Download Cost Accounting Class Test Paper: Intermediate Course Group II and more Exercises Financial Management in PDF only on Docsity!
Intermediate Course: Group – II (Class Test Paper – Series : 1 ) DATE: 07. 10. 2024 MAXIMUM MARKS: 50 TIMING: 11/2^ Hours
PAPER 4 : COST ACCOUNTING
**1. The question paper comprises two parts, Part I and Part II.
- Part I comprises Case Scenario based Multiple Choice Questions (MCQs).
- Part II comprises questions which require descriptive type answers.**
PART I – CASE SCENARIO BASED MCQs (15 MARKS)
PART - I IS COMPULSORY
Ans. 1 to Ans. 5 :
CASE SCENARIO
- Ans. d
- Ans. a
- Ans. a
- Ans. b
- Ans. c
MCQ [5 MCQ of 2 Marks Each : Total 10 Marks]
- Ans. b
- Ans. b
- Ans. c
PART II - DESCRIPTIVE QUESTIONS (35 MARKS)
QUESTIONS NO. 1 IS COMPULSORY.
CANDIDATES ARE REQUIRED TO ANSWER ANY FOUR QUESTIONS FROM THE
REMAINING FIVE QUESTIONS
Wherever necessary, suitable assumptions may be made and disclosed by way of a note. Working Notes should form part of the answer.
Answer 1: (i) Computation of the value of materials purchased To find out the value of materials purchased, reverse calculations from the given data can be presented as below: Particulars (Rs.) Cost of goods sold 56, Add: Closing stock of finished goods 19, Less: Opening stock of finished goods (17,600) Cost of production 57, Add: Closing stock of work-in-progress 14, Less: Opening stock of work-in-progress (10,500) Works cost 61,
Less: Factory overheads:
Rs.17,500 100 (10,000)
Prime cost 51, Less: Direct labour (17,500) Raw material consumed 33, Add: Closing stock of raw materials 10, Raw materials available 44, Less: Opening stock of raw materials (8,000) Value of materials purchased 36,
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(ii) Cost statement (Rs.) Raw material consumed [Refer to statement (i) above] 33, Add: Direct labour cost 17, Prime cost 51, Add: Factory overheads 10, Works cost 61, Add: Opening work-in-progress 10, Less: Closing work-in-progress (14,500) Cost of production 57, Add: Opening stock of finished goods 17, Less: Closing stock of finished goods (19,000) Cost of goods sold 56, Add: General and administration expenses 2, Add: Selling expenses 3, Cost of sales 62, Profit (Balance figure Rs. 75,000 – Rs. 62,000) 13, Sales 75,
Answer 2: No. of bags manufactured = 1,000 units Cost sheet for the month of September 2021 Particulars Total Cost (Rs.)
Cost per unit (Rs.)
- Direct materials consumed:
- Leather sheets 3,20,000 320.
- Cotton cloths 15,000 15. Add: Freight paid on purchase 8,500 8. (i) Cost of material consumed 3,43,500 343.
- Direct wages (Rs.80 × 2,000 hours) 1,60,000 160.
- Direct expenses (Rs.10 × 2,000 hours) 20,000 20.
- (ii) Prime Cost 5,23,500 523.
- Factory Overheads: Depreciation on machines {(Rs. 22,00,000 × 90%) ÷ 120 months} 16,500 16. Apportioned cost of factory rent 98,000 98.
- (iii) Works/ Factory Cost 6,38,000 638.
- Less: Realisable value of cuttings (Rs.150×35 kg.)
- (iv) Cost of Production 6,32,750 632.
- Add: Opening stock of bags 0
- Less: Closing stock of bags (100 bags × Rs.632.75)
- (v) Cost of Goods Sold 5,69,475 632.
- Add: Administrative Overheads:
- Staff salary 45,000 50.
- Apportioned rent for administrative office 12,000 13.
- Add: Selling and Distribution Overheads
- Staff salary 72,000 80.
- Apportioned rent for sales office 10,000 11.
- Freight paid on delivery of bags 18,000 20.
- (vi) Cost of Sales 7,26,475 807.
