COSTING

ASSIGNMENT ( 20 Marks)

1. XYZ Ltd furnishes you the following income information for the year 2010
Particulars

First half (INR)

Second half (INR)

Sales

810000

1026000

Profit earned

21600

64800

From the above, you are required to compute the following assuming that the fixed cost
remains the same in both the periods: 1) P/V Ratio 2) Fixed Costs 3) The amount of profit
or loss where sales are Rs 648000 and the amount of sales required to earn a profit of Rs
108000
2. What do you mean by operating costing? State and explain few important features of
operating costing.
3. What is Cost accounting? Highlight few important differences between financial
accounting and cost accounting.
4. While doing costing in a transportation company, the types of costs are divided into
standing charges/fixed costs and running charges/maintenance charges/variable charges.
State 5 examples each for such costs.
5. A manufacturing unit uses 4000 varieties of inventory. In terms of inventory holding and
inventory usage the following information is compiled:
No. of varieties of
inventory

% value of
inventory holding
(average)

% of inventory
usage in endproduct

3875

96.875

20

110

2.75

30

10

15

0.375

50

85

Classify the items of inventory as per ABC analysis with reasons.

6. Calculate the economic order quantity from the following information. Also state the
number of orders to be placed per year. (7 marks)
Consumption of material per annum: 10000 kg
Order placing cost per order
: Rs. 50
Cost per kg of raw materials
: Rs. 2
Storage costs
: 8% on average inventory
7. How do you treat the following items in cost a cost sheet?
i.
Material and labor cost
ii.
Selling expenses
iii.
Factory managers salary
iv.
Audit fees
v.
Interest on loan
8. What is marginal costing? How does it help the management in the decision making
process?
9. Following are the costs incurred by a garment manufacturing company:
i.
Compact discs for general office computer
ii.
Expenses on maintenance contract for photocopying machine
iii.
Expenses on road license for delivery vehicle
iv.
Expenses on market research before the product launch
v.
Cost of painting advertisement slogans in delivery vans
vi.
Cost of trade magazine
vii.
Expenses on upkeep of delivery vehicle
viii. Wages of operative in cutting department
ix.
Interest on bank overdraft
x.
Lubricant for sewing machines
Classify the above costs into different types of costs stating reasons.
10. Productivity of workers can be improved only if they are supervised closely. Do you
agree? Give your analysis with a case.