ARYAN COLLEGE

LAST YEARS SCANNER BBA-II COST ACCOUNTING

Unit-I- Introduction to Cost Accounting & Material Control

1. (a) What is meant by Cost Accounting? List down any 8 factors that you will consider for installing a costing
system. (2018)
(b) Write short note on Economic Order Quantity’.
2. The particulars of receipts & issue of an item of stores for the month of July 2017 are as follows: (2018)
2017
July ,1 Opening balance 600tonnes @ Rs.10 per tonne.
July , 7 (reg No 415) 400 tonnes Issue
July, 10 Receipt ( G R No. 365) 700 tonnes @ Rs. 11 per tonne
July, 16 Issue ( reg No 515) 250 tonnes
July , 24 Receipt ( G.R.No. 380 ) 200 tonnes @ Rs.12 per tonne
July ,28 Issue ( Reg No. 681) 500 tonnes
Prepare Stores Ledger Account on the basis of above particulars assuming that materials are issued on the basis
of:
(i) First In First Out
(ii) Last in First Out
(iii) Simple Average Method
(iv) Weighted Average Method
3. What is the scope of Cost Accounting? Elaborate the practical difficulties faced by a cost accountant in installing
a costing system. (2017)
4. a)The annual demand for an item is 3,200 units. The unit cost is Rs. 6 and the inventory carrying cost is 25% per
annum. If the cost is Rs. 150, determine: (2017)
i) Economic Order Quantity ii) Time between two consecutive orders.
b) A timber merchant purchased 12,000 c.ft. timber logs on 1 st September,2014 @ Rs.10 per c.ft. and stored them
in his timber yard , the following items of expenses were incurred during the period of seasoning: (2017)
i) Rent of the yard (area 3,000 sq.ft.) @ Rs.300 per month
ii) Salaries of 5 watchmen @ Rs.120 each per month
iii) Expenses for maintenance, lighting etc @ Rs. 200 per month.
iv) Annual share of general overhead expenses of the business Rs.3,000.
v) Insurance charges for the logs to be seasoned @ 1% on the value of the un-seasoned logs for the period of
seasoning.
50% of the floor area of the yard has been set apart for seasoning of timber and the remaining floor area for
stacking seasoned timber. Loss in the volume of timber logs due to seasoning is 10%.
Calculate the selling price of the seasoned log per c.ft. to the nearest rupee on 1 st March,2015 so that 20% profit
on the cost may be earned.
5. What is meant by Cost Accounting? Explain the nature, objects and advantages of Cost Accounting.(2016-S)
6. Ms. Truth, a textile dealer in Warangal commenced business on 1 January 2016, textile materials used include
two types M and N.
During six months ended on 30th June 2016, purchases were as follows: (2016-S)
Jan 4 500 meter of type M @ Rs. 20 per meter
Jan 6 800 meter of type N @ Rs. 30 per meter
March 18 1150 meter of type M @ Rs. 24 per meter
April 16 1500 meter of type N @ Rs. 32 per meter
May 26 400 meters of type M @ Rs. 19 per meter

Issues were as follows:

