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Cost Assignment

Here are the process accounts for Processes A and B: Process A Account Particulars Amount (Rs.) Particulars Amount (Rs.) To Material 6,000 By Output 97,500 To Direct Labour 8,000 By Normal Loss 400 To Manufacturing 1,000 By Scrap 100 Expenses To Input (20,000 x 10) 2,00,000 Total: 2,15,000 Total: 2,15,000 Process B Account Particulars Amount (Rs.) Particulars Amount (Rs.) To Material 4,000 By Output 94,

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Shafaq Alam
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26 views

Cost Assignment

Here are the process accounts for Processes A and B: Process A Account Particulars Amount (Rs.) Particulars Amount (Rs.) To Material 6,000 By Output 97,500 To Direct Labour 8,000 By Normal Loss 400 To Manufacturing 1,000 By Scrap 100 Expenses To Input (20,000 x 10) 2,00,000 Total: 2,15,000 Total: 2,15,000 Process B Account Particulars Amount (Rs.) Particulars Amount (Rs.) To Material 4,000 By Output 94,

Uploaded by

Shafaq Alam
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Centre for Management Studies

MBA-Entrepreneurship & Family Business


Semester-II (2020)

Online Submission of Mid-Term Assignment-I


Subject: COST & MANAGEMENT ACCOUNTING
Paper Code: EFB-205

Submitted To: Submitted By:

Mr. Mohammed Junaid Rizvi Nimra Shareen


Roll No.: 19MEF030
Q2. Tabulate the various elements of cost showing the usual items of expenditure
pertaining to each.

Ans 2.
Purchase Procedure

 Purchase requisition
A purchase requisition is a document used as part of the accounting process to initiate a
merchandise or supply purchase. By processing a purchase requisition, appropriate controls
can monitor the legitimacy of a purchase, as well as identify the business need for the
products.

 Selection of suppliers

When the purchasing department receives a duly authorised purchase requisition, a source of
supply has to be selected. The purchase department generally maintains a list of suppliers for
each type of material and selects a particular supplier after inviting tenders.

The important rule is to buy the best quality materials at the lowest possible price after giving
due consideration to delivery dates and other terms of purchases. Purchase should be made
from dependable sources of supply and ethical standards in dealing with suppliers should be
maintained.

 Suppliers credibility

 Suppliers financial condition (credibility)


 Suppliers quantity and quality
 Deliveries and payments (term and condition)

 Receiving and inspections of material

All incoming material should be received by the receiving department. This department
performs the functions of unpacking the goods received and verify their quantities and
conditions. The quantity is checked against the purchase order copy and the supplier’s advice
note which is normally received along with the goods.
Goods received should be inspected for quantity to ensure that they comply with
specifications stated on the purchase order. Where technical or laboratory inspection is
necessary, the goods are passed to laboratory which will provide a report on the quality of
goods.

 Clearing of bill/ payment


When the invoices are received by the purchasing department, the process of assembling the
business paper concerned with each purchase and preparation of vouchers begins. Invoices
are numbered serially and entered in the invoice register

Q4. Define the following:


Ans 4.

 Marginal cost
Marginal cost is the cost of the next unit or one additional unit of volume or output

 Sunk Cost
It is the cost which is not altered by change in current business activity. It can be understood
as an irrecoverable cost of the past business activity which has to be incurred now and is
irrelevant to the current business scenario.

 Imputed cost
These are hypothetical costs which are considered just for the purpose of decision making and
aren’t involved in any actual cash outflow

 Out of pocket cost


Involves the future cash payment or cash transfer both recurring and non recurring paid
during the current account period or during the project. In other words, the direct monetary
payment for the work done during the project

 Replacement cost
It is the cost incurred for replacing an asset, machinery, plant or equipment etc.

Q5. The product of a company passes through two distinct processes to completion. they
are known as process Proces A and Process B. 20,000 units have been issued to process
A at a cost of Rs. 10,000.
From the information given below, prepare process accounts.
Process A:
Material consumed Rs.6000, direct labour Rs.8000 , manufacturing expenses Rs.1000.
normal loss 2%, scrap value Rs.5 per 100 units, output 19500 units.

Process B:
Material consumed Rs.4000, direct labour Rs.6000 , manufacturing expenses Rs.1000.
normal loss - 5%, scrap value Rs.5 per 100 units, output 18800 units

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