Cost Question

1 . Cost accounting is becoming more and more relevant in the emerging economic scenario in India. Comment.
2 . An efficient system of costing is essential factor for industrial control under modern conditions of business and as such may be regarded as an
important part
in the efforts of any management to secure business stability. Elaborate.
3 . From the following transactions extracted from the books of accounts of a manufacturing concern as on 31 April 2011. Work out a)
consumption value of raw
material in the month and b) value of closing stock as on 31 April 2011 under the FIFO method of pricing issues:
Quantity in Units Rate per unit (Rs.)
2010 April 1 Opening Stock 300 9.7
2010 April 3 Purchases 250 9.8
2010 April 11 Issues 400
4 . From the following information prepare a cost sheet showing cost profit per unit
Direct materials consumed
Rs.4, 00,000
Direct labour
40% of direct material cost
Direct expenses
50% of direct labour cost
Factory overheads
25% of prime cost
Office and admin expenses are @ Rs.150 per 10 units produced

Selling & distribution overheads are Rs. 500 per 100 units sold
Opening finished stock
800 units @ Rs.85.50
Closing stock
400 units
Finished goods sold
16,400 units
Profit
1/6 th of sales
5 . Answer any three questions of the following:

a. Explain product cost and period cost with 2 examples of each.
b. What is meant by direct material cost?
c. Find out the cost of raw material purchased from the data given below:
Particular Amount
Prime cost 200000
Closing stock of raw material 20000
Direct labour cost 100000
Expenses on purchases 10000
d. Distinguish between costing and cost accounting.
e. Define batch costing. Give examples of industries which adopt batch costing.
6 . Mosaic Co. Ltd has three production depts A, B & C and two service depts D & E. Info:
Rent Rs. 5000
Indirect wages Rs. 1500
Power Rs.1500
Depreciation of Machinery Rs.10000
General lighting Rs. 600
Sundry expenses Rs. 10000
Floor space
(sq.ft.)
Light points
Direct wages (Rs.)
H.P. of machines
Value of machines (Rs.)
Prepare a statement showing distribution of overheads to various departments.
7 . The following information is provided to you:
Selling price per unit
Rs. 40
Variable cost
Rs. 24
Fixed costs
Rs. 6
Profit
Rs. 10
Present sales volume is 2000 units
Calculate:
(a) P/V ratio (b) BEP (c) Margin of safety (d) profit at a sales volume of 2500 units (e) sales required to earn a profit of Rs. 26,000
8 . What are budget and budgetary control? Discuss the advantages and essential for success of budgetary control.
Case Detail :
Read the case below and answer the questions given at the end
Case Study
Coffee Cart Supreme sells hot and iced coffee beverages and small snacks. The
following is last months income statement.
Particulars Amount $ Amount $

Revenue 5000
Cost of Beverage & snacks 2000
Cost of napkins, straws etc 500
Cost of rent cart 500
Employee wages 1000 4000
Pre tax profit 1000
Taxes 250
After tax profit 750
1. What is the total cost function for Coffee Cart Supreme? What is the tax rate for Coffee Cart Supreme?
2. Calculate the amount of sales needed to reach a target after-tax profit of $1,500.
3. What was Coffee Cart Supremes degree of operating leverage and Coffee Cart Supremes margin of safety in revenue last month?
Question No. 1 Marks - 10
Which of the following statement measures the financial position of the entity on particular time?
Options
Income Statement
Balance Sheet
Cash Flow Statement
Statement of Retained Earning
The Process of cost apportionment is carried out so that--
Options
Cost may be controlled
Cost unit gather overheads as they pass through cost centers
Whole items of cost can be charged to cost centers
Common costs are shared among cost centers
Direct materials cost is Rs. 80,000. Direct labor cost is Rs. 60,000. Factory overhead is Rs. 90,000. Beginning goods in process were Rs. 15,000.
The cost of goods manufactured is Rs. 245,000. What is the cost assigned to the ending goods in process?
Options
Rs. 45,000
Rs. 15,000 Rs.
30,000
There will be no ending Inventory Solution
1.
When prices are rising over time, which of the following inventory costing methods will result in the lowest gross margin/profits?
Options
FIFO
LIFO
Weighted Average
Cannot be determined
1.
The main difference between the profit center and investment center is--
Options
Decision making
Revenue generation
Cost in occurrence
Investment
1.
Which of the following is a characteristic of process cost accounting system?
Options
Material, Labor and Overheads are accumulated by orders
Companies use this system if they process custom orders
Opening and Closing stock of work in process are related in terms of completed units
Only Closing stock of work in process is restated in terms of completed units
1.
Which of the following manufacturers is most likely to use a job order cost accounting system?
Options
A soft drink producer
A flour mill
A textile mill
A builder of offshore oil rigs
1.
Production volume of 1,200 units cost incurred Rs. 10,000 and production volume of 1,400 units cost incurred Rs.20, 000.
The variable cost per unit would be?
Options
Rs. 50.00 per unit
Rs. 8.33 per unit
Rs. 14.20 per unit
Rs. 100 per unit

