COST AND MANAGEMET ACCOUNTING

Test-3 Ch-7,8,9

Total Marks 40

Q-1 During the year ended 31st March, 2014, the profit of a company stood at ` 36,450 as per
financial records. The cost book, however, showed a profit of `51,950 for the same period.
Prepare a Memorandum reconciliation account.

Particulars Amount ( Rs.)

Opening stock overstated in cost accounts 3,500

Closing stock understated in cost accounts 4,600

Factory overheads under recovered in cost accounts 2,500

Administration expenses over recovered in cost accounts 750

Selling and distribution expenses under-recovered in cost accounts 1,650

Depreciation over-recovered in cost accounts 1,500

Interest on investment not included cost accounts 5,000

Obsolescence loss in respect of machineries charged in financial accounts 2,450

Income-tax provided in financial accounts 25,000

Bank interest credited in financial accounts 1,500

Stores adjustments (debit in financial book) 750

(5 Marks)

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Q-2 As of 31st March, 2018, the following balances existed in a firm’s cost ledger, which is
maintained separately on a double entry basis:

Particulars Debit (Rs.) Credit (Rs.)

Stores Ledger Control A/c 3,20,000

WIP Control A/c 1,52,000

Finished Goods Control A/c 2,56,000

Manufacturing Overheads Control A/c 28,000

Cost Ledger Control A/c 7,00,000

During the next quarter, the following items arose:

Particulars Amount (RS.)

Finished Product (at cost) 2,35,500

Manufacturing overhead incurred 91,000

Raw material purchased 1,36,000

Factory wages 48,000

Indirect labour 20,600

Cost of sales 1,68,000

Materials issued to production 1,26,000

Sales returned (at cost) 8,000

Materials returned to suppliers 11,000

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Manufacturing overhead charged to production 86,000

Required:
Prepare the Cost Ledger Control A/c, Stores Ledger Control A/c, Work-in-process Control A/c,
Finished Stock Ledger Control A/c, Manufacturing Overhead Control A/c, Wages Control A/c,
Cost of Sales A/c and the Trial Balance at the end of the quarter as per costing records.

(6 Marks)

Q-3 The following data relate to the manufacture of a standard product during the 4-week
ended 28th February:

Raw Materials Consumed ₹6,00,000

Direct Wages ₹3,00,000

Machine Hours Worked 4,000 hours

Machine Hour Rate ₹50

Office Overheads 15% of works cost

Selling Overheads ₹30 per unit

Units produced and sold 12,000 units @ ₹150 each

You are required to FIND OUT the cost per unit and profit for the 4-week ended 28th February.

(5 Marks)

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Q-4 A jobbing Factory has undertaken to supply 300 pieces of a component per months foe the
ensuing six months. Every month a batch order is opened against which materials and labour
hours are booked at actual. Overheads are levied at a rate per labour hour. The selling price
contracted for is Rs.8 per piece.From the following data CALCULATE the cost and profit per
piece of each batch order and overall Position of the order for 1,800 pieces.

Month Batch Output Material Cost (Rs.) Direct wages (Rs.) Direct Labour Hours

January 310 1150 120 240

February 300 1140 140 280

March 320 1180 150 280

April 280 1130 140 270

May 300 1200 150 300

June 320 1220 160 320

The other details are:

Month Chargeable expenses (Rs.) Direct labour (hours)

January 12,000 4,800

February 10,560 4,400

March 12,000 5,000

April 10,580 4,600

May 13,000 5,000

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 June 12,000 4,800

(6 Marks)

Q-5 Difference between Job Costing and Process Costing?

(5 Marks)

Q-6 The following data presented by the supervisor of a factory for a Job.

Particulars Rs, per unit

Direct Material 120

Direct Wages @ ` 4 per hour

(Departments A-4 hrs,B-7 hrs,C-2 hrs& D-2 hrs)

Chargeable Expenses 20

Total 200

Analysis of the Profit and Loss Account for the year ended31st March, 2019

Rs. Rs. Rs.

Material 2,00,000 sales 4,30,000

Direct Wages

Dept. A 12,000

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Dept.B 8,000

Dept.C 10,000

Dept.D 20,000 50,000

Special Store items 6,000

Overheads

Dept.A 12,000

Dept.B 6,000

Dept.C 9,000

Dept.D 17,000 44,000

Gross Profit c/d 1,30,000

4,30,000 4,30,000

Selling Expenses 90,000 Gross Profit b/d 1,30,000

Net Profit 40,000

1,30,000 1,30,000

It is also to be noted that average hourly rates for all the four departments are similar.

Required:
(i) Prepare a Job Cost Sheet.
(ii) Calculate the entire revised cost using the above figures as the base.

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(iii) (iii) Ad4 20% profit on selling price to determine the selling price.

(8 Marks)

MCQ’s

1.What are the essential pre-requisites for implementing integrated accounts in an organization?

A) Determining the extent of integration, establishing a suitable coding system, and ensuring
perfect coordination between financial and cost staff.

B) Maintaining separate sets of books for financial and cost accounts.

C) Implementing a complex accounting software system.

D) Creating a separate cost ledger for cost accounting purposes.

2. XYZ Ltd. has recently integrated their cost accounts with their financial accounts. This
integration means that the same set of accounts now satisfies both cost and financial
accounting requirements. Under what circumstance can XYZ Ltd. avoid preparing a
reconciliation statement between cost and financial accounts?

A) When cost and financial accounts are prepared by different departments

B) When cost accounts are more detailed than financial accounts

C) When cost and financial accounts are integrated

D) When there are frequent discrepancies between cost and financial accounts

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3. M/s. KBC Bearings Ltd. has committed to supplying 48,000 bearings per annum to M/s. KMR
Fans on a steady daily basis. The company estimates an inventory holding cost of ₹1 per bearing
per month and a setup cost of ₹3,200 per run of bearing manufacture. What is the minimum
inventory holding cost for M/s. KBC Bearings Ltd.?

A) ₹ 30,360

B) ₹ 30,306

C) ₹ 33,060

D) ₹ 30,300

4. The manufacturing data for BharatiPvt. Ltd. concerning a standard product includes raw
materials consumed amounting to ₹5,00,000 and direct wages totaling ₹3,00,000. The
machinery used worked for 4,000 hours with a machine hour rate of ₹50 per hour. Office
overheads are 1,20,000 calculated, while selling overheads are ₹25 per unit. The production
and sales figures indicate that 12,000 units were produced and sold, each priced at ₹150. What
is the profit per unit?

A) ₹ 21.67

B) ₹ 30.67

C) ₹ 31.67

D) ₹ 25.67

5. Which of the following is NOT one of the basic objectives and purposes of job costing?

A) Analysis and ascertainment of cost of each unit of production

B) Control and regulate cost

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C) Determine the profitability

D) Increase the volume of production

(5 x 1 = 5 marks)

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