21 Costing Best

7/31/2019 21 Costing Best

1/23

MASTER MINDS

Cost Sheet

Q.No:1. (a) Value of materials purchased = RS. 36,50,000

Hint: Purchases = consumption Opening stock + closing stock.

(b) Rate of Profit = 17.33%

Hint: Rate of Profit =SalesofitPr X 100

Materials

Q.No:1. EOQ =4

400X1000X2= 448 units.

Hint: EOQ =C

AS2, A = 1000, S = 400, C = 4

Q.No:2. Decide where order is to be placed, i.e. order is placed at EOQ.

Hint: Calculate EOQ =CAS2 = 108 units.

Prepare statement for four options i.e. Monthly, Quarterly, Half yearly and EOQ,compare cost, where cost is lowest, at that order is to be placed.

Q.No:3. Place orders at EOQ. Even though there is a discount at single order.

Hint: EOQ =C

AS2

Calculate total cost at EOQ and at single order. Compare cost between EOQ andsingle order

As per EOQ, total cost = 20400

As per single order, cost = 20440

So Place order at EOQ.

Q.No:4. Place order at EOQ, because cost is lower at EOQ to compare present policy.

Hint: Calculate cost as per present policy

Ordering Cost (15000) + Carrying Cost (10000) = 25,000/-

Calculate EOQ i.e. = 4900 Pieces

Calculate cost at EOQ

i.e. Ordering Cost (12245/-) + Carrying Cost (12250/-) = 24,495/-

So cost is lower at EOQ. So place the order at EOQ point.

Q.No:5. Calculation of Inventory Levels.

ROL = 1350 Unit, Maximum Level = 2475 units, Minimum level - 855

Average stock level = 1665 units or 1455 units

Hint: First Calculate EOQ = 1200 units

Reorder Level: Maximum usage X Maximum Delivery Time.

45 X 30 = 1350 units.Minimum Level: ROL - (Normal usage X Average Lead Time)

1350 - (33 units X 15 days) = 855 units

COSTING ASSIGNMENT SOLUTIONS ------------------------------------------------------------------1


2/23

MASTER MINDSMaximum Level: ROL + ROQ (Minimum Usage X Minimum Lead Time)

= 1350 + 1200 (15 units X 5 days) = 2475 units.

Average Stock Level =2

LevelMaximumLevelMinimum +=

2

2475855 += 1665

units

= Minimum Level + ROQ

= 855 + 600 = 1455 unit

Q.No:6. (a) Minimum Stock level of M = 3000 Kg

Hint: Minimum Stock Level = Reorder level (Avg usage X Avg. Lead Time)

(b) Maximum Stock Level of N = 15400 kgs.

Hint: Maximum Stock Level = ROL + ROQ (Minimum Usage X Minimum LeadTime)

(c) Reorder Level Of Q = 15,000kgs

Hint: Reorder Level = Max usage X Max lead Time

Q.No:7. Revised issue Rate of Material I = 2.45

Material II = 1.96

Hint: Write Format:

Cost of Material XXX

Insurance XXX

Freight XXX

Sales Tax XXX

Total Cost XXX

Calculate no. Of Units:

Units Purchased = XXXX

Loss in Transits = XXXX

XXXX

Insurance, Sales Tax allocated on the basis of Cost of Material

Freight allocated on the basis of quantity of material

Q.No:8. Total Cost of Material = 1,16,560

Hint: Cost of Port = 4000 X 28 = 1, 12,000

Clearing Charges = 2,800

Freight = 1,760

1, 16,560

Calculation of Units: Total units Normal Loss

1000 60 = 940

Cost per unit =940

560161 ,,= Rs. 124

Material Issued to production = 900 X 124 = 1, 11, 600

940 40 (Abnormal Loss )= 900Q.No:9. Replacement price substitute as material issue price at the Time of Material issued.

Q.No:10.Closing Stock = 2400 units at cost 32, 760



3/23

MASTER MINDSHint: All Material issued at standard price i.e. RS.12.

Q.No:11.FIFO Method

(i) Inventory on June 30th = 3, 88, 500

Hint: 3000 X 2.85 = 85, 500

1, 00,000 X 3.03 = 3,03,000

3, 88,500

(ii) Cost of Goods Sold = 7, 84, 500

Hint: Opening Stock + Purchases Closing Stock.

LIFO Method

(i) Inventory on June 30th = 3, 88, 500

Hint: 1, 00,000 X 3.00 = 3,00,000

3000 X 2.85 = 85, 500

3, 85,500

(ii) Cost of Goods Sold = 787500

Hint: Opening Stock + Purchases Closing Stock.

Weighted Average Method

Closing Stock = 3, 90, 000

Hint: Cost of Goods Sold = 7, 83, 000.

Opening Stock + Purchases Closing Stock.

