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Cost Accounting

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Vaibhav Bamrara
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8 views3 pages

Cost Accounting

Uploaded by

Vaibhav Bamrara
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Assignment 1

B. Com (Hons.)
Cost Accounting

Section A: Multiple Choice Questions

 When production is below standard specification or quality and cannot be rectified by


incurring additional cost, it is called:

a. Defective
b. Spoilage
c. Waste
d. Scrap

Labour employed in time office and security office is an example of:


A. Direct labour
B. Indirect labour
C. Indirect expenses
D. Direct expense
 Labour employed in office and as security is an example of:
a. Direct labour
b. Indirect labour
c. Indirect expenses
d. Direct expenses

 Indirect labor is a
a. Prime cost
b. Conversion cost
c. Period cost

 Cost accounting standard 7 deals with


a. material cost
b. labour cost
c. overheads
d. none of the above

 When material prices fluctuate widely, the method of pricing that gives absurd results
is
a. Simple average price
b. Weighted average price
c. Moving average price
d. Inflated price
Section B: Case study

Q1. Your factory buys and uses a component for production at Rs.10 per unit. Annual
requirement is 20,000 units. Carrying cost of inventory is 10% per annum and ordering cost
is Rs.400 per order. The purchase manger argues that as the ordering cost is high it is
advantageous to place a single order for the entire annual requirement. He also says that if we
order 20,000 units at a time we get 3% discount from the supplier. Evaluate this proposal and
make your recommendations.

Q2. You are given the following information of a worker.


i. Name of worker: X
ii. Ticket no.: 002
iii. Work started: 1-4-22 at 8am
iv. Work finished: 5-4-22 at 12 noon
v. Work allotted: production of 2160 units
vi. Work done and approved: 2,000 units
vii. Time and units allowed: 40 units per hour
viii. Wage rate: Rs.25 per hour
ix. Bonus: 40% of time saved
x. Worker X worked 9 hours a day

You are required to calculate the remuneration of the worker on the following basis:
1. Halsey plan
2. Rowan plan

Q3. Calculate machine hour rate for the following machine whose scrap value is NIL:

Cost of machine: 1,90,000


Freight and installation charges: 10,000
Working life 5 years
Repairs and maintenance: 40% of depreciation
Annual power expenses @25 paise per unit 6,000
Eight hourly day charge:
1. Power: 24
2. Lubricating oil: 20
3. Consumable stores: 28
4. Wages: 80

Q4. Annual demand for a particular item of inventory is 10,000 units. Inventory carrying
costs per unit per year is 20% and ordering cost is Rs.40 per order. The price quoted by the
supplier is Rs.4 per unit. However, the supplier is willing to give discount of 5% for orders of
1500 units or more. Is it worthwhile to avail the discount offer?
Q5. Calculate machine hour rate if cost of machine is Rs.1,00,000, installation charges
Rs.10,000; scrap value after 15 years Rs.5,000; rent per month Rs.200; lighting per month
Rs.300; insurance premium for the machine per annum Rs.960; Repairs per annum Rs.1,000,
power consumption 10 units per hour; Rate of power per 100 units Rs.20; estimated working
hours per annum 2,200 (set-up time 200hrs); shop supervisor’s salary per month Rs.600;
Machine occupies 1/4th of the total area of the shop. The supervisor is expected to devote 1/5 th
of his time for supervising the machine.

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