Jan 7 350 meters of M
Jan 12 600 meters of N
March 28 710 meters of M
April 22 1430 meters of N
June 6 790 meters of M
Write out the complete stores ledger card in respect of above transactions using (a) LIFO and (b) FIFO methods
7. (2016)
(a) What do you mean by installation of costing system?
(b) What is meant by cost accounting? Explain briefly the nature and scope of cost accounting.
8. Components A & B are used weekly as follows:(2016)
Normal Usage 150 Units
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 Maximum Usage 225 Units
Minimum Usage 75 Units
Reorder Quantity A – 1200 Units : B – 1800 Units
Reorder period A – 4 to 6 Weeks : B – 2 to 4 Weeks
Calculate for each component
(a) Re-order level (b) minimum level (c) maximum level (d) average stock level
9. “Cost accounting system is neither unnecessary nor expensive, rather it is profitable investment.” Comment and
explain the procedure to be followed for installing a costing system in a factory. (2015)
10. A firm maintains its store ledger on the FIFO method. During the month of April,2014 , the following receipts &
issues of materials were made. Record the transactions in the stores ledger charging wastage & shortage
(a) As factory overhead & (b) At inflated Price.(2015)
2014
April 1 Opening Balance 400 kgs. @Rs.10 per kg.
April 3 Receipts 500 Kgs. @ Rs.6 per kg.
April 5 Issue 500 Kgs.
April 7 Receipts 400Kgs. @ Rs.8 per kg.
April 15 Wastage (as per stock verification report) 10Kgs.
April 20 Receipts 500 Kgs. @ Rs.10 per kg.
April 25 Issue 850 Kgs.
April 26 Shortage 40 Kgs.
April 30 Receipts 100 Kgs. @ Rs.12 per kg.
11. What is meant by cost accounting? Explain briefly the nature and scope of cost accounting. (2014)
12. “Costing is an essential tool of management.” Comment and list out the points that a cost accountant should keep
in mind before installing a costing system in an organisation.(2014)
13. An abstract of Stores Ledger Account is given below: (2014)
Date Receipts Issue
Qty. Rate Amount Qty. Rate Amount
units (Rs.) units (Rs.)
Jan.2 4,000 1.80 7,200 - - -
Jan.6 2,000 1.75 3,500 - - -
Jan.15 - - - 10,000 19,500
Jan.20 - - - 5,000 9,750
Jan.22 3,000 1.85 5,500 - - -
Jan.25 3,000 1.90 5,700 - - -
Jan.31 - - - 10,000 19,200
Opening stock on 1st January was 20,000 units valued at Rs. 40,000. Closing stock as per physical verification on
31st January was 6,950 units.
Work out the method of pricing which you consider to have been used for the issue of materials and show the
working of the issue rate. Complete Store Ledger Account of the material and find out the value of closing stock.
14. What is meant by cost accounting? Explain briefly the objects and advantages of cost accounting. (2013)
15. Prepare a stores ledger account showing the issue of material on :a.FIFO b.LIFO.From the following
information. (2013)
Receipts Issues
Date Unit Rate(Re.pu) Date Unit
3.01.2013 2,000 1.00 4.01.2013 500
5.01.2013 3,000 1.40 7.01.2013 2,000
10.01.2013 2,000 1.50 15.01.2013 3,000
20.01.2013 3,000 1.80 25.01.2013 2,500

Unit-II- Labour Cost control & Overhead control

1. The following information relate to a Truck of 5 ton capacity: (2018)

Cost of Truck Rs.2,00,000
Insurance (annual) Rs.4,800
Road tax (Annual) Rs.2,400
Estimated Life 10 Years
Cleaners wages (monthly) Rs. 250.
Drivers Wages (monthly) Rs.500
Supervision (Annual) Rs.4,800
Repairs(monthly) Rs.500