Q.No:12.Tender b should be accepted

Hint: Compare cost of two Tenders, accept lowest cost Tender.

a cost = 24,000

b cost = 23,200

Calculate ROQ

ROQ = 50,000

Hint: 80, 000 35,000 + (10,000 X month)

Q.No:13. (a) Reorder point = 5000kg

Hint: Reorder point = (Max. Consumption X Max. Lead Time) + Safety Stock

(b) Prepare statement showing total cost to consider discount

(c) 20 orders to be placed.

Hints: Calculate EOQ =C

AS2

EOQ = 2000 Kg

At EOQ = 2000 Kg ordering cost and carrying cost are the same.

So2000

40000= 20 orders.



4/23

MASTER MINDS

Operating costing

Q.No:1. Cost per Passenger Km = Rs. 0.2471

Hint: Cost per passenger Km = Km.Passenger

Cost

= 500,62,5

139000

Cost = Given

Passenger Km = 56 X 50 X 75% (50 Km X 2 Trips)

= 5,62,500 Passengers Km.

Q.No:2. Charge per round trip : 88.22

Hint:RoundTrip

tperMonthcosOperating=

Trip100

21.822,8

Q.No:3. Bus fare to be charged for each passengers = Rs.150 per trip per Passenger

= 0.0375 X 40 Km

Hint: Calculate cost per each passenger Km =rKmofPassenge.No

TotalCost

=000,40,2

9000= 0.0375 Rs. Km

Calculate total cost per month i.e.m12

tcosTotal

Q.No:4. (a) Cost per absolute Ton- Kilometer =720,44

8944= 0.20 per T.K

Hint:Km.AbsoluteT

tcosTotal

Absolute Ton-Km = Outward Journey + Inward Journey

= 20960 + 23760 = 44720

(b) Profit = 3224

Hint: Revenue collection Total cost

13368 10144 = 3224

Calculate Absolute Ton Km

A C B

140K 160K

Q.No:5. Fare to be collected per passenger Km = Rs. 0.08

Hint:rkmsofpassenge.No

tcosTotal=

000,44,1

520,11= 0.08

Total cost = Cost + Delivery Commission + Profit = 11,520

Passenger Kms = 25 days X 6 Two Way Trip X 2 X 20 km X 24 Seat = 1,44,000

Q.No:6. Rent to be charged per room per day = days30

5625

= RS. 187.50Ps.

Hint: Rent to be charged per room per day =Rooms16

000,90=

Roomsof

Costotal

.No

T



5/23

MASTER MINDSNo. of Rooms = 20 X 80 % = 16 Rooms

Total Cost = 60,000 + Profit = 90,000

Q.No:7. Unit cost of Electricity generated =Unit000,00,9

000,41,28= 3.16 per unit.

Hint:

atedUnitsgener.No

tcosTotal

Total cost = 28, 41,000

No. of units = 10, 00,000 1, 00,000 = 9, 00,000

Q.No:8. The cost per ton is however for 10 Ton capacity truck. Hence it is beneficial if theCompany switch over from existing carrier at Rs. 50 per Tonnes to our fleetof 10 TonnesTrucks at Rs. 29.88 per Tonne.

Hint: 10 Ton Truck 8 Ton Truck

Total Cost 7, 17, 094 7, 58, 367

Total Quantity 24,000 Tonnes 24,000 Tonnes

Cost per Ton =24000

094,17,7

24000

367,58,7

= 29.88 31.59

So 10 Tonnes Truck is Selected.

Q.No:9. Absolute Ton Km = 5600 Ton Km

Hint: = 20 T X 80 Km + 12 T X 120 Km + 16 T X 160 Km

= 1600 + 1440 + 2560

= 5600 T.Km

Commercial Ton Km = 5760 T.Km

Hint: )3

161220(

++Tonnes X (80 + 120 + 160) Km

= 16 Tonnes X 360 Km

= 5760T.Km

Labour

Basic + Bonus

Q.No:1. Wages to - A = 450 = 300 150B = 720 = 480 240

C = 330 = 110 330

Hint: Wages = Basic + Bonus

Bonus to be apportioned on the basis of wages Ratio.

Q.No:2.There is an increase in production per worker. There is an increase in the labour cost perunit. This may due to increase in the wage rate.

Hint: Prepare a statement for 2 years and compare wage cost per unit, productionper worker, earning per worker.

Q.No:3. Wages paid to Ram = 120,

150 charted to the job, remaining 15 Rs. Charged to production O,H



6/23

MASTER MINDS

Hint: Actual wage rate per hour =inghoursActualwork

WageperDay=

8

120= 15 /-

Effective working hours per day = 8H - 1H (Normal Idel Time) = 7H

Effective wage rate per costing purpose =7

120= 17.14 Rs.

