 4, 10, 000 32, 500 30, 000

Q.No:6. Profit as per Costing books

Profit as per Financial books Hint:

Prepare cost sheet to certain profit as per costing books Prepare reconciliation statement Start with costing books, Find out profit as per Financial books Factory Expenses over absorbed in costing books.

Job & Batch Costing

Q.No:1. Cost of sales Cost per 1000 Toys Net Profit Profit per 1000 Toys Sales Hints: : : : : : 34680 38.20 10320 11.80 45,000 143.00

Prepare statement showing cost structure for 1000 Toys

Q.No:2. Cost of Production per Ton

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MASTER MINDS
Hint: Variable O.H 100% and\Direct wages is Find O. H 60% an Direct wages. Q.No:3. Product wise cost A- 56.00 B 108.00 C- 180.00 D- 420.00 Offer price A- 67.20 B-129.60 C-216.00 D-504-00 Hint: No of machine hours = A 60 B 50 C 50 D- 65 Total cost of Machine centre = 50000+10,000+2000+6000+40.000=1.08.000 Cost of machine hr rate = totalO.H 1,08,000 = = 480 per Machine hour machine O.H 225 8000 4800

Sale of waste material is deducted from direct material total cost per Ton 162.50

Prepare statement showing cost and selling price. Q.No:4. (a) Cost of production per kg when preventive maintenance is not under taken = total cos t 1770 = = 3.734 out put 474

Hints: Out put in the week = 158 x 3kg = 474 kg for find out total cost prepare cost statement Labour will be paid for 168 hours, as machine break down is not the fault of workers. (b) Cost of production per kg when preventive maintenance is under taken = 2.5 317 Per total cos t 1276 = = 2.5317 = Out put 504

Kg

Q.No:5. Selling price per each C & t = 142.47 Hint : Sale price per each c &t = Sales 1,28,225 = No of good units 1000C & T 90%

Profit margin 15% and cost = 11,500 x 15%= 16,725 Q.No:6. (a) Optimum size for bearing manufacture = 3600 bearings Hint : Optimum size per batch = 2AS C 2x24000 x324 1.20 A= Annual usage

B = Set up cost C = carrying cost

= 3600 bearings 576 (b) Extra cost incurred by the company as compared to optimum Inventory holding cost = Hint : Total cost 6000 run = 4896

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MASTER MINDS
Total cost 3600 run Extra cost = = 4320 576

Q.No:7. Cost per unit = Jan : 6.52 Feb : 7.26 M : 6.83 April : 7.73 May : 8.15 Total cos t No of units June : 7.64

Hint : Cost per unit = Profit P.U :

Pr ofit No of unit Profit per each month = Jan : 1.48 April : 0.27 O.H recovery rate =

Feb : 0.74 M = 1.17 May : 0.15 June : 0.36

Fac O.H O.H 12000 = Ex : = = 2.5 Labar Hours re cov ery rule 4800

O.H Charged = O.H recovery rate x No of hours Q.No:8. Factory cost per unit, O.H. recovery rate based on 100% Labour cost 15 Units 1.30 20 Units 1.50 25 Units 1.50 Factory cost per unit O.H recovery rate based on 80% of price cost . 15 Units 1.44 20 Units 1.62 25 Units 1.62 Q.No:9. Industry Bricks works Oil refining mill Road transport company Q.No:10. Industry Toy making Cement Radio Ship building Hospital Cost Unit 1000 bricks Per tone oil Per tone km Cost Unit per batch Per tone/ bag per radio/ batch Per contract Per patient day Method of costing Out put costing Process costing service costing Method of costing Batch costing Unit costing Multiple costing Contract casting Operating costing

Book keeping in cost Accounting

Q.No:1. Pass journal entries for all transactions Q.No:2. Pass journal entries and prepare Office administration A/C Store ledger control A/C Wages control A/C selling expenses A/c WIP control A/C Works Exp control A/C

Q.No:3. Prepare share capital A/C, reserve A/C, Sundry creditors sundry debtors A/C, Stock control A/C, WIP control A/C, finished goods control A/C, cost of sales A/C Bank A/C, wages control, A/C, manufacturing O.H control A/C, selling & distribution O.H A/C, and trial balance.