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 Diesel, oil,etc trip each way Rs.18
One round trip day of 60kms each way capacity utilized 100% for outward trip & 20% on return trip. Average
operating day 25 days trip in a month. You are required to find out
(a) Operating cost per ton km.
(b) Rate per ton per trip to be changed to earn a profit of 50% on freight to be charged.
2. What do you mean by labour Turnover ? Discuss various methods of its measurement & explain the importance
of “ Labour Turnover’ on working of a manufacturing concern. (2018)
3. Discuss 3 important methods of absorption of factory overheads. Explain how you treat over- absorption & under-
absorption in cost accounting. (2018)
4. What earning will a workman receive under the following incentive schemes if he executes a piece of work in 120
hours as against 150 hours allowed to him.His hourly rate is Rs. 2.50 and he gets a dearness allowance of Rs. 10
per day of 8 hours worked in addition to his wages: (2017)
(i) Hasley Premium plan, 50% bonus to workers
(ii) Rowan premium plan
(iii) Emerson Efficiency plan
5. Define ‘overhead’. Give functional classification and explain fixed, variable and semi variable overheads in
detail. (2017)
6. What do you mean by ‘Labour Turnover’? What are different methods to calculate it? Explain with example.
(2016-
S)
7. A machine shop contains four newly purchased machines. Each occupying practically equal space and costing
respectively: (2016-S)
A-Rs. 20,000, B-25,000, C-Rs.30, 000 D-Rs.40, 000.
The following are the expenses per annum of the machine shop:
Rent 10, 000 Power A 5100 Power D 14,500
Rates & Water 4200 Power B 5000 Adminis. Exp. 9500
Light & Fuel 7150 Power C 12, 000 Running Exp. 20,000
Prepare a machine hour rate for each machine assuming 45 hours a week, 50 weeks per year, 80% utilisation the
life of machines being 10 years each without any scrap value.
8. What earning will a workmen receive under the following incentive schemes if he executes a piece of work in 120
hrs as against 150 hrs allowed to him. His hourly rate is 25 paisa & he gets a dearness allowance of Re.1 per day
of 8 hrs worked in addition to his wages: (2016)
(a) Halsey Premium Plan (b) Rowan Plan (c) Emerson’s efficiency Plan
9. Short Notes: (2016)
(a) Labour Turnover (b) Functional Classification of Overheads (c) Machine Hour-Rate (d) Departmentalisation
of overheads
10. Describe in detail a system of payment of wages in a large factory showing clearly the save guards you would
employ against fraud or theft. (2015)
11. What do you mean by “absorption of overhead”? Explain the different methods of absorptions of overheads. You
are also required to explain their relative advantages and disadvantages. (2015)
12. What do you understand by labour turnover? How is it measured? What are its causes? How can labour turnover
be minimised? (2014)
13. Define Overhead. What are the different methods of classifying overhead? Indicate the advantages of classifying
overhead into fixed in variable. (2014)
14. From the following information, Calculate wages under Emerson’s efficiency Scheme: (2013)
Standard time: 8 hrs
Standard Production : 100 Units
Time Rate : Rs.20 per hr
Actual Output Units : 60 ,70 ,85 , 95, 100, 110
Bonus Rate :
Efficiency % : 66.7-70 70-80 80-90 90-100
Bonus: 2% 8% 14% 20%
15. “Classification of overhead into fixed and variable is highly helpful to the management for efficient running of the
factory” Discuss. (2013)
16. A machine costing Rs.2,00,000 is expected to run for 10yrs.Its estimated scarp value is Rs.20,000.Installation
charges are Rs.6,000.Repairs for 10yrs life is expected to be Rs.25,000 & the machine is expected to run for 3,000
hrs in a yr.It will consume power at 15 units per hr @Rs.2p.u. The machine occupies 1/5 th of the area of the
department & has 2 pints out of 6 in the department for lighting. The foreman has to devote about 30% of his time
for this machine.The rent & rates of the department is Rs.5,000 per month, Lighting & heating Rs.1,200 per
month.The Foremen’s salary amounts to Rs.4,000 per month .Insurance is @ 2% p.a. of cost of machine &
expenses for oiling , greasing etc .are Rs.900 per month.
Find out machine hr rate of this machine for the recovery of fixed expenses & the machine expenses separately.

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 (2013)
Unit-III- Cost Ascertainment, Contract, Operating & Process Costing, Reconciliation of Cost & Financial Acc.

1. Ram Bros. Undertook a contract to construct a school building for Rs.6,00,000 which was completed in 2
years. They did the following expenses in 2 yrs:
I Year II Year
Material Issued 1,05,000 1,50,000
Wages Paid 57,000 1,25,000
Wages Accrued 5,000 -
Other Expenses 15,000 30,000
Cash Received (being
75% work certified) 2,25,000 Full
Cost of work Uncertified 2,000
Prepare the contract account for both the years.
2. Write short notes on the following: (2018)
(a) Abnormal Effectives
(b) Joint Product
(c) Cost Sheet(Unit I)
(d) Rown Premium Plan(Unit II)
3. From the following particulars, calculate the profit as revealed by cost records and financial records and also
prepare a ‘Reconciliation’ statement :
(2017)
Rs.
Opening stock of raw material 50,000
Opening stock of Finished Goods 1,50,000
Purchase of Raw materials 3,50,000
Direct Wages 1,50,000
Fatory lighting 3,000
Factory Rent 24,000
Power and Fuel 30,000
Indirect wages 2,500
Depreciation on Plant and Machinery 50,000
Oil,Waste,etc 2,000
Works managers salary 23,000
Office Rent 18,000
Office Lighting 600
Miscellaneous factory expenses 1,250
Depreciation on office appliances 2,000
Salaries of administrative staff 20,000
Closing stock of finished goods 50,000
Closing stock of Raw material 75,000
Donations 10,000
Factory overhead is charged at 20% on Prime cost and office expenses at 50% of factory overhead.
The selling price has been fixed by adding 25% on the total cst of manufactured and finished articles sold.

