M.B.A. DEGREE EXAMINATION, APRIL 2016
Elective Paper
ADVANCED COST ACCOUNTING
(CBCS 2012 onwards)
Time 3 Hours Maximum 75 Marks
Part A 3 15)
Answer all questions.
All questions carry equal marks.
1. Distinguish between direct costs and indirect costs. Also
give examples of each type.
2. What is material control? What are the objectives of
material control?
3. Define Activity Based costing.
4. A factory follows job costing. The following cost data are
obtained from its books for the year ending 31.12.2002.
Rs.
Direct Materials 90,000
Direct Wages 75,000
Profit 60,900
Sub. Code
641411
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Rs.
Selling overhead 52,500
Administration overhead 42,000
Factory overhead 45,000
Prepare a job cost sheet and find out percentage of profit
on sales.
5. Calculate margin of safety, sales and variable cost from
the following:
Fixed cost Rs. 12,000
Profit Rs. 1,000
Break Even Sales Rs. 60,000
Part B 10 50)
Answer all questions choosing either or
All questions carry equal marks.
6. Describe the element wise classification of costs.
Or
State the steps involved in the installation of a
costing system in a large manufacturing company.
7. Prepare the stores ledger account using weighted
average method of pricing out issues
2012
Aug 1 Opening balance 50 units Rs. 3 per
unit
5 Issued 2 units to production
7 Purchased 48 units Rs. 4 per unit
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2012
Aug 10 Issued 20 units
19 Purchased 76 units Rs. 3 per unit
24 Received back into stores 19 units out of
20 units issued on 10th Aug
27 Issued out 10 units to production
Or
Describe the various methods of pricing issues of
materials. Which method would you recommend for
adoption at the time of falling and rising prices?
8. A firm of building contractors began to trade on 1st
April 2011. The following was the expenditure on
the contract for Rs. 3,00,000:
Materials issued Rs. 51,000; Plant Rs. 15,000;
Wages Rs. 81,000; Other expenses incurred
Rs. 5,000, Cash received on account to 31.3.2012,
amounted to Rs. 1,28,000 being 80% of the work
certified. If the plant and materials charged to the
contract, plant which cost Rs. 3,000 and materials
which cost Rs. 2,500 were lost. On 31.3.2012 plant
which cost Rs. 2,000 was returned to store, the cost
of work done but uncertified was Rs. 1,000 and
materials costing Rs. 2,300 were in hand on site.
charge 15% depreciation on plant and take to the
profit and loss a/c 2/3 of the profit received. Prepare
the contract account.
Or
Explain the meaning and procedure involved in
activity based costing. What are its advantages?
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9. The accounts of Voltas company Ltd. show for 2012:
Materials Rs. 3,50,000; Labour Rs. 2,70,000;
Factory overheads Rs. 81,000 and Administration
overheads Rs. 56,080.
What price should the company quote for a
refrigerator? It is estimated that Rs. 1,000 in
materials and Rs. 700 in labour will be required for
one refrigerator. Absorb factory overheads on the
basis of labour and administration overheads on the
basis of works cost. A profit of 12 2
1 on selling price
is required.
Or
A pharma company processes a product through
three distinct stages, the product of one process
being passed on to the next process and so on to the
finished product intact. Details of the cost incurred
in each process are given below.
Process
A
Rs.
B
Rs.
C
Rs.
Materials 1,150 1,050 700
Direct wages 500 600 700
The overhead expenses for the period amounted to
Rs. 3,600 and is to be distributed to the processes on
the basis of direct wages. There were no stocks in
any of the process either at the beginning or at the
close of the period.
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Assuming the output was 1,000 kilos show the
process cost of B and C including also the cost per
kilo of each element of cost and the output in each
process.
If 10% of the output is lost in storage and giving
samples, what should be the selling price per unit to
make a gross profit 33 3
1 on the selling price.
10. X Ltd. has prepared the budget for the production of
one lakh units of the only commodity manufactured
by it for a costing period as follows:
Rs. (in lakhs)
Raw material 2.52
Direct wages 0.75
Direct expenses 0.10
Works overhead fixed) 2.25
Office overhead fixed) 0.40
Selling overhead fixed) 0.20
The actual production during the period was only
60,000 units. Calculate the revised budgeted cost
per unit.
Or
Calculate labour variances:
The budgeted labour force for producing
product A is.
20 Semi skilled workers P.75 per hour for 50
hours
10 skilled workers Rs. 1.25 per hour for 50 hours
The actual labour force employed for producing A is:
22 Semi skilled workers P.80 per hour for 50
hours
8 Skilled workers Rs. 1.20 per hour for 50 hours.
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Part C 10 10)
Compulsory.
11. A company produces and markets industrial containers
and packing cases. Due to competition the company
proposes to reduce the selling price. If the present level of
profit is to be maintained, indicate the number of units to
be sold if the proposed reduction in selling price is:
15%.
The following additional information is available:
Rs.
Present sales turnover (30,000 units) 3,00,000
Variable cost (30,000 units) 1,80,000
Fixed cost 70,000
Net profit 50,000