Page 1 of 4
Seat No.: Enrolment
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA SEMESTER 2 EXAMINATION WINTER 2016
Subject Code: 2820001 Date: 20/10/2016
Subject Name: Cost and Management Accounting
Time: 10.30 am to 01.30 pm Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q. No.
06
Q.1
Cost accounting is an information system developed for:
1.
A.
Shareholder
B.
Government
C.
Management
D.
Financial Institutions
2.
Contribution minus fixed costs is
A.
Variable cost
B.
marginal cost
C.
unit cost
D
Profit
3.
An increase in the variable cost:
A.
Reduces contribution
B.
Increase in PV ratio
C.
Increases margin of safety
D.
None of the above
4.
Another name for direct expenses:
A.
Period cost
B.
Prime cost
C.
Variable cost
D.
Chargeable cost
5.
An input of 2500 kgs. of material introduced into the process and the expected normal loss is and if the actual output from the process is 2150 kgs., the abnormal loss is kgs.
A.
200
B.
150
C.
250
D.
300
6.
BEP Means
A.
Profit
B.
Loss
C.
Profit Loss
D.
No Profit No Loss
Q.1

1. Define Cost Accounting
2. List down the steps in Costing Procedure
3. Define Normal and Abnormal Costs
4. Draw the chart for BEP
04
Q.1

Write note on various elements of Direct cost
04
Q.2

Discuss Benefits and Limitations of Cost Accounting.
07
Page 2 of 4

The following particular relate to a new machine purchased:
Purchased price of machine Rs. 400,000
Installation expenses Rs. 100,000
Rent per quarter Rs. 15000
General lighting for the total area Rs. 1000 p.m
Foremen salary Rs. 30,000 p.a.
Insurance premium for the machine RS. 3000 p.a.
Estimated repairs for the machines Rs. 5000 p.a.
Estimated consumable store Rs. 4000 p.a.
Power 2 units per hour at Rs. 50 per 100 Units
Estimated life of the machine is 10 years and the estimated value at the end of the 10 year is Rs. 100,000. The machine is expected to run 20000 hours in its life time. The machine occupies 25% of the total area. The foremen devotes 1/6 of his time for the machine. Calculate the machine hour rate for the machine.
07
OR

The following direct costs were incurred on Job No. 415 of Standard Radio Company.
Materials Rs. 6010
Wages:
Deptt: A 60 hours Rs. 30 per hr
B 40 hours Rs. 20 per hr
C 20 hours Rs. 50 per hr
Overhead for these three departments were estimated as follow:
Variable overheads:
Deptt: A Rs 15000 for 1500 labour hours
B Rs. 4000 for 200 labour hours
C RS. 12000 for 300 labour hours
Fixed overheads:
Estimated at Rs. 40000 for 2000 normal working hours.
You are required to calculate the cost of Job 415 and calculate the price to give profit of 25% on selling price.
07
Q.3

Discuss the various characteristics of Activity Based Costing.
07
Page 3 of 4

A product passes through three processes and C. the normal wastages of each process is as follows.
Process
Wastages
Sold for (per unit)
A
3
Rs. 0.25
B
5
Rs. 0.50
C
8
Rs.1
10,000 units were issued to process A in the beginning of October 2015 at a cost of Rs. 1 per unit. The other expenses were as follows:
Process A
Process B
Process C
Sundry Materials
Rs. 1000
Rs 1500
Rs 500
Labour
Rs 5000
Rs 8000
Rs 6500
Direct Expenses
Rs1050
Rs 1188
Rs 2009
Actual Output
9500 units
9100 units
8100 units
Prepare the process accounts, Abnormal wastages and Abnormal Gain Accounts.
07
OR
Q.3

Describe the important advantages of Standard costing.
07

From the following data relating to two different vehicles A and compute the cost per running mile:
Vehicle A
Vehicle B
Mileage run (annual)
Rs. 15000
Rs. 6000
Cost of vehicle
Rs. 25000
Rs. 15000
Road License (Annual)
Rs. 750
Rs. 750
Insurance (Annual)
Rs. 700
Rs. 400
Garage rent (Annual)
Rs. 600
Rs. 500
Supervision and Salary
Rs. 1200
Rs. 1200
Driver's wages per hour
Rs. 3
Rs. 3
Cost of Fuel per gallon
Rs. 3
Rs. 3
Mile run per gallon
20 miles
15 miles
Repairs and maintenance per mile
Rs. 1.65
Rs. 2
Tyre allocation per mile
Rs. 0.80
Rs. 0.60
Estimated life of Vehicle
100,000 miles
75000 miles
Charge interest at p.a. on cost of vehicles. The vehicles run 20 miles per hour on an average.
07
Q.4

Differentiate the Process Costing and Job Costing
07

Y and Z are the three joint products in a factory. Their joint cost is Rs. 30,000. Quantities produced are as follows:
X 1000
Y 400
Z 600
On the basis of technical evaluation, points allotted to Y and Z products are and respectively. Apportion the joint cost.
07
Page 4 of 4
OR
Q.4

Discuss the various characteristics of marginal costing.
07

The following information is given:
Sales Rs. 200,000
Variable Rs. 120,000
Fixed Cost Rs. 30,000
Calculate: Break Even Point
New BEP if Variable cost increases by 10%
Show both the results in a single graph.
07
Q.5
The following information is available from the cost records of Novel Co. for the month of March.
Material Purchased 20000 units Rs. 88000
Material consumed Rs. 19000
Actual wages paid for 4950 hours Rs. 24750
Units produced 1800 units
Standard rates and pieces are:
1. Direct Material rate is Rs. 4.00 per unit, standard input is 10 numbers for one unit.
2. Direct labour rate is Rs. 4 per hour, standard requirement is 2.5 hours per unit.
You are required to compute all material and labour variances for the month of March.
14
OR
Q.5
A department of Tek India Company attains sales of Rs. 600000 at 80% of its normal capacity. Its expenses are give below:
Office Salaries Rs. 90000
General Expenses of sales
Depreciation Rs.7500
Rent and Rates Rs.8750
Selling Costs:
Salaries of Sales
Travelling expenses of sales
Sales office of sales
General Expenses of sales
Distribution Costs:
Wages Rs. 15000
Rent of sales
Other Expenses of sales
Draw up flexible Administration, selling Distribution costs budget, operating at 100% and 110& of normal capacity.
14