Cost Accounting

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Raw Material
1. Palmer Product Ltd is involved in the manufacture of motor cycle parts. The following
information are available :
Material used is 8000 units
Carrying cost is $ 1 per unit.
Ordering cost is $10
What is the economic order quantity (EOQ), the total carrying costs, the total ordering costs and
the total costs?
2. The following information is available on component x for the month of January :
Maximum usage 200kg
Minimum usage 100kg
Reorder period 2 to 4 months
Reorder quantity 400kg
Calculate :
The order level, the maximum stock level, the minimum stock level, the average stock level
3. Using the following figures calculate : i. reorder level ii. Reorder quantity
Budgeted consumption : Maximum 3000 kg per week
Minimum 1600 kg per week
Maximum stock level : 26800kg
Estimated delivery period : Maximum 8 week
Minimum 4 week.
Labour
1. The details below relate to Mr. Kutty on Job No. 39. The direct wages rate is $1 per hour. The
time allowed is 50 hours. The time taken is 40 hours. Calculate the basic wage, bonus pay and
total pay based on :
a. The Halsey 50% scheme
b. The Halsey Weir 33 1/3% scheme
c. The Rowan scheme.
2. The standard production for Uno Factory Ltd is 24 units a day. A group of 10 employees work on
the assembly line. For every 20% increase in production a bonus of $60 will be shared equally by
the group. On day 13, 30 units were produced. How much will each member of the group
receive?
3. The following information is available on Department 3 of Ershard Manufacturing Ltd for a
period of six months.
Number of people employed at the beginning of the period 36
Additions to the workforce during the period 7
Number of employees who left during the period 5
Cost Accounting
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What is the labour turnover rate?
4. The following information relates to worker Doe on job No 13 for week 1
Rate of play $1 per week
Time allowed 35 hours
Time taken 31 hours

Calculate Doe`s remuneration based on :
a. Halsey Weir schemes
b. Rowan scheme
c. The effective hourly rate of pay for week 1
Overhead
1. Marten Ltd is divided into 4 departments. A and B are production departments, X and Y are
service departments. The actual costs for a period are as follows :
Repair and maintenance to plant 500
Depreciation of plant 1000
Rent 1200
Supervision 800
Power 400
Plant insurance 600
Lighting 500
Canteen 1000

The following information is available with respect to the4 departments :
Dept A Dept B Dept X Dept Y
Area (sq. metre) 2000 1500 1000 500
Number of employees 30 30 20 20
Effective horse power 10 15 15 10
Plant value ($) 35000 30000 20000 15000

How should the overhead costs be apportioned?
2. The following information is available on Bolkiah Engineering Ltd.
Budgeted production overhead $45000
Budgeted direct material cost $15000
Budgeted direct labour cost $45000
Budgeted labour hours 30000
Budgeted machine hours 22500
Budgeted output (units) 3000
During a particular period, a job was produced details of which are as follows :
Cost Accounting
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Material cost $10
Labour cost $25
Labour hours 15
Machine hours 7.5
Calculate:
a. The various methods of overhead absorption
b. The overhead absorbed by the job under each of the overhead absorption methods
calculated under 1.
3. The following is the budgeted data for Azlan Ltd for January, 19-18
Production overhead $12000
Direct labour hours 8000
The actual results for January, 19-18 was :
Production overhead $10000
Direct labour hours 8200
Calculate over/under absorption of overhead. Show the cost accounting entries.
4. Prepare a schedule showing the allocation of overheads between departments x, y and z of
Krisha Dutt Ltd. The overheads for the year to 31 December, are as follows:
Electricity 1280
Power 500
Plant depreciation 600
Plant insurance 150
Rent 1500
Material handling charges 1000
Repair and maintenance 500
The following information is also available :
Department X Y Z
Direct wages 12000 8000 15000
Material used 4000 4000 8000
Plant value 2000 1000 3000
Floor are(sq. feet) 1000 800 200
Number of direct operatives 25 15 10
Number of machines 20 30 50
5. Avril ltd operates 3 production departments x, y and z and two service departments a and b.
during the last financial year the department overhead absorption rates used were:
X 70% on departmental direct labour costs
Y $1.50 per machine hour
Z $0.60 per direct labour hour
Allowance is made in the rates for apportionment of the costs of the two service departments.
The overhead costs for the year were as follows:

Cost Accounting
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X Y Z A B
Indirect wages and supervision 3600 6000 1800 4800 2400
Repairs and maintenance 960 2160 360 240 120
Indirect material 1800 2760 1320 1080 1800

Power 900
Rent and rates 9600
Lighting and heating 6000
Depreciation- plant 12000
- fitting 300
Insurance - plant 2400
- buildings 600
The following data is available :
Department Effective
h.p
Area
occupied
(sq.ft)
Value of
plant
Value of
fittings
Direct
hours
Labour
cost
Machine
hours
X 80 4000 12500 2000 28800 41000 24000
Y 180 8000 30000 1000 41000 60600 43200
Z 30 6000 3750 4000 40400 48400 4000
A 10 1000 3750 2000 - - -
B - 1000 - 1000 - - -
The cost of service department A and B are allocated to other department on percentage:

Basis viz X Y Z A B
A 20 50 20 - 10
B 20 60 10 10 -

You are required to :
1. prepare an overhead analysis sheet showing the distribution of overhead costs to the
departments
2. show the over/under absorption of overheads during the year.
3. State the factors which gave rise to the over/under absorption.