4. a) What is ‘Operating Cost Method’ ? To what concerns is this method applicable? (2017)
b) Differentiate between ‘Absolute tonne kilometers’ and ‘Commercial tonne kilometeres’. Explain and illustrate
with example.
5. A product passes through two processes, Vis A and B. Prepare process accounts from the following:
Process A Process B
10,000 units introduced at a cost of Rs. 20,000 -
Materials consumed Rs. 24,000 Rs. 12,000
Direct Labour Rs. 28,000 Rs. 16,000
Manufacturing Expoenses Rs.8,000 Rs.8,566
Normal wastage on Input 5% 10%
Scrap value oif normal wastage(per Rs. 40 Rs. 50
100 units)
Output in units 9,400 8,500
Also prepare Abnormal wastage/ Effective account, as the case may be, with each process account.

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 6. From the following information given by a manufacturing company which manufactures a product. You are
required to prepare process accounts. (2016-
S)
Process I Process II Process III
Finished goods sold for Rs. 1, 30,000. Value of closing
Direct 30,000 7,500 7,500 finished stock Rs. 5,612. It is the policy of the company to
Material charge 20% on transfer price or 25% on cost price while
transferring the goods from process I to process II and 20%
Direct 22,500 15,000 15,000 on cost price from process II to process III and from process
wages III to the finished stock.
7. Mr. RVS took a contract for the construction of a
Closing 7,500 8,750 21,300
cinema building on 1st April, 2015. The contract
stock
price was Rs. 75, 00,000. The following details
are available at the end of 31st March, 2016:
(2016-S)
Rs.

Material Issued 12,00,000

Labour paid and accrued 4,50,5000

Plant Issued 6,00,000

Direct Expenses 3,00,000

Establishment charges 75,000

Materials returned to stores 75,000

Wages Outstanding 90,000

Direct Expenses accrued 1,20,000

Material issued from stores 1,50,000

Cash received( 80% of work 30,00,000

certified )

Work uncertified 7,50,000

Materials in hand 30,000

Plant in hand 4,50,000

Prepare the Contract Account and show the amount that would appear in the Balance Sheet.
8. What do you understand by reconciliation of cost and financial accounts? Why is reconciliation of cost and
financial accounts necessary? Give any eight items which appear in the financial accounts but do not appear
in the cost accounts.
(2016-S)
9. What is meant by “Contract Costing Method”? Is it desirable to take into account the profit on incomplete
contracts at the date of balance sheet? If so, why and to what extent? (2016)
10. Explain the following:
(2016)
(a) Absolute Tonne Km
(b) Objectives of reconciling cost profit with financial profit
(c) Characteristics of cost sheet
11. The production of a company passes through 3 distinct processes to completion. The expenses & other details
were as follows: (2016)
Process A(Rupees) Process B(Rupees) Process C(Rupees)
Input 4000 units at 13,560 - -
Materials 12,000 10,000 9,000
Direct Labour 16,000 5,000 4,900
Manufacture Expenses 2,000 3,400 3,590

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 Other works expenses 3,500 2,005 2,004
Other Information:
Normal Wastage 2% 4% 2.5%
Sale of Normal wastage(Re.p.u.) 0.25 0.50 0.60
Output(in units) 3,850 3,600 3,500
Prepare Process Account & Work out the Sale price per unit of the finished output so as to realise 20% profit on
selling price.
12. Jaipur Construction company undertook a contract for the construction of a Bridge. On 1 st January,2014, the
following balances were revealed from the costing records in respect of that contract: (2015)
Materials at site 7,500
Plant at site 18,000
Work certified ( Value) 1,80,000
(Cash Received 80%)
Cost of work uncertified 30,000
Profit reserved 10,500
During this year the following expenses were incurred:
Rupees.
Materials 24,000
Wages 32,000
Wages approved on 1.1.14 1,500
Material at site certified work during the yr(Value) 1,80,000
Uncertified work(Cost) 1,100
Wages approved on 31.12.2014 2,100
Administrative expenses paid during the yr 1,800
Administrative approved on 1.1.2014 300
Contract price 4,00,000