Raju: Raju is not directly engaged in production

Dev: Charged to Job = 6 X 17.14 = 104.4

Charged to P&L = 1 X 17.14 = 17.4

Q.No:4. Total Monthly Remuneration to

P = 800

Q = 1120

R = 240

Hint: 1. First Calculate Basic Wages on the basic rate per unit

2. Calculate Efficiency Ratio

=daradRatiotanS

uctionActualprodX 100

3. Calculate Incentives

P = No Incentive

Q = (100% 85% ) X%5

1X 40% = Rs. 120

R = (110% - 85% ) X

%5

1X 40 X 120 = Rs. 240

Q.No:5. Cost per 8 Hours of a day = 173.04

Hint:ofHours.No

tpermonthcosTotal=

Hr200

4326X 8 = 173.04

Q.No:6. Cost per day of 8 hours = 129.55

Hint:ofDays.No

tcosTotal=

25

75.3238

Q.No:7. A B

Earnings 4800 5016(Wages + Bonus)

Hint: Calculate Actual Conversion Cost

Calculate Standard Conversion Cost

Determine differences and Calculate Bonus.

Q.No:8. Effective Hourly rate to A = 5 per Hr

B = 5.50 per Hr

C = 6.60 per Hr

D = 8.25 per Hr

Hint:enofHoursTak.No

arnedTotalwageE Ex. A =1575 = 5

Conversion cost to A = 225



7/23

MASTER MINDSB = 186

C = 166

D = 146

Hint: Conversion Cost = Wages + O.H, Ex. A = 75 + 10 X 5 = 225

Q.No:9.Time Taken by A = 30 Hrs.

B = 25 Hrs.

Hint: Write the formula as per Rowan system and

Substitute the given Figures.

Q.No:10.Earnings under Halsey Scheme = 94.50

Earnings per hour =Hr45

50.94= 2.10 Per Hr.

Earnings as per Rowan Plan = 101.25

Earnings per Hr. =Hr45

25.101= 2.25 Per Hr.

Hint: Calculate Standard Time, Actual time, Time Saved.

Write Formula and Substitute underTwo systems

Halsey = T x R + (Time saved x R)

Rowan = T x R +dardTimetanS

S.Tx (T x R)

Q.No:11. Earningsunder Halsey Plan = 540

Hourly Rate of Earning =.Hrs48

540= 11.25 /- Per Hr.

Hint: Calculate Time Taken i.e. = 48 Hrs.

Write Formula under Roman Plan, and Substitute the Given information.

Alternative I II III IV

Q.No:12. (a) Wages under Halsey Scheme = 30 27 24 21

Hint: Time Taken X Rate per Hour + (Time Saved X Rate per hour)

I II III IV

Wages under Rowan = 30 28.80 25.20 19.20

Hint: Time Taken X Rate per Hr. + dardTimetanS

Timesaved

(Time taken X Rate per Hr.)

Q.No:13.Standard Time = 3200Hr.

Hint:rUnitperHou

itsBudgetedun=

Units6

19200= 3200 Standard Time.

Total Hours per Week = 60 Workers X 40 Hr. = 2400Hr.

No. of Hours required after introduction of Bonus Plan to produce 19200

=UnitsPerHr8

19200= 2400 Hr.

Savings = 3200 2400 = 800Hr.

Prepare Statement for Present, Halsey and Rowan Plan. Calculate effect on the profit.

Wages Payable under Halsey _____ 28,000



8/23

MASTER MINDSRowan _____ 30,000

Profit is high in Halsey Plan.

Q.No:14. Total Earnings under Beadux System = 51.25

Earnings = Basics + Bonus

= 40 + 11.25 = 51.25

Beadux Point system = T x R + Beadux points saved X 75% X Rate per Hr.

Basic = 8 X 5 = 40

Bonus = 75% of points saved X Rate per Beadux point

= 180 X 75% X60

Hr5= 11.25

Q.No:15.Earnings of Shyam _______ 562.5

Earnings of Ram _______ 742.5

Earnings of Mohan _______ 1023.751

Hint: Rate of Earnings of Shyam = 9.375

Basic =Hr8

50.Rs= 6.25

D.A. =2

25.6= 3.125

9.375

Rate of Earnings of Ram = 11.25. per Hr

Basic =H8

60= 7.50

D. A =25.7 = 3.75

11.25

Rate of Earnings of Mohan = 13.125 per hr

Basic =H8

70= 8.75

D. A =2

75.8= 4.375

13.125

Q.No:16. (a) Total amount of bonus for the week = 100/-

Hints: Bonus = 21100

tindardproductansoductionPrExcess

= 21100

000001

000002xx

,,

,,= 10%

Total Amount of Bonus = 500 x 2 x 10% = 1002

(b) Total Earnings of works A = 103.60

B = 100.80

Hint: Total Earnings = Basic wages + Bonus

Q.No:17. Cost of labour Turnover. Per Employee = 120



9/23


10/23

MASTER MINDSA = 3.00 B: 2.50 C : 4.00

Hint: allocate given Expenditure on the basis given

Calculate No of labour Hours

Dept A = 6000H B = 8000H C=4000, H

Hint: Calculate labour hour rate :HrsLobourofNo

OHTotal

A =6000

18000= 3

B =8000

20000= 2.5

C =4000

16000= 4

Q.No:3.Total O.H. to x = 7,44,000,

y = 6, 64, 500, z = 4.92,000 Hint: Prepare statement, show the allocation of expenses of boiler House, and

