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IPC – MAY 2017

IPC – MAY 2017 Cost Accounting & FM Test Code – COST-1 75 Marks Coverage Standard
IPC – MAY 2017 Cost Accounting & FM Test Code – COST-1 75 Marks Coverage Standard
IPC – MAY 2017 Cost Accounting & FM Test Code – COST-1 75 Marks Coverage Standard
IPC – MAY 2017 Cost Accounting & FM Test Code – COST-1 75 Marks Coverage Standard
IPC – MAY 2017 Cost Accounting & FM Test Code – COST-1 75 Marks Coverage Standard
IPC – MAY 2017 Cost Accounting & FM Test Code – COST-1 75 Marks Coverage Standard
IPC – MAY 2017 Cost Accounting & FM Test Code – COST-1 75 Marks Coverage Standard
Cost Accounting & FM Test Code – COST-1

Cost Accounting & FM

Test Code – COST-1

75 Marks

Coverage Standard Costing, Operating Costing, JPBP, Contract costing

Question-1

KPR Limited operates a system of standard costing in respect of one of its products which is manufactured within a single cost centre. The Standard Cost Card of a product is as under:

Standard Unit cost ( ) Direct material 5 kgs @ 4.20 21.00 Direct labour 3
Standard
Unit cost ( )
Direct material
5
kgs @
4.20
21.00
Direct labour
3
hours @
3.00
9.00
Factory overhead
1.20 per labour hour
3.60
Total manufacturing cost
33.60
The production schedule for the month of June, 2007 required completion of 40,000
units. However, 40,960 units were completed during the month without opening and
closing work-in-process inventories.
Purchases during the month of June, 2007, 2,25,000kgs of material at the rate of
4.50 per kg. Production and Sales records for the month showed the following actual
results.
Material used 2,05,600kgs.
Direct labour 1,21,200 hours; cost incurred
3,87,840
Total factory overhead cost incurred
1,00,000
Sales
40,000 units
Selling price to be so fixed as to allow a mark-up of 20 per cent on selling price.
Required:

(i)

Calculate material variances based on consumption of material.

(ii)

Calculate labour variances and the total variance for factory overhead.

(iii)

Prepare Income statement for June, 2007 showing actual gross margin.

(iv) An incentive scheme is in operation in the company whereby employees are paid a bonus of 50% of direct labour hour saved at standard direct labour hour rate.

Calculate the Bonus amount.

(16 Marks)

Question-2

The following information is available from the cost records of Vatika& Co. For the month of August, 2009:

Material purchased 24,000 kg

Material consumed 22,800 kg

Actual wages paid for 5,940 hours

Unit produced 2,160 units.

Standard rates and prices are: Direct

produced 2,160 units. Standard rates and prices are: Direct 1,05,600 29,700 material rate is 4.00 per

1,05,600

2,160 units. Standard rates and prices are: Direct 1,05,600 29,700 material rate is 4.00 per unit

29,700

material rate is 4.00 per unit Direct labour rate is 4.00 per hour Standard input
material rate is
4.00 per unit Direct
labour rate is 4.00 per hour Standard
input is 10 kg. for one unit
Standard requirement is 2.5 hours per unit.
Calculate all material and labour variances for the month of August, 2009.(8 Marks)
Question-3
SJ Ltd. has furnished the following information:
Standard overhead absorption rate per unit
20
Standard rate per hour
4
Budgeted production
15,000 units
Actual production
15,560 units
Actual overheads were
2,95,000 out of which
62,500 fixed .
Actual hours
Overheads are based on the following flexible
budget
74,000
Production (units)
8,000
10,000
14,000
Total Overheads ( )
1,80,000
2,10,000
2,70,000
You are required to calculate the following overhead variances (on hour’s basis) with
appropriate workings:
(i)
Variable overhead efficiency and expenditure variance
(ii)
Fixed overhead efficiency and capacity variance.
(8 Marks)

Question-4

A transport company has a fleet of three trucks of 10 tonnes capacity each plying in

different directions for transport of customer's goods. The trucks run loaded with

goods and return empty. The distance travelled, number of trips made and the load carried per day by each truck are as under:

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Truck No.

