Problem 1

• Assertion the prime cost, work cost, cost of productions, total cost
and profit of the understanding figures
• Cost of Material Rs 8,000
• Direct labour Rs 4,000
• Factory expenses Rs 2000
• Administration expenses Rs 1000
• Selling expenses Rs 1200
• Sales Rs 25,000

11/6/2019 DR RAJA NARAYANAN. M.Com, M.Phil, PhD. 1

 Problem 2
• ABC Ltd., will produce one product, which require the following inputs, in the following forthcoming
quarter
Direct Materials 1Kg @ 6.50 Per kg
Direct Labour 1 hour @ 5 per hour
Rent Rs 5,000 per quarter
Leased machines Rs 2,500 for every 120 units
Maintenance cost Rs 999 per quarter Plus Rs1.50 per unit

• Calculate the total cost of production and the cost per unit for each of the following production level
• 100 Units
• 300 Units
• 600 units

11/6/2019 DR RAJANARAYANAN.M.Com.,M.Phil.,PhD 2
Problem 3
From the following figures relating to two components A and B, compute Reorder Level,
Minimum Level, Maximum Level and Average Stock Level.

Particulars Component A Component B

Maximum consumption per week 100 units 100 units

Average consumption per week 60 units 60 units

Minimum consumption per week 40 units 40 units

Reorder period 6 to 8 weeks 2 to 4 weeks

Reorder quantity 800 units 1000 units

11/6/2019 DR RAJA NARAYANAN. M.Com, M.Phil, PhD. 3

Problem 4
• From the following particulars, compute Economic Order Quantity
• Annual consumption = 8, 10, 000 units
• Order placing and receiving costs: Rs.10 per order Annual stock
holding stock: 20% of consumption
Problem 5
Bike LTD purchased 20 bikes during January and sold 12 bikes, details of which are
as follows:
• January 1 Purchased 10 bikes @ Rs 100 each
• January 5 Sold 3 bikes
• January 10 Sold 5 bike
January 15 Purchased 8 bikes @ 120 each
January 16 Purchased 2 bikes @ 130 each
• January 25 Sold 9 bikes
• Show the statement of stock order under FIFO and LIFO

11/6/2019 DR RAJA NARAYANAN. M.Com, M.Phil, PhD. 5

Problem 6
During October 2018, the following information is obtained from the
Personnel Department of a manufacturing company. Labor force at the
beginning of the month 1200 and at the end of the month 1500. During the
month, 75 people left while 60 persons were discharged. 320 workers
were engaged out of which only 50 were appointed in the vacancy created
by the number of workers separated and the rest on account of expansion
scheme. Calculate the labor turnover by
i. Addition method
i. Separation method
ii. Replacement method
iii. Flex method
•
11/6/2019 DR RAJA NARAYANAN. M.Com, M.Phil, PhD. 6
Problem 7
From the following particulars, calculate the earnings of workers X and
Y and also comment on the labor cost under Tailor method. Standard
time allowed: 20 units per hour Normal time rate: Rs.30 per hour
Differential to be applied:
• 80% of piece rate when below standard
• 120% of piece rate at or above standard
In a particular day of 8 hours, X produces 140 units while Y produces
165 units

11/6/2019 DR RAJA NARAYANAN. M.Com, M.Phil, PhD. 7

Problem 8
• X, Y and Z are three workers working in a manufacturing company and
their output during a particular 48 hours week was, 96, 111 and 126
units respectively. The guaranteed rate per hour is Rs.12 per hour, low
piece rate is Rs.6 per unit, high piece rate is Rs.8 per unit. High task is
120 units per week. Compute the total earnings and labor cost per
unit under Taylor, Merrick and Gantt Task Bonus Plan.

11/6/2019 DR RAJA NARAYANAN. M.Com, M.Phil, PhD. 8

11/6/2019 DR RAJA NARAYANAN. M.Com, M.Phil, PhD. 9
 Problem 10
ABC Limited is an engineering company which uses job costing to attribute costs to individual
products and services provided to its customers. It has commenced the preparation of its fixed
production overhead cost budget for 2018 and has identified the following costs:
Machining (in thousand) 400
Assembly (in thousand) 125
Finishing (in thousand) 75
Stores (in thousand) 100
Maintenance (in thousand) 60
The stores and maintenance departments are production service departments. An analysis of the
services they provide indicates that their costs should be apportioned accordingly:
Machining Assembly Finishing Stores Maintenance
Stores 40% 30% 20% — 10%
Maintenance 55% 20% 20% 5% —
The number of machine and labour hours budgeted for 2018 is:
Machining Assembly Finishing
Machine hours 60 000 4 000 5 000
Labour hours 10 000 20 000 15 000
Required: Calculate appropriate overhead absorption rates for each production department for
2018
11/6/2019 Meshack Letlhare ACMA, CGMA 10
•Problem 11
•A company uses process costing to value its output and all materials are input at the start of the process.
The following information relates to the process for one month.
•Input 3000 Units
•Opening stock 400 Units
•Losses 10% of inputs is expected to be lost
•Closing stock 200 Units
•How many goods units were outputs from the process if actual losses were 400 Units?

11/6/2019 DR RAJANARAYANAN M.Com., MPhil., PhD 11

• Problem 12
• Process B had no opening stock. Rs 13,500 Units was of raw material were
transferred in at Rs 4.5 per Unit. Additional material at 1.25 per unit was added in
process. Labour and overheads were Rs 6.25 per completed unit and Rs 2.50 unit
incomplete.
• If 11,750 completed units were transferred out, what was the closing stock in
Process B?

11/6/2019 DR RAJANARAYANAN M.Com., MPhil., PhD 12

 • Problem 5
• Product XYZ is obtained after it passes through three distinct processes. The following
information is obtained from the accounts for the week ending on 31st March 2018
Particulars Total Amount Process I Process II Process III
Direct material 12695 4000 3633 5062
Direct wages 5000 1500 2000 1500
Production overheads 10000

• 100 units @ Rs. 50 each were introduced in Process I. There was no stock of materials or
work in progress at the beginning or at the end of the period. The output of each process
passes direct to next process and finally to finished store. Production overheads are
recovered on 200% of direct wages. The following additional data are obtained
Output during % of normal Value of scrap
Particulars the week loss to input per unit

Process I 95 units 5% Rs. 25

Process II 72 units 20% Rs. 20

Process III 60 units 25% Rs 25.

• Prepare Process Cost Accounts

11/6/2019 DR RAJANARAYANAN M.Com., MPhil., PhD 13
 Problem 14
• Assuming that the cost stricture and selling prices remain the same in periods I
and II find out
• P/V ratio
• B.E. Sales
• Profit when sales are 100,000
• Sales required to earn profit of 20,000
• Margin of safety in II nd period
• Period Sales Profit
• I 120,000 9,000
• II 140,000 13,000

11/6/2019 DR RAJANARAYANAN M.Com., MPhil., PhD 14

Problem 15
• The following information's are given for two companies
X Ltd Y Ltd
Unit Produced and sold 17,000 17,000
Revenues Rs 170,000 Rs 170,000
Fixed Cost 85,000 34,000
Operating income 51,000 51,000
Variable cost 34,000 85,000

• Find out the BEP of each company both in units as well as in volume.

11/6/2019 DR RAJA NARAYANAN. M.Com, M.Phil, PhD. 15