Expenses of pump Room given Ratio to x, y, z Department

Q.No:4. O.H rate of each production Department:

P1 = 10.91 P2 = 11.35 P3 = 10.22

Hint: Calculate x, y values on simultaneous Equation method.

i.e X = 16,000 + 0.1y

Y = 24,000 x 0.2y

after solving the Equation we get x = 18775

x = 27,755

Q.No:5. Fixed Expenses apportioned to MCD PED

Legal 462814 231407

Personal 462211 513586

Variable Expenses apportion to

Legal 92929 278788

Personal 859798 368485

Hint: Fixed Expenses apportioned on the basis at budgeted capacity

i.e X = 7,20,000 + 0.05 y ---- (1)

Y = 9,50,000 + 0.10 x ---- (2)

Variable Expenses apportioned on the basis of actual usage

i.e X = 4,00,000 + 0.05 Y ---- (1)

Y = 12,00,000 + 0.20 X ---- (2) after solving

We get values then opposite to concerned department

Q.No:6. Sales man Y performance is the best

Hint: Allocate the expenses on the basis givenExpenses total : X = 2800, Y = 1750, Z = 1450

Profit : X = 400, Y = 1050, Z = 550



11/23

MASTER MINDSBoth compare, sales man Y less expenditure, more profit. So, Ys performance is the best.

Q.No:7. Selling Distribution cost to Departments to A = 11,611

B = 11,150

C = 7828

Hint: apportion the selling and distribution cost on the basis given

Apportionment of packing O.H.: A = 4000

B = 3000

C = 250

Base for packing ratio = space X unit sold X Time for packing

Base for storage cost = space per unit X unit sold X Average Time for storage

A B C

Profit 4389 850 4172

Q.No:8. Zone wise selling O.H. as % sales

A = 10.49% B = 10.49% C = 10.54% D = 11.12%

Hint: % on sales =Sales

H.SellingOX 100

A = 100X000,00,36

743,77,3= 10.49% B = 100X

000,00,48

877,03,5= 10.49%

C = 100X000,00,16

789,68,1= 10.54% D = 100X

000,00,20

591,23,2= 11.12%

Apportion all expenses on the basis given.

Q.No:9. Profit of 3 stages: I =6200 II = 1,59,500 III = 1,07,000

Hint: Calculate sales revenue, deduct all expenses from sales revenue we gotprofit.

Q.No:10.Factory cost of each type of Fan

Table Fan ________ 384/-

Ceiling Fan ________ 300/-

Car Fan ________ 182/-

Hint: First convert all Fans into car Fans

O.H. recovery rate :2500

000,80,1

ofCarFans.No

H.TotalO= = 72 per unit.

Q.No:11.F.O.H = 25% A.O.H = 75%

Hint: X is the % F.O.H

Y is the % of A.O.H

Cost of production to 1st order : 22,000 + 100x + 220y + xy = 42,875 _______(1)

2nd order: 32,000 + 140x + 320y + 1.4 xy = 62,125 _______

(2)

After solving the equations we get x = 25%, y = 75%

These % apply to order I, order II, we get



12/23

MASTER MINDSF.O.H ______ 2500 3500

A.O.H ______ 18,775 26,625

Profit _______ 8575 7455

Q.No:12. (a) Machine hour rate = 30

Hint: Machine hour rate =800,16

000,04,5

neHoursTotalMachi

H.TotalO= = 30

Machine Hours = Normal working Hours - Hours lost due to maintenance in a year.

(b) O.H. over absorbed = 58,000 60,000 = 2000

Wages under absorbed = 16,400 16,000 = 400

Q.No:13. (a) Six Methods:

Based on Direct Material cost =L10

L30= 3. Hint:

rialCostDirectMate

.H.O

Based on Direct Labour cost =L5

L30= 6. Hint:

LabourCost

.H.TotalO

Based on Prime cost =15

30= 2. Hint:

imeCostPr

.H.TotalO

Based on Machine Hour rate=15000

L30= 200 Per Machine Hr. Hint:

.rsofMachineH.No

.H.TotalO

Based on Labour Hour rate =25000

L30= Rs.120 Per Labour Hr.

Production Unit Method =Jobs300

L30= 10,000 per Job.

(b) O.H. cost for Each Method.

Multiply the recovery rates with given Figures.