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MASTER MINDS
Q.No:4. prepare following A/C, Store ledger A/C balance 66,000 WIP control A/C 40,000 Finished goods control A/C 20,000 Production O.H control A/C transfer to P & L a/c P&L A/C ------- Profit 20,000.

Q.No:5. (a) Item A : The difference between stock card, and physical stock charged to costing A/C If it is abnormal loss. (b) 40x 60= 2400 charged to costing P & L A/C for B difference between stock card and physical stock is treated as purchases.

Joint & Bi-Products Q.No:1. Joint cost per unit

Hint: P = 8.00 Q = 4.00 Joint cost apportion on the basis of total output cost is 48,000 : 18,000 = output units X pre split off Net Joint cost per unit = Sales Margin Pre split off cost Pre split off Net. Joint cost xxxx xxxx xxxx xxxx xxxx

Total output cost Pre split off Net Joint cost

Q.No:2. Apportionment of Joint cost of 24000 on the basis given B (a) Physical unit (b) Market value of separation Paints (c) M.V. after further processing 6:4 5:3.75 7:7.50 14,400 13,715 11,586 C 9600 10285 12414

Profit = Selling price of the further processing _____ total cost Method I B = 42,000 - 19400 = 22600

Method II B= 42,000 - 18715 = 23285 Method III B Product C Method I Method II Method III = 12900 = 12215 = 10086 X Q.No:3. Cost per Ton of each variety Y Z = 42,000 - 16586 = 25414

250 330 520 Total cos t 62500 Hint: Cost per Ton = = Ex = for x = = 250 Pr oduction(inTons ) 250 Mixing cost is apportioned in the Ratio of 500 : 450 : 500 i.e. Production X Mixing points Ex: X = 250 X 2 = 500

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MASTER MINDS
Packing cost is apportioned in the Ratio of 1250 : 450 : 200 i.e. Production X Packing Points Ex: X = 250 X 5 = 1250 Q.No:4. Total cost of main product = 30,500 Total cost of by product Hint: = 5000 = 80 :20 = 30:4 = 200% of wages. = 2000 X 75% ______ 1500 units = 2000 X 20% _______ 400 units = Main Product 1500 X 2 Q.No:5. Unit cost each product Petrol __________ 4.898 4.898 4.8975 4.9 Total cos t Output 4.8975 by product 400 X 1

Raw Material apportioned Labour O.H.

Main product & units By product units Labour cost apportioned

Lubricating Oil__________ Fuel oil Kerosene Gas oil Hint: __________

__________ __________

Unit cost of each product =

Normal loss is apportioned on the basis of out put liters. Q.No:6. Raw Material cost = 80, 800 Unit cost of sales per P Q Y Z 45 36 54 22.50 Unit cost of Sales = CostofSale s No.ofUnits

Joint cost apportioned on the basis of sales values.

Q.No:7. (a) Joint Cost to A = 58,510

X = 37,020 Y = 24,020 Hint: To find out Joint cost to main product and joint product the procedure Sales Further Processing cost Profit Selling expenses Joint Cost xxxx xxxx xxxx xxxx xxxx

Selling Expenses 10% of cost of sales i.e. 1, 49,500 X 10% = 14,950 Cost of sales = Sales value profit.