One way

No. of trips per day

Load carried per trip / day tonnes

Distance Km

1

16

4

6

2

40

2

9

3

30

3

8

The analysis of maintenance cost and the total distance travelled during the last two years is as under

Year Total distance travelled Maintenance Cost 1 1,60,200 46,050 2 1,56,700 45,175 The following are
Year
Total distance travelled
Maintenance Cost
1
1,60,200
46,050
2
1,56,700
45,175
The following are the details of expenses for the year under
review:
Diesel
10 per litre. Each litre gives 4 km per litre of diesel on an
average.
Driver's salary
2,000 per month
Licence and taxes
5,000 per annum per truck
Insurance
5,000 per annum for all the three vehicles
Purchase
Price
per
3,00,000, Life 10 years. Scrap value at the end of life is
truck
10,000.
Oil and sundries
25 per 100 km run.
General Overhead
11,084 per annum
The vehicles operate 24 days per month on an average.
Required
(i)
Prepare an Annual Cost Statement covering the fleet of three vehicles.
(ii)
Calculate the cost per km. run.
(iii)
Determine the freight rate per tonne km. to yield a profit of 10% on freight.
(10 Marks)

Question-5

A transport company has been given a 40 kilometre long route to run 5 buses. The cost of each bus is 6,50,000. The buses will make 3 round trips per day carrying on an average 80 percent passengers of their seating capacity. The seating capacity of each bus is 40 passengers. The buses will run on an average 25 days in a month. The other information for the year 2013-14 are given below:

The other information for the year 2013-14 are given below: Garage rent 4,000 per month Annual

Garage rent

4,000 per monthGarage rent

Annual repairs and maintenance

22,500each busAnnual repairs and maintenance

Salaries of 5 drivers

3,000 each per monthSalaries of 5 drivers

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Wages of 5 conductors 1,200 each per month Manager’s salary 7,500 per month Road tax,
Wages of 5 conductors
1,200 each per month
Manager’s salary
7,500 per month
Road tax, permit fee, etc.
5,000 for a quarter
Office expenses
2,000 per month
Cost of diesel per litre
33
Kilometre run per litre for each but
6 kilometres
Annual depreciation
15% of cost
Annual Insurance
3% of cost
You are required to calculate the bus fare to be charged from each passenger per
kilometre, if the company wants to earn profits of 33 1 /3 percent on taking (total
receipts from passengers).
(8 Marks)
Question-6
PQR Construction Ltd. commenced a contract on April 1, 2009. The total contract
was for 27,12,500. It was decided to estimate the total profit and to take to the credit
of p/L A/c the proportion of estimated profit on cash basis which work completed
bear to the total contract. Actual expenditure in 2009-10 and estimated expenditure in
2010-11 are given below:
2009-10
2010-11
Actual ( )
Estimated ( )
Material
issued
Labour : Paid
4,56,000
8,14,000
3,05,000
3,80,000
:
Outstanding at end
24,000
37,500
Plant
2,25,000
-
purchased
Expenses
: Paid
1,00,000
1,75,000
: Outstanding at the end
-
25,000
: Prepaid at the end
22,500
Plant returned to stores (a historical stores)
75,000
-
1,50,000 (on Dec 31 2010)
Material at site
Work-in progress certified
Work-in-progress uncertified
Cash received
30,000
75,000
12,75,000
Full
40,000
----
10,00,000
Full
The plant is subject to annual depreciation @ 20% of WDV cost. The contract is
likely to be completed on December 31, 2010.
Required:
1. Prepare the Contract A/c for the year 2009-10.
2. Estimate the profit on the contract for the year 2009-10 on prudent basis which has to
be credited to P/L A/c.
(14 Marks)
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Question-7

Explain the terms notional profit and retention money in contract costing.

Question-8

(3 Marks)

A Company produces two joint products P and Q in 70 : 30 ratio from basic raw

materials in department A. The input output ratio of department A is 100 : 85. Product

P can be sold at the split of stage or can be processed further at
P
can be sold at the split of stage or can be processed further at department B and sold
as
product AR. The input output ratio is 100 : 90 of department B. The department B
is
created to process product A only and to make it product AR.
The selling prices per kg.are as under:
Product P
85
Product Q
290
Product AR
115
The production will be taken up in the next month. Raw materials 8,00,000Kgs.
Purchase price
80 per Kg.
Deptt. A
Deptt. B
Lacs
Lacs
Direct materials
Direct labour
Variable overheads
Fixed overheads
Total
35.00
5.00
30.00
9.00
45.00
18.00
40.00
32.00
150.00
64.00
in Lacs
Selling Expenses:
Product P
24.60
Product Q
21.60
Product AR
16.80
Required:
(i)
Prepare a statement showing the apportionment of joint costs.
(ii)
State whether it is advisable to produce product AR or not.
(8 Marks)

All the Best

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