Q.No:14.O.H. under Recovery = 80,000

Hint: Actual O.H. recovered = 446380 366380 = 80,000

Total Product = 7000 + 800 + 200 = 8000

Under recovery 50% charge to PSL

Remaining 50% i.e. 40,000 charged to Unit on the basis calculating supplementary, rate.

Supplementary rate =Units000,8

000,40= Rs. 5 per Unit

Q.No:15. (a) Under recovery of Production O.H. = 45,000

Hint: POH actually incurred O.H. recovered

Calculate Supplementary rate to charge Units

i.e. Rate =00024

00030

,

,

UnitsEquivalent

.H.eredOcovReUnder= = Rs. 1.25 per Unit

1/3 TO P & L

45000

2/3 to Units

(b) Prepare costing P & L A/C

Estimations Actual



13/23

MASTER MINDS

Q.No:16. (a) O.H. Rate =000,44,1

000,60,3= 2.5

500,21,1

500,38,3= 2.782

Hint: O.H. rate =ursofLabourHo.No

.H.TotalO

(b) Un absorbed F.O.H = 34250

Hint: O.H. incurred recovered: 3,38,000 - 3,03,750 = 34,250

Q.No:17.Over/Under recovery of O.H.

A = 1700

B = (300)

C = 800

D = 100

Hint: Over/Under recovery = Incurred - O.H. recovered.

Q.No:18. (a) Blanket recovery rate = 12.73 Per Machine Hr.

Hint:000,44

000,60,5

H.otalMEstimatedT

.H.otalOEstimatedT=

Charged to job A = 150 Hrs. X 12.73 per Hr = 1910

(b) Departmental recovery Rate: F = 12.50

M = 12.00

A = 15.55

F = 11.25

Hint:rsMachineHou

.H.TotalO

O.H charged job AU/ Departmental Recovery Method:

F = 375

M = 480

A = 1088

F = 112

Hint: Machine Hours X Departmental O.H. Recovery rate.

Q.No:19.O.H Recovery under Present (i.e. 25% on Prime cost)

O.H PA = (100)

O.H PB = 100

O.H PC = (50)

Recovery = O.H Absorbed Incurred

Suggested method is : O.H. recovered based on Direct Labour Cost

Recovery Rate =tcosLabour

.H.ActualO

Recovery Rate to A = 66.67%, B = 65%, C = 87.5%

Q.No:20. Machine O.H. rate = 60,00

Hint: Fixed standing Charges =1500

22500= 15.00

Time Standard Charges =oursEffectiveH

esargChTotalFixed

Calculate variable Expenses, then add to Fixed Charges

We get comprehensive Machine Hour Rate = 60.00



14/23

MASTER MINDSQ.No:21.Machine Hour rate = 31.914

Hint: Standard Charges = 0.789 (1) Depreciation

Variable Charges (1) = 12.375 (2) Electricity

(2) = 18.75

Q.No:22.Comprehensive Machine Hour rate = 14.841

Hint: No. Working Hours = 2400 Hrs.

5

12000

ofMachines.No

neHoursTotalMachi= = 2400

Standing Charges = 6.925

=24000

16620

ofHours.No

esargdingChtanTotalS= = 6.925

Machine Expenses Depreciation 2.083

Power 5.00

Repairs 0.833

Comprehensive Machine Hour Rate 14.841

Q.No:23. (a) Multiple Machine Hr. rate of

Operating Time = 6.84 per Hr.

Setting Time = 7.84 per Hr.

Hint: Multiple Machine hour rate = Common cost + Set up cost

Common Cost per hour = 4000

19375

ofHours.No

tcosnTotalcommo= = 4.84 per hr.

Calculate setup cost separately.

(b) Job A cost = 1516

Job B cost = 1408

Q.No:24. Two Tier Machine Hour rate

Setup time rate = 52.50

Running time rate = 152.50

Hint: Standard Charges per Hr. =

.Hr200

4000= 20 per Hr.

Machine Expenses = Dep =200

4000= 20 per Hr.

Repairs =180

5040= 28 per Hr.

Consumable Stock =180

3960= 22.50

Power =180

9000= 50 per Hr.

Wages =200

2500= 12.50 per Hr.

Prepare Statement for setup time rate and Running time rate.

ABC

Q.No:1. Indirect Selling and Distribution cost to



15/23

MASTER MINDSProduct A = 24, 55, 000

Product B = 14, 33, 000

Hint: Item Base

Insurance Charges Inventory Value

Storage Cost Avg. Inventory Storage

Packing Forwarding Charges Annual Sales Unit

Salesman Salary Effort of salesman

Salesman Commission Annual Sales Value

Invoicing Cost No. of Invoices.

