Chapter 1 Cost Concept 8.

The repair and maintenance cost for a workshop along with operating
machine hours are as follows:
1. You are given the following information:
Operating machine hours Repair and maintenance cost (Rs.)
Months Output in units Mixed cost (in Rs.)
100 5,000
January 500 Rs. 20,000
150 6,000
February 600 Rs. 22,000 200 7,000
March 700 Rs. 24,000 250 8,000
Required: Segregate the mixed cost into fixed and variable cost using
High-Low cost method. (VCPU= Rs.20 TFC Rs.10,000)
Required: (i) Segregate the cost using two point method.
2. The following information are available front the records of a (ii) Segregate the cost using least square method.
manufacturing company for two different levels of output: (iiI) Estimate repair and maintenance cost for 300 operating
Output 1,000 units 2,000 units machine hours (VCUP 20, TFC 3,000 TC 9,000)
9. You are given the following information:
Prime cost Rs. 20,000 Rs. 40,000
Increase in sales revenue Rs.2,00,000
Maintenance cost Rs. 10,000 Rs. 16,000
Increase in total manufacturing cost Rs. 60,000
Power and fuel Rs. 10,000 Rs. 14,000
Fixed manufacturing cost for the period Rs. 50,000
Depreciation and insurance Rs. 15,000 Rs. 15,000
Required: (i) Variable cost per rupee of sales revenue.
Require: (i) Indicate which of the items are variable, semi-variable and (ii) Estimate the manufacturing cost for forecasted sales of Rs.
fixed. (ii) Segregate the semi-variable costs into fixed and variable 5,00,000. ( VCPU 0.30; TC 2,00,000)
components using high- low method. (v, sv, sv, f; M= 6, 4000 P= 4, 6000) 10. The following data relating to service revenue and service costs.
3. The following information was extracted from the records of a company: Revenue from services (Rs.) Cost to provide services (Rs.)
Months Production units Repairs and maintenance cost 5,00,000 3,00,000
January 100 (Rs.)
1,500 10,00,000 5,00,000
February 200 2,000 15,00,000 7,00,000
March 300 2,500 20,00,000 9,00,000
April 400 3,000 25,00,000 11,00,000
May 500 3,500 Required: (i) Determine the variable and fixed components of the cost
Required: Segregation of repairs and maintenance cost into variable and using least square method.
fixed components by using least square method. (VCUP Rs.5, TFC Rs.1000) (ii) Estimate the cost to provide services for projected revenue
4. The details of the cost of goods sold at various levels of production from services of Rs. 35,00,000. (VCUP 20; TFC 3,000)
activities of a manufacturing company have been presented below:
Output in units ('00') Cost of goods sold (in Rs. '000')
200
300
300
400
Chapter 2 Accounting
400
500
500
600
For Materials
600 700
Required: Segregation of cost of goods sold by using least square method. 1. You are given the following information:
(VCUP 10, TFC 1,00,000) Unit purchase price = Rs 2
5. The difference in total cost is Rs. 20,000 between 5,000 units and 10,000 Holding cost = 25% of inventory value
units of output. The fixed cost for the period is Rs. 8,000. Procurement cost per procurement = Rs. 100
Required: (i) Variable cost per unit. Economic order quantity = 4,000 Units
(ii) Estimate the total cost for 6,000 units and 8,000 units by Required: (a) Annual requirement. (b) Number of orders.
using Y = a +bX. (VCUP 4, TC 40,000) (c) Length of inventory cycle. (d) Total cost at EOQ
6. The difference in cost for repair and maintenance is Rs. 10 per machine (e) Total cost at order size of 2,000 units and 10,000 units.
hour between 4,000 machine hour and 10,000 machine hours. The total 2. Pashupati Company has an expected usage of 5,000 units of certain
repair and maintenance cost at 4,000 machine hours is Rs. 60,000. product during the next year. The cost of processing an order is Rs. 100. The
Required: (i) Variable cost per machine hour and total fixed cost. estimated storage cost including the opportunity cost of I the investment in
(ii) Estimate the total repair and maintenance cost for 6,000 inventory is Rs. 4 per unit per year. The purchasing price per unit is Rs. 14.
machine hours. (VCUP 10, TFC 20,000, TC 80,000) Required: (a) Economic order quantity.
7. The cost equation of a manufacturing company is given below: Total (b) If the supplier willing to give 1 % discount if it buys in order
cost = Fixed cost + Variable cost per unit x Units size of 1,000 units, should the company accept the supplier's
= Rs. 50,000 + Rs. 20 x Units ^ offer?
Required: (i) Estimate the total cost for 5,000 units.
(ii) Production units when total cost is Rs. 2,10,000.