Depreciation on Plant is to be provided @10 % per annum. Material costing Rs,830 was found unsuitable for the
contract & was sold for Rs.790.Prepare Bridge Contract Account for the year ending 31 st December ,2014 & state
as to what profits should be taken to P&L account.
13. What is meant by “Operating Costing”? In which industries it is used? Prepare a transport operating cost sheet
with imaginary figures and discuss the various items included in it. (2015)
14. Prepare Memorandum Reconciliation Account on the basis of the following information obtained from the
books of a manufacturing unit for the yr 2013-14:
(2015)
Rupees.
Profit as per cost record -estimated 3,44,800
Profit as per financial books -actual 2,57,510
Works overhead under – absorbed in cost acc. 6,240
Administrative overhead over - absorbed in cost acc. 5,000
Selling overhead recovered less in cost acc. 1,600
Depreciation absorbed in cost acc. 25,000
Depreciation charged in financial books 22,400
Loss due to obsolescence charged in financial books 11,400
Interest on investments not included in cost acc. 16,000
Income tax provided in financial books 80,600
Bank interest & transfer fees accounted in financial books only 1,500
Stores adjustment credited in financial books only 950
Loss due to depreciation in stock values accounted for financial books only 13,500

15. From the following particulars calculate the profit as revealed by cost records & financial records & also
prepare a reconciliation statement.
(2014)
Rs.
Opening Stock of raw material 50,000
Opening stock of finished goods 1,50,000
Purchases of Raw Material 3,50,000
Direct Wages 1,50,000
Factory Lighting 3,000

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 Factory rent 24,000
Power & Fuel 30,000
Indirect wages 2,500
Depreciation on plant & machinery 50,000
Oil , Waste etc 2,000
Works manager’s salary 23,000
Office rent 18,000
Office lighting 600
Misc. factory expenses 1,250
Depreciation on office appliance 2,000
Salaries of administrative staff 20,000
Closing stock of finished goods 50,000
Closing stack of raw material 75,000
Donation 10,000

Factory overheads is charged at 20% of prime cost & office & administrative expenses at 50% factory overhead.
The selling price has been fixed by adding 25% on the total cost of manufactured & finished articles sold.

16. Product A yields by Product X & Y, the joint & subsequent expenses of manufacture were as follows:
(2014)
Joint Expenses Subsequent Expenses
Rs. A(Rs.) X(Rs.) Y(Rs.)
Materials 1,12,000 40,000 25,000 13,000
Labour 80,000 42,000 30,000 12,000
Overheads 90,000 44,000 20,000 10,000
2,82,000 1,26,000 75,000 35,000
Selling Prices 5,10,000 2,10,000 1,00,000
Estimated Profit on 40% 30% 20%
selling price
Show the manner in which the joint expenses of manufacture are apportioned between three production accounts
& prepare the production accounts.

17. The production of a company passes through 3 distinct processes to completion .The expenses & other details
were as follows: (2013)
Process A(Rs.) Process B(Rs.) Process C(Rs.)
Input 4,000 units at 13,560 - -
Materials 12,000 10,000 9,000
Direct Labour 16,000 5,000 4,900
Mfg. Expenses 2,000 3,400 3,590
Other works expenses 3,500 2,005 2,004
Normal wastage 2% 4% 2.5%
Sale of normal wastage(p.u.) 0.25 0.50 0.60
Output(in units) 3,850 3,600 3,500
Prepare Process Accounts & workout the Sale price per unit of finished output so as to realise 20% profit on
selling price.
18. State the reasons for disagreement between the costing and financial results. Prepare an imaginary
reconciliation statement.
(2013)

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