Profitability of Two Products:

Product A = 5,45,000 Profit % On Sales =Sales

ofitPr

Product B = 17,67,000

Hint: Actual Sales xxxx

Less: Cost of Sales xxxxLess: Selling and Distribution cost xxxx

Profit xxxx

Product A = 100X000,00,50

000,45,5= 10.9%

Product B = 100X000,00,80

000,67,17= 22.09%

Q.No:2. (a) O.H. absorbed on the basis of Labour Hrs = 15 per Hr.

Hint: s.tLabourHrTotalDirec

tcosTotalOH

= 000,19

000,85,2

= 15 per hr.

O.H recovered = Product L = 1HR. X 15 per Hr. = 15 Per Unit.

Product M = 2 Hr. X 15 per Hr. = 30 per Unit.

On the basis at machine hours

Product L.P.U =5000

163000= 32.6 per hr.

Product M.P.U =7000

122000= 17.3 per hr.

(b) Machine Hours = Product L = 500 X 3 = 15000

Product M = 7000 X 1 = 7000

22000 Hr.

Using ABC costing The O.H are absorbed using Cost Drivers*

Machine Hour Driven Cost Recovering Rate =000,22

000,20,2= 10 per Machine Hr.

Setup Driven cost Recovering Rate =Setuo50

000,20= 400 per setup.

Order Driven Cost Recovering Rate =days758

000,45= 600 per Order.

Reconciliation

Q.No:1. Loss as per costing records : 1,72,400



16/23

MASTER MINDSLoss as per Financial records : 2,080

Q.No:2. Profit as per Financial records : 33,542

Profit as per costing records : 1,87,000

Hint: No. of Units Produced = F.G

Sales = Opening F.G + Production Closing Finished Goods,

By substituting the values we get production = 14,000 units.

Prepare statement reconciling the profits as per costing records with the profits asper Financial records.

Profit as per cost accounts i.e. 1,87,000, we get profit aw per Financial A/C, 33,542.

Q.No:3. Profit as per costing P & L. a/c 91200

Profit as per Financial a/c 72450

Hint: Distribution Expenditure over recovered in costing books

FOH under recovered in costing books

AOH under recovered in costing books.Q.No:4. Profit as per costing P & L a/c 11,000

Profit as per Costing books 32,700

Hint: FOH as per P & L 45,000

as per costing books 50,000

AOH as per P & L 26,000

as per costing books 19,300

S.D.OH as per P & L 18,000

as per costing books 20,000Prepare reconciliation Statement.

Q.No:5. Prepare Memorandum Reconciliation A/C

Profit as per Financial accounts = 3, 72,000

Profit as per Costing books = 4, 10, 000

Q.No:6. Profit as per Costing books = 32, 500

Profit as per Financial books = 30, 000

Hint: Prepare cost sheet to certain profit as per costing books

Prepare reconciliation statement

Start with costing books, Find out profit as per Financial books

Factory Expenses over absorbed in costing books.

Job & Batch Costing

Q.No:1. Cost of sales : 34680

Cost per 1000 Toys : 38.20

Net Profit : 10320

Profit per 1000 Toys : 11.80

Sales : 45,000

Hints: Prepare statement showing cost structure for 1000 Toys

Q.No:2. Cost of Production per Ton 143.00



17/23

MASTER MINDS Hint: Variable O.H 100% and\Direct wages is 8000

Find O. H 60% an Direct wages. 4800

Sale of waste material is deducted from direct material total cost per Ton 162.50

Q.No:3. Product wise cost A- 56.00

B 108.00

C- 180.00

D- 420.00

Offer price A- 67.20

B-129.60

C-216.00

D-504-00

Hint:

No of machine hours = A 60B 50

C 50

D- 65

Total cost of Machine centre = 50000+10,000+2000+6000+40.000=1.08.000

Cost of machine hr rate =H.Omachine

H.totalO=

225

000081 ,,= 480 per Machine hour

Prepare statement showing cost and selling price.

Q.No:4. (a) Cost of production per kg when preventive maintenance is not under taken

= 734.3474

1770

putout

tcostotal==

Hints: Out put in the week = 158 x 3kg = 474 kg for find out total cost prepare coststatement

Labour will be paid for 168 hours, as machine break down is not the fault of workers.

(b) Cost of production per kg when preventive maintenance is under taken = 2.5 317Per

Kg = 5317.2504

1276

putOut

tcostotal==

Q.No:5. Selling price per each C & t = 142.47

Hint : Sale price per each c &t =%T&C

,,

unitsgoodofNo

Sales

901000

225281

=

Profit margin 15% and cost = 11,500 x 15%= 16,725

Q.No:6. (a) Optimum size for bearing manufacture = 3600 bearings

Hint : Optimum size per batch =C

AS2A= Annual usage

=20.1

324x24000x2B = Set up cost

C = carrying cost

= 3600 bearings

(b) Extra cost incurred by the company as compared to optimum Inventory holding cost =576