(TC 1,50,000 Units 8,000)
3. A firm's requirement of materials is 30,000 units for one month. The
8. A manufacturing company provides you the following information:
ordering cost per order is Rs. 300 and carrying cost per unit is Rs. 0.50. The
following schedule of discount is applicable to the firm. Cost of placing an order Rs. 100
Lot size Discount rate Purchase price per unit Rs. 20
0 -7,000 Nil Return on investment 10%
Rent, insurance and taxes per unit per Rs. 2
7,001 - 9,000 1% Total
year cost of economic order quantity Rs. 2,000
9,001 -15,000 3%
Above 15,000 5% Required: (a) Total annual needs.
(b) Economic order quantity.
Required: (a) Economic order quantity by using Formula Method. (c) EOQ units if the ordering cost increases to Rs. 108 and
(b) Economic order quantity by using Tabular Method, without carrying cost per unit decreases by Rs.1.
considering discount rate. 9. From the following information were given:
(c) Economic order quantity by using Tabular Method, with Re-ordering quantity 5,000 units
considering discount rate. Re-purchase cost Rs. 500 per purchase
4. A firm's requirement of materials is 6,000 units @ Rs. 10 per unit for one Annual demand 50,000 units
year. The ordering cost pier order is Rs. 240 and the carrying cost is 20% of Cost per unit of material Rs. 20
original purchase price. The following schedule of discount is applicable to Required:(i) Holding cost per unit per year.
the firm (ii) Total cost of order size of 25,000 units after Rs. 0.30 per unit
Lot size Discount rate discount.
10. Pashupati company provides the following information:
1 -1,499 Nil
Consumption per week 1,000 to 1,400 units
1,500-1,999 Rs. 0.05 per unit
Re-order period 2 to 4 weeks
2,000 - 2,499 Rs. 0.10 per unit Re- order quantity 2,000 units
2,500-4,999 Rs. 0.20 per unit Required: (a) Re-order level (b) Minimum stock level
5,000 and above Rs. 0.30 per unit (c) Maximum stock level (d) Average stock level
11. Januka Publication Pvt. Ltd. provides you the following information:
Required:(a) Economic order quantity, by using Formula Method. Maximum consumption during maximum re-order period is 5,000 units.
(b) EOQ, by using Table Method, without considering discount. Minimum consumption during minimum re-order period is 1,500 units.
(c) EOQ, by using Table Method, with considering discount. Normal consumption during normal re-order period is 3,000 units.
Re-ordering quantity (ROQ or EOQ) is 4,000 units.
5. The following information has been provided to you: Required: (a) Re-order level (or point) (b) Minimum stock level
Annual demand = 20,000 Units (c) Maximum stock level (d) Average stock level
Procurement cost per procurement = Rs. 200
Unit cost of material = Rs. 20
Holding cost= 10% of inventory value
Chapter 2 Accounting
Required: (a) Economic order quantity (b) Optimum number of orders
(c) Minimum average yearly cost (d) Length of inventory cycle.
For LABOUR
6. Find the EOQ and its total cost by applying formula for packaging 1. You are given the following information:
materials to be procured from foreign company.
Standard time allowed for a job 20 hours
Packaging for goods manufactured: 4,00,000 units per month
Time taken 16 hours
Cost of procurement : Rs. 1,000 per procurement
Required: (i) Bonus under Halsey Premium Plan.
Cost of storage : 2 paisa per unit per month
(ii) Total wages (or earning) under Halsey Premium Plan.
(iii) Effective wage rate per hour
7. RHK Co. Ltd. supplied you the following information:
2. Company provides you the following information:
Annual consumption 2,000 units
Standard time allowed for a job 30 hours
Ordering, receiving and handling cost Rs. 500 per order
Time taken 25 hours
Trucking cost (or carriage inward) Rs 1500 per order
Normal rate per hour Rs. 60
Interest cost Rs 4 per unit per year
Required: i) Bonus under Rowan Premium Plan.
Deterioration and obsolescence cost Rs. 6 per unit per year
(ii) Total wages (or earning) under Rowan Premium Plan.
Storage cost Rs. 80,000 per year for 2,000 units
(iii) Effective wage rate per hour under Rowan Premium Plan
Estimated working days in a year Required 300 days
3. Following information are provided in respect of wages:
Required: (a) Economic order quantity (b) Minimum average yearly cost
Pre-determined time for a job 15 hours
(c) Total cost of order size of 1,000 units (d) Average period
Time rate Rs. 40 per hour
between the orders
Actual time taken by: X —>10 hours; Y -»12 hours and Z —»15 hours
Required: Total earning of X, Y and Z on the basis of Halsey Plan.