1.
Cost accounting concepts include all of the following EXCEPT--
Options
Planning
Controlling
Sharing
Delegating.
1.
The main purpose of cost accounting is to--
Options
Maximize profits
Help in inventory valuation
Provide information to management for decision making
Aid in the fixation of selling price
1.
Period costs are --
Options
Expensed when the product is sold
Included in the cost of goods sold
Related to specific Period
Not expensed
1.
An organization sold units 4000 and have closing finished goods 3500 units and opening finished goods units were 1000.The quantity of unit
produced would be--
Options
7500 units
6500 units
4500 units
5500 units
Examples of industries that would use process costing include all of the following EXCEPT
Options
Beverages
Food
Hospitality
Petroleum
1.
The components of the prime cost are--
Options
Direct Material + Direct Labor + Other Direct Cost
Direct Labor + Other Direct Cost + FOH
Direct Labor + FOH
None of the given options
Opportunity cost is the best example of--
Options
Sunk Cost
Standard Cost
Relevant Cost
Irrelevant Cost
1.
Fixed cost per unit decreases when--
Options
Production volume increases.
Production volume decreases.
Variable cost per unit decreases.
Variable cost per unit increases.
Prime cost + Factory overhead cost is--
Options
Conversion cost.
Production cost.
Total cost.
None of given option.
1.
Find the value of purchases if Raw material consumed Rs. 90,000; Opening and closing stock of raw material is Rs. 50,000 and 30,000
respectively.
Options
Rs. 10,000
Rs. 20,000
Rs. 70,000
Rs. 1,60,000
1. Annual requirement is 7800 units; consumption per week is 150 units. Unit price Rs 5, order cost Rs 10 per order. Carrying cost Rs 1 per unit
and
lead time is 3 week, The Economic order quantity would be--
Options
365 units.
300 units
250 units
150 units
For which one of the following industry would you recommend a Job Order Costing system?
Options
Oil Refining
Grain dealing
Beverage production
Law Cases
______________ method assumes that the goods received most recently in the stores or produced recently are the first ones to be delivered to
the requisitioning department.
Options
FIFO
Weighted average method
Most recent price method
LIFO
Cost of production report is a _________________.
Options
Financial statement
Production Process report
Order Sheet
None of above

Opening work in process inventory can be calculated as under--
Options
FIFO and Average costing
LIFO and Average costing
FIFO and LIFO costing
None of given option.
Jan 1; finished goods inventory of Manuel Company was Rs.3, 00,000. During the year Manuels cost of goods sold was Rs. 19, 00,000, sales
were Rs. 2, 000,000 with a 20% gross profit. Calculate cost assigned to the December 31; finished goods inventory.
Options
Rs. 4,00,000
Rs. 6,00,000
Rs. 16,00,000
The cost expended in the past that cannot be retrieved on product or service--
Options
Relevant Cost
Sunk Cost
Product Cost
Irrelevant Cost
When a manufacturing process requires mostly human labor and there are widely varying wage rates among workers, what is probably the most
appropriate basis of applying factory costs to work in process?
Options
Machine hours
Cost of materials used
Direct labor hours
Direct labor dollars
A typical factory overhead cost is--
Options
Audit
Compensation of plant manager
Design distribution
Internal
Question No. 28 Marks
Complete the following table--
Fixed Cost Increase Constant

