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GUJARAT TECHNOLOGICAL UNIVERSITY
MBA - SEMESTER 2 - EXAMINATION - WINTER 2016
Subject Code: 2820001 Date: 20/10/2016
Subject Name: Cost and Management Accounting (CMA)
Time: 10.30 am to 01.30 pm Total Marks: 70
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Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1
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- Cost accounting is an information system developed for:
A. Shareholder B. Government
C. Management D. Financial Institutions - Contribution minus fixed costs is:
A. Variable cost B. Marginal cost--- Content provided by FirstRanker.com ---
C. Unit cost D. Profit - An increase in the variable cost:
A. Reduces contribution B. Increase in PV ratio
C. Increases margin of safety D. None of the above - Another name for direct expenses:
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A. Period cost B. Prime cost
C. Variable cost D. Chargeable cost - An input of 2500 kgs. of material introduced into the process and the expected normal loss is 8% and the actual output from the process is 2150 kgs., the abnormal loss is kgs.
A. 200 B. 150
C. 250 D. 300 - BEP Means:
A. Profit B. Loss
C. Profit & Loss D. No Profit & No Loss
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Q.1 (b)
- Define Cost Accounting (04)
- List down the steps in Costing Procedure
- Define Normal and Abnormal Costs
- Draw the chart for BEP
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Q.1 (c) Write note on various elements of Direct cost (04)
Q.2 (a) Discuss Benefits and Limitations of Cost Accounting. (07)
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Q.2 (b)
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
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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
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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.OR
The following direct costs were incurred on Job No. 415 of Standard Radio Company.
Materials Rs. 6010
Wages:
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Deptt: A — 60 hours @ Rs. 30 per hrB — 40 hours @ Rs. 20 per hr
C — 20 hours @ Rs. 50 per hr
Overhead for these three departments were estimated as follow:
Variable overheads:
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Deptt: A —Rs 15000 for 1500 labour hoursB — Rs. 4000 for 200 labour hours
C —RS. 12000 for 300 labour hours
Fixed overheads:
Estimated at Rs. 40000 for 2000 normal working hours.
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You are required to calculate the cost of Job 415 and calculate the price to give profit of 25% on selling price.
Q.3 (a) Discuss the various characteristics of Activity Based Costing. (07)
Q.3 (b) A product passes through three processes A, B 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.
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OR
Q.3 (a) Describe the important advantages of Standard costing. (07)
(b) From the following data relating to two different vehicles A and B, 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 5% p.a. on cost of vehicles. The vehicles run 20 miles per hour on an average.
Q.4 (a) Differentiate the Process Costing and Job Costing (07)
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(b) X, 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 X, Y and Z products are 3.2%, 5% and 8% respectively. Apportion the joint cost.
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OR
Q.4 (a) Discuss the various characteristics of marginal costing. (07)
(b) The following information is given: (07)
Sales Rs. 200,000
Variable Rs. 120,000
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Fixed Cost Rs. 30,000Calculate: (A) Break Even Point
(B) New BEP if Variable cost increases by 10%
Show both the results in a single graph.
Q.5 The following information is available from the cost records of Novel & Co. for the month of March.
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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:
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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.
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:
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Office Salaries Rs. 90000
General Expenses 2% of sales
Depreciation Rs.7500
Rent and Rates Rs.8750
Selling Costs:
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Salaries 8% of SalesTravelling expenses 2% of sales
Sales office 1% of sales
General Expenses 1% of sales
Distribution Costs:
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Wages Rs. 15000Rent 1% of sales
Other Expenses 4% of sales
Draw up flexible Administration, selling & Distribution costs budget, operating at 90%, 100% and 110% of normal capacity.
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