M.B.A. DEGREE EXAMINATION, APRIL 2017.
Fourth Semester
ADVANCED COST ACCOUNTING
(CBCS-2013 onwards)
Time 3 Hours Maximum 75 Marks
Part A x 3 15)
Answer all questions.
All questions carry equal marks.
1. Explain cost centre cost unit.
2. What is perpetual inventory system?
3. Define budgetary control?
4. State the objectives of process costing
5. What is Breakeven Point?
Part B x 10 50)
Answer all the questions, choosing either or
All questions carry equal marks.
6. Show the stores ledger entries as they would appear
when using the Weighted Average Method, and
the LIFO Method, of pricing issues, in
connection with the following transactions
April Units Value
1 Balance in hand b/f 300 600
2 Purchased 200 440
4 Issued 150
Sub. Code
641411
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April Units Value
6 Purchased 200 460
11 Issued 150
19 Issued 200
22 Purchased 200 480
27 Issued 250
In a period of rising prices such as above, what are
the effects of each method?
Or
Distinguish between Job costing and process
costing?
7. A product passes through three processes B and
10,000 units at a cost of Re. 1 were issued to
process A. The other direct expenses were
Particulars Process A Process B Process C
Sundry materials 1,000 1,500 1,480
Direct Labour 5,000 8,000 6,500
Direct expenses 1,050 1,188 1,605
The wastage of Process A was and Process B 4%.
The wastage of Process A was sold at Re. 0.25 per
unit and that of B at Re. 0.50 per unit and that of C
at Re. 1.00 per unit. The overhead charges were
168% of direct labour. The final product was sold at
Rs. 10.00 per unit, fetching a profit of 20% on sales.
Find the percentage of wastage in Process C.
Or
Explain the types of sales variances.
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8. From the following data compute the material cost
variances
Name of the material Standard Actual
Qty (Units) Price Qty (Units) Price
Zee 3,500 10 3,700 12
Wee 1,500 21 1,650 20
Tee 1,000 33 1,250 36
Or
Explain different methods of costing.
9. Majestic Auto Ltd. Is manufacturing and selling
three standard products. The company has a
standard cost system and analyses the variances
between the budget and the actual periodically.
The summarised working results for 2005-2006
were as follows
Product Budget Actual
Selling
price
per unit

Cost
per unit

No. of
units sold
Selling
price per
unit
Cost
per unit

No. of
units sold
A 50 32 10,000 48 30 12,000
B 40 24 14,000 42 25 12,000
C 30 18 16,000 31 20 15,000
Calculate the variance in profit during the
period.
Analyse the variance in profit into Sales
price variance; Sales volume variance;
Cost variance; Sales margin quantity
variance. Sales margin mix variance,
Or
Distinguish between Budgetary control and
Standard costing?
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10. Following information relates to the manufacturing
of a component X 101 in a cost centre
Cost of materials 6 paise per component
Operators wages 72 paise an hour
Machine-hour rate Rs. 1.50
Setting up time of the
machine
2 hours and 20
minutes
Manufacturing time 10 minutes per
component
Prepare cost sheets showing both production and
setting up costs total and per unit, when a batch
consists of 10 components, 100 components,
and 1,000 components.
Or
Give an account of Use of Software for cost
Management Treatment of Scrap in Cost
accounting (iii)Activity based costing.
Part C 10 10)
Compulsory.
11. A company using a detailed system of standard costing
finds that the cost of investigation of variances is
Rs. 20,000. If after investigation an out-of-control
situation is discovered, the cost of correction is
Rs. 30,000. If no investigation made, the present value of
extra cost involved is Rs. 1,50,000. The probability of the
process being in control is 0.82 and the probability of the
process being out of control is 0.18. You are required to
advise
Whether investigation of the variances should be
undertaken or not.
The probability at which it is desirable to institute
investigation into variances.
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