Hint : Total cost 6000 run = 4896



18/23

MASTER MINDSTotal cost 3600run = 4320

Extra cost = 576

Q.No:7. Cost per unit = Jan : 6.52 Feb : 7.26 M : 6.83

April : 7.73 May : 8.15 June : 7.64

Hint : Cost per unit =unitsofNo

tcosTotal

Profit P.U :unitofNo

ofitPr

Profit per each month = Jan : 1.48 Feb : 0.74 M = 1.17

April : 0.27 May : 0.15 June : 0.36

O.H recovery rate = 524800

12000.

ruleerycovre

H.OFac:Ex

HoursLabar

H.O===

O.H Charged = O.H recovery rate x No of hours

Q.No:8. Factory cost per unit, O.H. recovery rate based on 100%

Labour cost 15 Units 1.30

20 Units 1.50

25 Units 1.50

Factory cost per unit O.H recovery rate based on 80% of price cost .

15 Units 1.44

20 Units 1.62

25 Units 1.62

Q.No:9. Industry Cost Unit Method of costing

Bricks works 1000 bricks Out put costing

Oil refining mill Per tone oil Process costing

Road transport company Per tone km service costing

Q.No:10. Industry Cost Unit Method of costing

Toy making per batch Batch costing

Cement Per tone/ bag Unit costing

Radio per radio/ batch Multiple costing

Ship building Per contract Contract casting

Hospital Per patient day Operating costing

Book keeping in cost Accounting

Q.No:1. Pass journal entries for all transactions

Q.No:2. Pass journal entries and prepare

Office administration A/C selling expenses A/c

Store ledger control A/C WIP control A/C

Wages control A/C Works Exp control A/C

Q.No:3. Prepare share capital A/C, reserve A/C, Sundry creditors sundry debtors A/C, Stock controlA/C, WIP control A/C, finished goods control A/C, cost of sales A/C Bank A/C, wagescontrol, A/C, manufacturing O.H control A/C, selling & distribution O.H A/C, and trialbalance.



19/23

MASTER MINDSQ.No:4. prepare following A/C,

Store ledger A/C balance 66,000

WIP control A/C 40,000

Finished goods control A/C 20,000

Production O.H control A/C transfer to P & L a/c

P&L A/C ------- Profit 20,000.

Q.No:5. (a) Item A : The difference between stock card, and physical stock charged to costingA/C If it is abnormal loss.

40x 60= 2400 charged to costing P & L A/C

(b) for B difference between stock card and physical stock is treated as purchases.

Joint & Bi-Products

Q.No:1. Joint cost per unit P = 8.00

Q = 4.00

Hint: Joint cost apportion on the basis of total output cost is 48,000 : 18,000

Total output cost = output units X pre split off Net Joint cost per unit

Pre split off Net Joint cost = Sales xxxx

Margin xxxx

xxxxPre split off cost xxxx

Pre split off Net. Joint cost xxxx

Q.No:2. Apportionment of Joint cost of 24000 on the basis given

B C

(a) Physical unit 6:4 14,400 9600

(b) Market value of separation Paints 5:3.75 13,715 10285

(c) M.V. after further processing 7:7.50 11,586 12414

Profit = Selling price of the further processing _____ total cost

Method I B = 42,000 - 19400 = 22600

Method II B= 42,000 - 18715 = 23285

Method III B = 42,000 - 16586 = 25414

Product C

Method I = 12900

Method II = 12215

Method III = 10086

X Y Z

Q.No:3. Cost per Ton of each variety 250 330 520

Hint: Cost per Ton =)inTons(oductionPr

tcosTotal= Ex = for x =

250

62500= 250

Mixing cost is apportioned in the Ratio of 500 : 450 : 500

i.e. Production X Mixing points Ex: X = 250 X 2 = 500



20/23

MASTER MINDSPacking cost is apportioned in the Ratio of 1250 : 450 : 200

i.e. Production X Packing Points Ex: X = 250 X 5 = 1250

Q.No:4. Total cost of main product = 30,500

Total cost of by product = 5000

Hint: Raw Material apportioned = 80 :20

Labour = 30:4

O.H. = 200% of wages.

Main product & units = 2000 X 75% ______ 1500 units

By product units = 2000 X 20% _______ 400 units

Labour cost apportioned = Main Product by product

1500 X 2 400 X 1

Q.No:5. Unit cost each product

Petrol __________ 4.8975

Lubricating Oil__________ 4.898

Fuel oil __________ 4.898

Kerosene __________ 4.8975

Gas oil __________ 4.9

Hint: Unit cost of each product =Output

tcosTotal

Normal loss is apportioned on the basis of out put liters.

Q.No:6. Raw Material cost = 80, 800

Unit cost of sales per P 45 Unit cost of Sales =ofUnits.No

sCostofSale

Q 36

Y 54

Z 22.50

Joint cost apportioned on the basis of sales values.

