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GGDSD College, Chandigarh

Mid Semeter Tests Sept, 2017


B.Com 3rd Semester, Cost Accounting

Max. Marks: 80 Time Allowed: 3 hours

Note: Attempt any four questions from section-A and two questions each from section B and C.

Section A (4 X 5)

Q1. What is Conversion cost?

Q2. Explain VED analysis.

Q3. Compute the Inventory turnover ratio from the following:


Opening Stock - Rs. 10,000
Closing Stock - Rs. 16,000
Material Purchased - Rs. 84,000

Q4. Anil company buys its annual requirement of 36,000 units in six installments. Each unit costs Rs.
1 and the ordering cost is Rs. 25. The inventory carrying cost is estimated at 20% of unit
value. Find the total annual cost of the existing inventory policy. How much money can be
saved by using E.O.Q?

Q5. Calculate the minimum stock level, maximum stock level, re-ordering level from the following
information: (i) Minimum consumption = 100 units per day (ii) Maximum consumption = 150
units per day (iii) Normal consumption = 120 units per day (iv) Re-order period = 10-15 days
(v) Re-order quantity = 1,500 units (vi) Normal re-order period = 12 days

Q6. AVS Ltd., made a Net Profit of Rs. 5, 71,000 during the year 2017 as per their financial system.
Whereas their cost accounts disclosed a profit of Rs. 7,77,200. On reconciliation, the
following differences were noticed:
(1) Directors fees charged in financial account, but not in cost account Rs. 13,000.
(2) Bank interest credited in financial account, but not in cost account Rs. 600.
(3) Income Tax charged in financial account, but not in cost account Rs. 1,66,000.
(4) Bad and doubtful debts written off Rs. 11,400 in financial accounts.
(5) Overheads charged in costing books Rs. 1,70,000 but actual were Rs. 1,66,400.
(6) Loss on sale of old machinery Rs.20,000 charged in financial accounts.
Reconcile cost and financial accounts.

Section B (2 X 15)

Q 7. Lekha Mfg. Co. manufactures two types of pens P and Q. The cost data for the year ended
on June 30, 2017 is as follows:

Direct materials Rs. 4,00,000


Direct wages Rs. 2,24,000
Production overhead Rs. 96,000
It is further ascertained that:
(i) Direct material per unit of type P costs twice as much direct material per unit of type Q.
(ii) Direct wages per unit 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 units
Type Q 120000 units
(vii) Sales during the year:
Type P 36000 units
Type Q 100000 units
(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, and profit separately for the
two types of pen P and Q.

Q8. Discuss the difference between cost and financial accounting. Is it mandatory to maintain
cost accounting too? What is the relevance of cost accounting for various decisions?

Q9. The received side of the Stores Ledger Account shows the following particulars:

Jan. 1 Opening Balance: 500 units @ Rs.4


Jan. 5 Received from vendor: 200 units @ Rs.4.25
Jan.12 Received from vendor: 150 units @ Rs.4.10
Jan.20 Received from vendor: 300 units @ Rs.4.50
Jan.25 Received from vendor: 400 units @ Rs.4

Issues of material were as follows:


Jan. 4- 200 units;
Jan.10- 400 units;
Jan. 15- 100 units;
Jan 19- 100 units;
Jan.26- 200 units;
Jan.30- 250 units.

Write the Stores Ledger Account in respect of the materials for the month of January
following FIFO, LIFO and Weighted Average Methods of inventory valuation.

Q 10. Write short notes on the following.


a. ABC Analysis
b. FNSD Analysis
c. Two Bin System
Section C (2 X 15)

Q11. Discuss various types of costs in detail.

Q12. What are the reasons of differences in results reported by cost and financial accounts? What
are the methods of reconciliation?
Q13. A local distributor for a national tyre company expects to sell approximately 9,600 steel
belted radial tyres of a certain size and tread design next year. Annual carrying cost is Rs. 16
per tyre, and ordering cost is Rs. 75. The distributor operates 288 days a year.
(a) What is the EOQ?
(b) How many times per year does the store reorder?
(c) What is the length of an order cycle?
(d) What is the total annual cost if the EOQ quantity is ordered?
(e) If a discount of 2% is offered on ordering a minimum lot size of 5,000 units, is it beneficial
to opt for the offer?

Q 14. The following figures are available from the financial records of ABC Manufacturing Co. Ltd.
for the year ended 31-3-2017.

Rs.
Sales (20,000 units) 25,00,000
Materials 10,00,000
Wages 5,00,000
Factory Overheads 4,50,000
Office and administrative Overhead 2,60,000
Selling and distribution Overheads 1,80,000
Finished goods (Closing 1,230 units) 1,50,000
Goodwill written off 2,00,000
Interest on capital 20,000

In the Costing records, factory overhead is charged at 100% wages, administration


overhead 10% of factory cost and selling and distribution overhead at the rate of Rs. 10
per unit sold. Prepare a statement reconciling the profit as per cost records with the profit
as per financial records.

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