B.Com DCM2103 Cost Accounting

Description

SESSION	March 2024
PROGRAM	BACHELOR of COMMERCE (B COM)
SEMESTER	III
course CODE & NAME	DCM2103 Cost Accounting
CREDITS	4
nUMBER OF ASSIGNMENTS & Marks	02 30 Marks each

 

 

Set – 1^st

Questions

 

1. a. Discuss the classification of cost on the basis of functions.

Ans:

Classification of Costs:

Costs incurred can be grouped according to some common characteristics.

Most popularly used classification of costs is as follows (detail explanation in the next chapter):-

1. Based on the nature of time period like Historical Costs, Pre determined Costs
2. Classification on the basis of Behaviour/Nature/Variability namely Variable Costs, Fixed Costs, Semi-Variable Costs
3. Based on Elements like materials Cost, Labour Cost
4. Based on Functions

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1. Explain any 3 techniques of costing.

Ans: Companies can follow various techniques of costing depending upon the requirement of the management.

The following are some of the techniques that a company can follow for its costing:

1. Absorption Costing: Under this system, costs are ascertained when they are actually incurred. It is a kind of total costing, where all the costs that are incurred have been allocated to cost units. It is a traditional costing but A major drawback is that it will not help in exercising control on the

 

 

2. The following information is in respect of Material.

Re-order quantity = 15000 units

Re-order period = 4 – 6 weeks 

Maximum Consumption = 4000 units per week

Normal consumption = 3000 units per week

Minimum consumption = 2500 units per week 

Emergency Re- order period = 2 weeks 

Calculate:

(a). Re-order level

(b) Minimum Level

(c) Maximum Level

(d) Average stock level

(e) Danger Level

Sol:-

To calculate the various inventory levels, we use the following formulas and given data:-

Given Data: Re-order quantity (ROQ) = 15000 units

Re-order period = 4 – 6 weeks

Maximum consumption = 4000 units per week

Normal consumption = 3000 units per week

Minimum

 

3. a. Discuss the functional classification of overhead.

Ans: The classification of overhead cost is based on four main characteristics given as follows:-

1. Classification based on Elements:-

Similar to the elements of costs that we have already discussed in the previous units, elements are: –

1. a) Indirect Material (e.g., small tools, lubricants, coolants, cleaning material, etc.)
2. b) Indirect Labour (maintenance workers, cleaners, office staff, etc.)
3. c) Indirect

 

1. Explain the meaning & features of job costing.

Job Costing is a costing method used to compile the costs of each job, work order or project separately. This method is suitable to job processing industries where each job is performed based on specific orders from customers.

Examples: Foundry, wielding works, carpentry, interior decoration, etc. This type of costing is also used in service industry for e.g., billing based on number of hours spent on doing customer’s

 

 

Assignment- 2^nd

Set-IInd

 

 

4.

 

 

 

 

 

 

 

 

 

 

M Ltd. produced and sold are 2500 units @ ₹ 25 per unit. From given data prepare cost sheet with per unit.
Particulars	Amount	Particulars	Amount
Direct Material	25000	Office Rent	1500
Direct Wages	6250	Direct Expenses	2500
Office Stationery	250	Wages Of Foremen	2000
Telephone Charges	62	Director’s Fees	650
Advertising	875	Depreciation-Factory	1000
Factory Rent	4250	Carriage Outwards	188
Factory Lighting	750	Salesmen’s Salary	625
Depreciation-Office	600	Oil & water	250

 

Sol:-

To prepare a cost sheet for M Ltd., we need to categorize the given expenses into different cost components such as prime cost, factory cost, cost of production, cost of sales, and then calculate the per unit cost.

Given Data: Units produced and sold: 2500 units

Selling

 

5. a. State the difference between Job costing and contract costing.

Ans:- Job costing and contract costing are two distinct costing methods used in cost accounting to track and allocate costs for different types of projects or products.

Here are the key differences between the two: 

1. Nature of the Work:

Job Costing:  Used for specific, short-term projects or jobs that are distinct and identifiable. Each job is

 

2. Q Ltd. produces a product involving 2 distinct processes of manufacture. The identical units are introduced in process P1 and the entire output is transferred to process P2.

From the following particulars prepare the relevant process accounts.

Particulars	₹
Materials
Process P1 (5280 units introduced)	131975
Process P2	27805
Direct Labour
Process P1	31500
Process P2	66000

There was no opening or closing stock in process P1and process P2. Works overheads are absorbed @ 40% of Direct labour in all processes. There were no spoiled units in any process.

Ans:

To prepare the relevant process accounts for Q Ltd., we need to create two separate process accounts: one for Process P1 and another for Process P2.

We’ll include all costs such as materials, direct labour, and works overheads, and then determine the total

 

 

6. a. State the advantages and disadvantages of Cost-plus contract.

Ans:

Advantages of cost-plus contract:

• In a cost plus contract, the contractor has sufficient flexibility in the design or any other aspect of the

 

1. State the objectives of Cost Reconciliation statement.

Ans: The objectives of a Cost Reconciliation Statement are to ensure consistency and accuracy between financial accounts and cost accounts.

Here are the primary objectives:-

Objectives of Cost