B.Com DCM2103 Cost Accounting

Description

SESSION	JULY-AUG 2024
PROGRAM	BACHELOR OF COMMERCE (B.COM)
SEMESTER	III
COURSE CODE & NAME	DCM2103 COST ACCOUNTING

 

 

Set – 1

 

 

1. a. Explain the nature and scope of cost accounting.
2. Elaborate any five methods of costing.

Ans 1.

1. Nature and Scope of Cost Accounting

Cost accounting is a branch of accounting that focuses on capturing, recording, and analyzing costs associated with the production of goods or services. It serves as a tool to ascertain the total cost incurred in business operations and assists in effective cost management. Cost accounting plays a crucial role in decision-making, pricing strategies, and performance evaluation.

Nature of Cost Accounting

1. Classification of Costs

 

 

 

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2. Information regarding two types of materials A and B is as follows:

Normal usage                                       50 units per week each

Minimum usage                                   25 units per week each

Maximum usage                                  75 units per week each

Reorder Quantity                                 A: 300 units     B: 500 units

Reorder Period                                    A: 4 to 6 weeks     B: 2 to 4 weeks

 

Calculate the following levels for each type of material:

1. a) Reorder level
2. b) Minimum stock level
3. c) Maximum Stock Level
4. d) Average stock level
5. e) Danger stock level

Ans 2.

Stock Level Calculations for Materials A and B

1. Formulas for Calculation

• Reorder Level = Maximum Usage × Maximum Reorder Period
• Minimum Stock Level = Reorder Level − (Normal Usage × Maximum Reorder Period)
• Maximum Stock Level = Reorder Level + Reorder Quantity − (Minimum Usage × Minimum Reorder Period)
• Average Stock Level =

 

 

 

3. On the basis of the following information, Calculate the earnings of a worker under: A) Halsey Plan B) Rowan Plan

Guaranteed hourly rate of wages                                       Rs. 5 per hour

Standard time for production one dozen articles                       3 Hours

Actual time is taken by the worker to produce 20 dozen          48 Hours

Articles

Ans 3.

Worker Earnings Under Halsey and Rowan Plans

Given Data

• Guaranteed Hourly Rate = Rs. 5/hour
• Standard Time for One Dozen Articles = 3 hours
• Actual Time Taken = 48 hours
• Number of Dozens Produced = 20 dozens

 

Step 1: Calculate Total Standard Time for Production

 

 

 

Set – 2

 

 

4. Explain the Absorption of overhead. Explain various methods of Absorption of overhead.

Ans 4.

Absorption of Overhead

Absorption of overhead refers to the process of allocating or assigning overhead costs to specific products, jobs, or services. Overheads are indirect costs that cannot be directly traced to a single product or service, such as factory rent, depreciation, administrative expenses, and utilities. Absorbing these costs ensures that the total cost of production is accurately calculated and helps in

 

 

5. The product of a manufacturing concern passes through two processes A and B and then to finished stock. It is ascertained that for each process normally 5% of total weight is lost and 10% is scrap which from processes A and B realizes Rs. 80 per ton and Rs. 200 per ton, respectively. The following are the figures relating to both processes:

                                              Process A                                       Process B

Materials in tons                        1000                                                70

Cost of material in rupees per      125                                               200

Ton

Wages in rupees                       28,000                                        10,000

Manufacturing expenses            8,000                                          5,250

Output in tons                               830                                             780

Prepare processes show the cost per ton of each process. There was no stock or work-in-progress in any process.

Ans 5.

Process Costing Calculation

The product passes through two processes, A and B. We will calculate the cost per ton for each process step by step.

Given Data

Details	Process A	Process B
Materials Input (tons)	1,000	70

 

 

6. XYZ Travels Ltd. Provides the following details related to a month:

Driver, Conductor and Cleaner’s wages                                      Rs.5,00,000

Office staff’s salary                                                                     Rs.2,00,000

Diesel and Other oils                                                                   Rs.7,00,000

Insurance, Taxes, etc.                                                                  Rs.4,00,000

Interest and other expenses                                                          Rs.4,50,000

Repairs & Maintenance                                                               Rs.2,00,000

Depreciation                                                                                Rs.5,20,000

Five buses with a seating capacity of 50 passengers shuttled between two cities at a distance of 50 kms. Each bus has made one round trip (to and from) per day with a normal occupancy of 60%. The number of days worked in a month was 25 days. Calculate the cost per passenger kilometer.

Ans 6.

Calculation of Cost Per Passenger Kilometer

Step 1: Given Data

1. Fixed Costs:
   • Driver, Conductor, and Cleaner Wages = Rs. 5,00,000
   • Office Staff Salary = Rs. 2,00,000
   • Insurance, Taxes, etc. = Rs. 4,00,000
   • Interest and Other Expenses =