Variable cost
Total cost Increase Decrease
Per Unit Total
Options
Constant, Decrease
Decrease, Decrease
Increase, Increase
Increase, Decrease.
The difference between total revenues and total variable costs is known as--
Options
Contribution margin
Gross margin
Operating income
Fixed costs
Percentage of Margin of Safety can be calculated in which one of the following ways?
Options
Based on budgeted Sales
Using budget profit
Using profit & Contribution ratio
All of the given options
Which of the following represents a CVP equation?
Options
Sales = Contribution margin (Rs.) + Fixed expenses + Profits
Sales = Contribution margin ratio + Fixed expenses + Profits
Sales = Variable expenses + Fixed expenses + profits
Sales = Variable expenses Fixed expenses + profits
For which one of the following industry would you recommend a Process Costing system?
Options
a) Grain dealer
Television repair shop
Law office
Auditor
If 120 units produced, 100 units were sold @ Rs. 200 per unit. Variable cost related to production & selling is Rs. 150 per unit and fixed cost
is Rs.
5,000. If the management wants to decrease sales price by 10%, what will be the effect of decreasing unit sales price on profitability of company?
(Cost & volume profit analysis keep in your mind while solving it)
Options
Remains constant
Profits will increased
Company will have to face losses
If 120 units produced, 100 units were sold @ Rs. 200 per unit. Variable cost related to production & selling is Rs. 150 per unit and fixed cost
is Rs.
5,000. If the management wants to increase sales price by 10%, what will be increasing sales profit of company by increasing unit sales price?
(Cost & volume profit analysis keep in mind while solving)
Options
Rs.2,000
Rs. 5,000
Rs. 7,000
The following is the Corporation's Income Statement for last month: Particular Rs. Sales 4,000,000 Less: variable expenses
2,800,000Contribution
margin 1,200,000 Liss: fixed expenses 720,000 Net income 480,000 The company has no beginning or ending inventories. A total of 80,000
units were produced and sold last month. (Q.no. 36-39) What is the company's contribution margin ratio?
Options
30%
70%
150%
None of given options
What is the company's break-even in units?
Options
48,000 units
72,000 units
80,000 units
How many units would the company have to sell to attain target profits of Rs. 600,000?
Options
88,000 units
100,000 units
106,668 units
Whatis the company's margin of safety in Rs?
Options
Rs. 480,000
Rs. 1,600,000
Rs. 2,400,000
Inventory control aims at--
Options
Achieving optimization
Ensuring against market fluctuations
Acceptable customer service at low capital investment
Discounts allowed in bulk purchase

Cost Question

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Cost Question

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1 . Cost accounting is becoming more and more relevant in the emerging economic scenario in India. Comment.

40% of direct material cost

50% of direct labour cost

25% of prime cost

Office and admin expenses are @ Rs.150 per 10 units produced

800 units @ Rs.85.50

Finished goods sold

5 . Answer any three questions of the following:

Indirect wages Rs. 1500

Depreciation of Machinery Rs.10000

General lighting Rs. 600

Sundry expenses Rs. 10000

7 . The following information is provided to you:

Selling price per unit

Present sales volume is 2000 units

Particulars Amount $ Amount $

Which of the following is a characteristic of process cost accounting system?

The variable cost per unit would be?

Rs. 100 per unit

Cost accounting concepts include all of the following EXCEPT--

The main purpose of cost accounting is to--

Period costs are --

produced would be--

The components of the prime cost are--

Fixed cost per unit decreases when--

Question No. 23 Marks - 10

Fixed Cost Increase Constant

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