Professional Documents
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Note: Attempt any four questions from section-A and two questions each from section B and C.
Section A (4 X 5)
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:
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:
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.
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