NATIONAL MANAGEMENT COLLEGE – THUDUPATHI
COST ACCOUNTING
TEST – 1 – CMA INTERMEDIATE
TIME: 2 hours 15 min Maximum Marks: 75
SECTION – A (20*1=20 Marks)
1.which of the following is not an element of works overhead?
1.Sales manager’s salary 2. Factory repairman’s wages 3.Product inspector’s salary 4.Plant manager’s salary
- Costs which are ascertained after they have been incurred are known as (A) Sunk Costs (B) Imputed Costs (C) Historical Costs (D) Opportunity Costs
- Prime cost plus variable overheads is known as (A) Factory Cost (B) Marginal cost (C) Cost of production (D) Total cost
- In which of the following methods, issue of materials are priced atpre-determined rate? (A) Specific price method (B) Standard price method (C) Inflated price method (D) Replacement price method
- Bin card is a record of both quantities and value (A) True (B) False
- costs are historical costs which are incurred in the past.
- The main purpose of cost Accounting is (A) to maximize profit. (B) to help in inventory valuation. (C) to help in the fixation of selling price. (D) to provide information to management for decision making.
- Which of the following is considered to be a normal loss of material? (A) Loss due to accident (B) Pilferage (C) Loss due to breaking the bulk (D) Loss due to careless handling of material
- Which of the following items is not included in preparation of cost sheet? (A) Purchase returns (B) Carriage inwards (C) Sales commission (D) Interest paid
- Bin card maintained by the costing department. (A) True (B) False
- Charging to a cost center those overheads that result solely for the existence of that cost center is known as (a) Allotment (b) Allocation (c) Absorption (d) Apportionment
- Slow moving materials have a high turnover ratio (A) True (B) False
- There is inverse relationship between order size and carrying costs. (A) True (B) False
- The sum of direct material, direct wages, direct expenses and manufacturing overheads is known as conversion cost. (A) True (B) False
- In case of materials that suffers loss in weight due to evaporation etc. the issue price of the materials is inflated to cover up the losses (A) True (B) False
- Royalty payable based on the right to sell is treated as
- At the economic ordering quantity level, the following is true: (A) The ordering cost is minimum (B) The carrying cost is minimum (C) The ordering cost is equal to the carrying cost (D) The purchase price is minimum
- VED analysis is primarily used for control of
- Imputed costs involve actual cash outlay (A) True (B) False
- At EOQ total ordering cost per annum is ‘4,000. EOQ in units if carrying cost per unit per annum is ‘ 2.
SECTION –B
- (A) A store keeper has prepared the below list of items kept in the store of the factory.
| Item | Units | Unit cost (‘)
|
| A | 12,000 | 30.00
|
| B | 18,000 | 3.00
|
| C | 6,000 | 35.00
|
| D | 750 | 220.00
|
| E | 3,800 | 75.00
|
| F | 400 | 105.00
|
| G | 600 | 300.00
|
| H | 300 | 350.00 |
| I | 3,000 | 250.00
|
| J | 20,000 | 7.50
|
| K | 11,500 | 27.50
|
| L | 2,100 | 75.00
|
The store keeper requires your help to classify the items for prioritization. You are required to
APPLY ABC analysis to classify the store items as follows:
Store items which constitutes approx 70%, 20%, and 10% of total value as A, B and C respectively. 8 Marks
1.(B) At EOQ total ordering cost per annum is ‘4,000. Find EOQ in units if carrying cost per unit per annum is ‘2
2 Marks
2.EXPLAIN the difference between cost control and cost reduction 5 Marks
3.M/s. SJ Private Limited manufactures 20000 units of a product per month. The cost of placing an order is ‘ 1,500. The purchase price of the raw material is ‘ 100 per kg. The re-order period is 5 to 7 weeks. The consumption of raw materials varies from 200 kg to 300 kg per week. The average consumption being 250 kg .The carrying cost of inventory is 9.75% per annum.
You are required to calculate: (i) Re-order quantity (ii) Re-order level (iii) Maximum level (iv) Minimum level (v) Average stock level (5 Marks)
- The following are the details of receipt and issue of material ‘CXE’ in a manufacturing Co. during the month of April 2019:
| Date | Particulars | Quantity | Rate
per kg |
| April 4
April 8 April 15 April 20 April 25 April 26 April 28 |
Purchase
Issue Purchase Issue Return to supplier out of purchase made on April 15 Issue Purchase |
3,000
1,000 1,500 1,200 300 1,000 500 |
₹ 16
₹18
₹ 17 |
Opening stock as on 01-04-2019 is 1,000 kg @ ₹ 15 per kg. On 30th April, 2019 it was found that 50 kg of material ‘CXE’ was fraudulently misappropriated by the store assistant and never recovered by the Company. Required:
(i)Prepare a store ledger account under each of the following method of pricing the issue:
(a) Weighted Average Method (b) LIFO (iii) What would be the value of material consumed and value of closing stock as on 30-04-2019 as per these two methods? (10 Marks)
5.
From the following particulars with respect to a particular item of materials of a manufacturing company, calculate the best quantity to order:
| Ordering quantities (tone) | Price per ton (Rs.) |
| Less than 250 | 6.00 |
| 250 but less than 800 | 5.90 |
| 800 but less than 2,000 | 5.80 |
| 2,000 but less than 4,000 | 5.70 |
| 4,000 and above | 5.60 |
The annual demand for the material is 4,000 tonnes. Stock holding costs are 25% of material cost p.a. The delivery cost per order is Rs. 6.00. 8
6.
ZION LTD uses three types of materials A,B and C for production of product-P for which the following data apply:
| Raw
Material |
Usage per
Unit Of product (kgs) |
Reorder
Quantity (kgs) |
Price
Per Kg (Re.) |
Delivery period
(in week) |
Reorder level
(kgs) |
Minimum level
(kgs) |
||
| Minimum | Average | Maximum | ||||||
| A | 10 | 10000 | 0.10 | 1 | 2 | 3 | 8000 | ? |
| B | 4 | 5000 | 0.30 | 3 | 4 | 5 | 4750 | 1550 |
| C | 6 | 10000 | 0.15 | 2 | 3 | 4 | ? | 2000 |
Weekly production varies from 175 to 225 units, averaging 200 units of the said product.
What would be the following quantities? (i) Minimum stock of A, (ii) Maximum stock of B, (iii) Re- order level of C, (iv) Average stock level of A
- PANCHAL LTD, a toy manufacturer earns an average net profit of Rs. 1.80 per price on a selling price of Rs. 16.50 by producing and selling 12000 pieces or 60% of the capacity. His cost of sales per toy is as under:
Amount (Rs.) Direct material 4.25 Direct wages 1.60 Works Overheads(40% fixed) 7.15 Sales Overheads (30% fixed 0.90
During the current year, he intends to produce the same number of toys but anticipates that fixed cost will go up by 10%. Direct wages and material will increase by 6% and 4% respectively but he has no option of increasing the selling price. Under this situation, he obtains an offer for further sale of 20% of the capacity.
Required:
What minimum price you will recommend for acceptance of the offer to ensure the manufacturer an overall profit of Rs. 30,100? 8
(Show your calculations upto 3 decimal points.)