Apportionment of Factory rent: To factory building {(Rs. 1,20,000 ÷ 2400 sq. feet) × 1,960 sq. feet} = Rs. 98, To administrative office {(Rs. 1,20,000 ÷ 2400 sq. feet) × 240 sq. feet} = Rs. 12, To sale office {(Rs. 1,20,000 ÷ 2400 sq. feet) × 200 sq. feet} = Rs. 10,
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Advantages of such a system are:
i. A comparison of the performance of each of the firms
can be made with that of another, or with the average performance in the industry.
ii. Under such a system, it is also possible to determine the
cost of production of goods which is true for the industry as a whole. It is found useful when tax-relief or protection is sought from the Government. Marginal Costing
It is defined as the ascertainment of marginal cost by differentiating between fixed and variable costs. It is used to ascertain effect of changes in volume or type of output on profit. Standard Costing and Variance Analysis
It is the name given to the technique whereby standard costs are pre-determined and subsequently compared with the recorded actual costs. It is thus a technique of cost ascertainment and cost control. This technique may be used in conjunction with any method of costing. However, it is especially suitable where the manufacturing method involves production of standardised goods of repetitive nature. Historical Costing
It is the ascertainment of costs after they have been incurred. This type of costing has limited utility.
Post Costing : It means ascertainment of cost after
production is completed.
Continuous costing : Cost is ascertained as soon as the
job is completed or even when the job is in progress. Absorption Costing
It is the practice of charging all costs, both variable and fixed to operations, processes or products. This differs from marginal costing where fixed costs are excluded. Direct costing Direct costing is a specialized form of cost analysis that only uses variable costs to make decisions. It does not consider fixed costs, which are assumed to be associated with the time periods in which they are incurred.
Answer: (b) Cost Control Cost Reduction
- Cost control aims at maintaining the costs in accordance with the established standards. 1. Cost reduction is concerned with reducing costs. It challenges all standards and endeavours to improvise them continuously
- Cost control seeks to attain lowest possible cost under existing conditions. 2. Cost reduction recognises no condition as permanent, since a change will result in lower cost.
- In case of cost control, emphasis is on past and present 3. In case of cost reduction, it is on present and future.
- Cost control is a preventive function 4. Cost reduction is a corrective function. It operates even when an efficient cost control system exists.
- Cost control ends when targets are achieved. 5. Cost reduction has no visible end and is a continuous process.
Answer 5: I. Statement of Cost (for the month of April, 2022) S. No. Particulars Amount (Rs.)
Amount (Rs.) Opening stock of Raw material 10, Add: Purchase of Raw material 2,80,
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Less: Closing stock of raw materials (40,000) Raw material consumed 2,50, (i) Manufacturing wages 70, (ii) Prime Cost 3,20, Factory/work overheads: Depreciation on plant 15, Lease rent of production Asset 10, Expenses paid for pollution control and engineering & Maintenance 1,000 26, (iii) Factory/Work Cost 3,46, Expenses paid for quality control check activity 4, Research and Development Cost 5, Administration Overheads (Production) 15, Primary Packing Cost 8, (iv) Cost of Production 3,78, Add: Opening stock of finished goods 28, Less: Closing stock of finished goods (50,400 ) (v) Cost of Goods Sold 3,55, Advertisement expenses 1, Packing cost for re-distribution of finished goods sold
(vi) Cost of Sales 3,58,
Note: Valuation of closing stock of finished goods
400 units 3000 units
= Rs. 50,
II. Cost per unit sold 200 3,000 400
= Rs. 128 per unit
Selling Price 80%
= Rs. 160 per unit
Answer 6: (a) Cost classification based on variability (i) Fixed Costs – These are the costs which are incurred for a period, and which, within certain output and turnover limits, tend to be unaffected by fluctuations in the levels of activity (output or turnover). They do not tend to increase or de- crease with the changes in output. For example, rent, insurance of factory building etc., remain the same for different levels of production. (ii) Variable Costs – These costs tend to vary with the volume of activity. Any increase in the activity results in an increase in the variable cost and vice- versa. For example, cost of direct labour, etc. (iii) Semi-variable Costs – These costs contain both fixed and variable components and are thus partly affected by fluctuations in the level of activity. Examples of semi variable costs are telephone bills, gas and electricity etc. Cost classification based on controllability (i) Controllable Costs - Cost that can be controlled, typically by a cost, profit or investment centre manager is called controllable cost. Controllable costs incurred in a particular responsibility centre can be influenced by the action of the executive heading that responsibility centre. For example, direct costs comprising direct labour, direct material, direct expenses and some of the overheads are generally controllable by the shop level management.
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