Q.No:7. (a) Joint Cost to A = 58,510

X = 37,020

Y = 24,020

Hint: To find out Joint cost to main product and joint product the procedure

Sales xxxx

Further Processing cost xxxx

Profit xxxx

Selling expenses xxxx

Joint Cost xxxx

Selling Expenses 10% of cost of sales

i.e. 1, 49,500 X 10% = 14,950Cost of sales = Sales value profit.



21/23

MASTER MINDS(b) Profit of X product is Not subject to further processing without selling expenses =

21480

Hint: Sale value - Joint cost i.e. 58500 37020 = 21480

If further processing is made then profit = 12,000

Hint: Sales value xxxx

Joint cost xxxxFurther processing cost xxxx

Selling expenses xxxxProfit xxxx

Q.No:8. (a) Joint Cost to A = 6, 16,914

B = 1, 93,476

C = 4, 77,610

Hint: Joint cost is apportioned in the ratio 1116 : 350 : 864

Sales xxxx

(-) Further Processing cost xxxx

xxxx This value is taken forapportionment of Joint cost

A B X

(b) Joint Cost per Kg 34.27 19.35 8.84

F.P. cost per Kg 10 15 2

Total cost 44.27 34.35 10.84

Hint: Joint cost per Kg. =ofUnits.No

tcosintJo

Further processing cost =ofUnits.No

tcosgsincesFurtherpro

A B X

(c) Product wise profit = 4,71,410 78,250 3,15,040

Total = 8,64,700

Profit = Sales Cost of goods Sold.

Q.No:9. Joint cost apportioned to products on the basis of Net. Realizable value.

i.e. 3400 : 390 : 200 : 200 : 1050

A B C D E

Income forecast of the Company assuming No Further processing takes place

Sales Joint cost = Income

Income of 5 products, i.e. A = 7,15,686

B = 82,094

C = 42,100

D = 42,100

E = 2,21,020

Income forecast of the company assuming further processing takes place.



22/23

MASTER MINDSA = 10,65,686

B = 52,094

C = 92,100

D = 42,100

E = 5,21,020

Hint: Sales xxxx

Joint cost xxxx

Further processing cost xxxx

Income xxxx

By comparing it is beneficial for the Company. If it makes further processing toproducts A, C & E and sell the products B and D at split off point.

Q.No:10. (a) Joint cost to M = 10,00,000

N = 6, 00,000

O = 10,00,000

P = 14,00,000

Hint: Joint Cost is apportioned on the basis of sales value at split off point.

(b) Joint cost on the basis of Physical output to

Product______ M = 24,00,000

N = 8,00,000

O = 4,00,000

P = 4,00,000

(c) Joint cost on the basis of Net realizable value Method to

Product______ M = 20,00,000

N = 4,00,000

O = 10,00,000

P = 6,00,000

Hint: Net realizable value = Sales revenue of the further processing Furtherprocessing cost

Decision:The Company should not report to further processing of its N and Pproduct

Hint: By comparing sales revenue after further processing, sales revenue at point

of split off.

M N P

Profit after further processing : 20,00,000 (4,00,000) (16,00,000)

Process costing

Q.No:1. Normal Loss in process I = 1600 KGs

Normal Loss in process II = 900 KGs

Abnormal Loss in Process I= 400

Abnormal Gain in Process II = 300Transfer from process I II is 18,000 units @ 18.25

Hint: Valuation of Abnormal Loss:



23/23

MASTER MINDS

= ossXAbnormalLutNormalOutp

utputtofNormalONormalcos

Valuation of Abnormal Gain in Process II:

= ainXAbnormalGutNormalOutp

utputtofNormalOcosNormal

All expenses and abnormal gain debited to process A/C. Normal loss, abnormal loss,finished product credited to process A/C.

(ii) Selling Price = 31.875 Cost = 80

=80

100X 25.50 = 31.875 Profit = 20

100

Q.No:2. Prepare Statement showing Normal Loss, Abnormal Loss closing stock and transferred to

next stage.

Find out cost of Abnormal loss, cost of closing stock.

Profit = 63,057

Computation of Profit: Sales Revenue xxxx

Less: Normal Processing Cost xxxx

Cost of abnormal loss xxxx

Net profit xxxx

Add: Closing Stock xxxx

Total Profit xxxx

Q.No:3. Product A Should not be Further processed

Product Y Should be further processed

Hint: After Further processing Product A Earn a loss of Rs.1000,

Product Y earned Rs. 1944 profits.

Incremental Profit = Incremental revenue Incremental cost offurther processing.

Q.No:4. (a) Prepare a Statement to Find out Total equivalent units

(b) Prepare Statement showing cost per Equivalent Units, separately as material,Labour, O.H, and total.

(c) Cost for Equivalent Unit =ofUnits.No

TotalCost

Cost Finished goods = 5600 X 14.812 = 8, 29,472

Cost of Closing work in Progress = 2, 60,496.

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