BBA/B.Com cost and management accounting Dec 2024

Description

Cost and Management Accounting

December 2024 Examination

 

 

 

 

 

1. Calculate the Prime cost, Factory cost, Total cost of production and Cost of sales from the following particulars:

 

	Rs.	Rs.
Raw Materials consumed	– – –	20,000
Wages paid to labourers	– – –	5,000
Directly chargeable expenses	– – –	1000
Oil & Waste	– – –	100
Wages of Foremen	– – –	1, 000
Storekeepers’ Wages	– – –	500
Electric Power	– – –	200
Lighting: Factory	500
Office	200	700
Rent:          Factory	2,000
Office	1,000	3,000
Repairs & Renewals:
Factory Plant	500
Machinery	1,000
Office Premises	200	1,700
Depreciation:
Office Premises		500
Plant & Machinery	200	700
Consumable Stores	– – –	1,000
Manager’s Salary	– – –	2,000
Directors’ Fees	– – –	500
Office Printing & Stationery	– – –	200
Telephone Charges	– – –	50
Postage & Telegrams	– – –	100
Saltsmen’s Commission & Salary	– – –	500
Travelling Expenses	– – –	200
Advertising	– – –	500
Warehouse Charges	– – –	200
Carriage Outward	– – –	150

 

 

Ans 1.

Introduction:

Cost and management accounting is essential for businesses to determine the total cost of production, from raw material consumption to the final sale of products. It enables management to understand the costs incurred at each stage and facilitates more informed financial decision-making. Key cost components include Prime Cost, Factory Cost, Total Cost of Production, and Cost of Sales, each providing insights into different levels of expenditure associated with production. Prime Cost consists of direct expenses tied to manufacturing, while Factory Cost includes all expenses necessary to produce goods, adding indirect expenses to direct costs. Total Cost of Production includes all production costs, and Cost of Sales includes selling and

 

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2. Gen Ltd. produced three chemicals during the month of October 2024 by three consecutive processes. In each process, 2% of the total weight put in is lost and 10% of it is left as scrap which from Processes I and II realises Rs. 10 a ton and from Process III Rs. 20 per ton. The

products of the three processes undertaken are as follows:

 

	Process I	Process II	Process III
Passed on to the Next Process	75%	50%	–
Transferred to Warehouse	25%	50%	100%

 

Expenses Incurred	Qty	Rs.	Qty	Rs.	Qty	Rs.
Raw Materials	1000 tons	12,000	140 tons	2,800	1348 tons	10,784
Manufacturing Wages		2,050		1,852		1,500
General Expenses		1,030		724		310

 

Prepare Process Cost Account showing the cost per ton of each product. (10 Marks)

 

Ans 2.

Introduction

In cost accounting, a Process Cost Account helps in determining the costs associated with each stage of production, particularly useful for industries with continuous manufacturing processes. In this case, Gen Ltd. has three consecutive processes to produce chemicals, each with a minor wastage and scrap generation. The challenge is to calculate the cost per ton across the three stages while factoring in material losses, scrap values, and the allocation of expenses incurred in each process. Given the weight losses, scrap sales, and different quantities transferred to subsequent processes and the warehouse, the Process Cost Account serves as a comprehensive tool to derive accurate

 

 

3a. Under the inventory valuation concept, we usually calculate the Equivalent Production Units which means converting the incomplete production into equivalent completed units.

In the above context, you are required to explain the steps involved in the computation of equivalent production units.    (5 Marks)

Ans 3a.

Introduction

In process costing, the concept of Equivalent Production Units (EPU) is crucial for valuing partially completed inventory. EPU converts incomplete units into the equivalent number of fully completed units, providing a more accurate measure of production costs. This method is particularly valuable in continuous manufacturing processes where production stages are ongoing and inventory is often left in various stages of completion. By calculating EPUs, companies can assign accurate costs to work-in-progress (WIP) inventory, leading to precise financial reporting and

 

 

1. A worker X is allowed 60 hours’ time for completion of the job and the hourly rate is Rs. 4 The actual time taken by the worker is 40 hours. Calculate the wages of worker A. Under Halsey Plan. (5 Marks)

Ans 3b.

Introduction

The Halsey Plan is a popular incentive wage system designed to encourage workers to complete jobs more efficiently. Under this plan, employees are rewarded for finishing tasks faster than the standard time allocated, with a bonus based on a percentage of the time saved. The Halsey Plan benefits both the worker and the employer, as it encourages productivity while controlling costs. Here, we will calculate the wages of Worker X, who has completed a job in 40 hours