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MASTER MINDS
(b) Profit of X product is Not subject to further processing without selling expenses = 21480 Hint: Sale value - Joint cost i.e. 58500 37020 = 21480

If further processing is made then profit = 12,000 Hint: Sales value Joint cost Further processing cost Selling expenses Profit xxxx xxxx xxxx xxxx xxxx 6, 16,914 1, 93,476 4, 77,610

Q.No:8. (a) Joint Cost to

A B C

= = =

Hint: Joint cost is apportioned in the ratio 1116 : 350 : 864

Sales (-) Further Processing cost

xxxx xxxx xxxx A B 34.27 10 44.27 = = A 15 34.35 Jo int cos t No.ofUnits Furtherproces sin g cos t No.ofUnits B 78,250 X 3,15,040 19.35 2 10.84 This value is taken for apportionment of Joint cost X 8.84

(b)

Joint Cost per Kg

F.P. cost per Kg Total cost Hint: Joint cost per Kg.

Further processing cost

(c) Product wise profit Total =

= 8,64,700

4,71,410

Profit =

Sales Cost of goods Sold.

Q.No:9.

Joint cost apportioned to products on the basis of Net. Realizable value. i.e. 3400 : 390 : 200 : 200 : 1050 A B C D E

Income forecast of the Company assuming No Further processing takes place Sales Joint cost = Income Income of 5 products, i.e. A = B = C = D = E = 7,15,686 82,094 42,100 42,100 2,21,020

Income forecast of the company assuming further processing takes place.

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MASTER MINDS
A B C D E Hint: Sales Joint cost Further processing cost Income = = = = = 10,65,686 52,094 92,100 42,100 5,21,020 xxxx xxxx xxxx xxxx

By comparing it is beneficial for the Company. If it makes further processing to products A, C & E and sell the products B and D at split off point.

Q.No:10. (a) Joint cost to

M N O P

= = = =

10,00,000 6, 00,000 10,00,000 14,00,000

Hint: Joint Cost is apportioned on the basis of sales value at split off point. (b) Joint cost on the basis of Physical output to Product______ M N O P (c) = = = = 24,00,000 8,00,000 4,00,000 4,00,000

Joint cost on the basis of Net realizable value Method to Product______ M N O P = = = = 20,00,000 4,00,000 10,00,000 6,00,000 Sales revenue of the further processing Further processing cost

Hint: Net realizable value =

product

Decision: The Company should not report to further processing of its N and P Hint: By comparing sales revenue after further processing, sales revenue at point of split off. M Profit after further processing : 20,00,000 N (4,00,000) P (16,00,000)

Process costing Q.No:1. Normal Loss in process I

Normal Loss in process II Abnormal Loss in Process I= 400 Abnormal Gain in Process II = 300 = 1600 KGs = 900 KGs

Transfer from process I II is 18,000 units @ 18.25 Hint: Valuation of Abnormal Loss:

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MASTER MINDS Normal cos tofNormalOutput XAbnormalLoss NormalOutput

Valuation of Abnormal Gain in Process II: = Normal cos tofNormalO utput XAbnormalG ain NormalOutp ut

All expenses and abnormal gain debited to process A/C. Normal loss, abnormal loss, finished product credited to process A/C.

(ii)

Selling Price

= =

31.875 100 X 25.50 = 31.875 80

Cost

80 20 100

Profit =

Q.No:2. Prepare Statement showing Normal Loss, Abnormal Loss closing stock and transferred to next stage. Find out cost of Abnormal loss, cost of closing stock. Profit = 63,057 Sales Revenue Normal Processing Cost Cost of abnormal loss Net profit Add: Closing Stock Total Profit xxxx xxxx xxxx xxxx xxxx xxxx

Computation of Profit: Less:

Q.No:3. Product A Should not be Further processed

Product Y Should be further processed Hint: After Further processing Product A Earn a loss of Rs.1000, Product Y earned Rs. 1944 profits. Incremental Profit = Incremental revenue Incremental cost of further processing.

Q.No:4.

(a) Prepare a Statement to Find out Total equivalent units

(b) Prepare Statement showing cost per Equivalent Units, separately as material,
Labour, O.H, and total.

(c) Cost for Equivalent Unit =

TotalCost No.ofUnits

Cost Finished goods = 5600 X 14.812 = 8, 29,472 Cost of Closing work in Progress = 2, 60,496.

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