B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
Unit 1 Introduction of Cost Accounting and Cost Sheet
Answer the following. (1 mark)
1. List the components of prime cost.
2. Which method of costing would be most appropriate for printing press?
3. Which is the other name of factory overhead?
4. Which method of costing is used in a Refinery?
5. What is the other mane of office overhead?
6. Which method of costing would be most appropriate for transport?
7. Which types of cost unit is used in Taxtiles Industries?
8. Total cost or cost of sales = cost of production +?
9. Work or factory cost = prime cost +?
10. Which types of cost unit is used in an automobile industry?
Briefly answer the following. (2 marks)
1. Define cost accounting.
2. List out any four features of cost accounting.
3. List down any two objectives of cost accounting.
4. What is cost sheet?
5. List down the methods of costing.
6. List out the techniques of costing.
Answer the following (limit 250 words). (5 marks)
1. Difference between cost accounting and management accounting.
2. Explain Limitation of cost accounting.
3. Explain methods of costing.
4. Explain techniques of costing.
5. The books of Adarsh manufacturing company present the following data for the
month of April, 2007. Direct labour cost Rs. 17,500 being 175% of the works
overhead; cost of goods sold excluding administration expenses Rs. 56,000.
Inventory accounts showed the following opening and closing balances:
Particulars April 1st April 30
th
Raw materials Rs. 8,000 Rs.10,600
Work-in-progress Rs. 10,500 Rs. 14,500
Finished goods Rs. 17,600 Rs. 19,000
Other data are:-
Selling expenses Rs. 3,500
General and administration expenses Rs. 2,500
Sales for the month Rs. 75,000
Prepare statement of cost sheet.
B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
6. Modern manufacturing company submits the following information on March 31 :
Particulars Rs.
Sales for the year 2,75,000
Inventories at the beginning of the year
Finished goods
Work in progress
7,000
4,000
Purchase of materials for the year 1,10,000
Raw materials at the beginning of the year 3,000
Raw materials at the end of the year 4,000
Direct labour 65,000
Factory overhead was 60% of the direct labour cost
Inventories at the end of the year
Work in progress
Finished goods
6,000
8,000
Other expenses for the year
Selling expenses 10% of sales
Administrative expenses 5% of sales
Prepare statement of cost sheet.
7. Electronics ltd. Furnishes the following information for 10,000 TV valves
manufactured during the last year
Particulars Rs.
Materials 4,50,000
Direct wages 3,00,000
Power and consumable stores 60,000
Factory indirect wages 75,000
Lighting of factory 27,500
Normal defective work (cost of rectification) 15,000
Clerical salaries and management expenses 1,67,500
Selling expenses 27,500
Sale proceeds of scrap 10,000
Plant repairs, maintenance and depreciation 57,500
The net selling price was Rs. 158 per unit and all units were sold.
Prepare a cost sheet.
8. ABC is manufacturing refrigerators and the following details are furnished in respect
of its factory operations for the month ended 31st march.
Particulars Rs.
Work-in-progress in the beginning
At prime cost
Manufacturing expenses
51,000
15,000
Work-in-progress at the end
At prime cost
45,000
B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
Manufacturing expenses 9,000
Stock of raw materials in the beginning 2,25,000
Purchase of raw materials 4,77,000
Direct labour 1,71,000
Manufacturing expenses 84,000
Closing stock of raw materials 2,04,000
On the basis of above data, prepare a statement showing the cost of production. Also
indicate separately the amount of manufacturing expenses which enter into the cost of
production.
9. Work out in cost sheet form the unit cost of production per ton of special paper,
manufactured by a paper mill in January, from the following data.
Direct materials:
Paper pulp : 500 tons @ Rs. 1,000 per ton
Other materials : 100 tons @Rs. 600per ton
Direct labour:
80 skilled men @ Rs. 60 per day for 25 days
40 skilled men @ Rs. 40 per day for 25 days
Direct expenses:
Special equipment Rs. 60,000
Special dyes Rs. 20,000
Works overhead:
Variable @100% on direct wages
Fixed @ 60% on direct wages
Administration overhead @10% and selling and distribution overhead @15% on works
cost.
400 tons of special papers were manufactured and a sum of Rs. 16,000 was realized by
selling of waste material during the course of manufacture. The scrap value of the special
equipment after utilization in manufacture is nil.
10. Inter Co. Ltd. has received an enquiry for supply of 10,000 steel folding chairs. The costs
are estimated as under:-
Raw material: 1, 00,000 kgs at Rs. 8 per kg.
Direct wages: 10,000 hours at Rs. 8per hour
Variable overheads: factory Rs.4.80 per hour
Selling and distribution Rs. 35,000
Fixed overheads: factory Rs. 15,000
Selling and distribution: Rs. 40,000.
Prepare a statement showing the per chair price to be fixed which will result in
profit of Rs. 20% on selling price.
B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
11. The following extract of costing information relates to commodity „A‟ for the half year
ending 31st December, 2006.
Particulars Rs. Particulars Rs.
Purchases of Raw materials 1,20,000 Stock (31st Dec. 2006)
Works overheads 48,000 Raw materials 22,240
Direct wages 1,00,000 Finished products (2000 tons) 32,000
Carriage on purchases 1,440 Work-in-progress (1st July,
2006)
4,800
Stock(1st July , 2006); Work-in-progress (31
st Dec.,
2006)
16,000
Raw materials 20,000 Sales finished product 3,00,000
Finished products (1000
tons)
16,000
Selling and distribution overheads are Rs. 1 per ton sold 16,000 tons of commodity were
produced during the period.
You are required to prepare statement of cost sheet.
12. Following information has been obtained from the cost records of Aditya chemicals Ltd.
For 2006:
Particulars Rs. Particulars Rs.
Finished goods on 1-1-2006 50,000 Heat, light and power 20,000
Raw materials on 1-1-2006 10,000 Factory insurance and taxes 5,000
Work-in-progress 1-1-2006 14,000 Repairs to plant 3,000
Direct labour 1,60,000 Factory supplies 5,000
Purchase of raw materials 98,000 Depreciation -factory building 6,000
Indirect labour 40,000 Depreciation - plant 10,000
Other information made available is-
Factory cost of goods produced in 2006 Rs. 2, 80,000
Raw material consumed in 2006 Rs. 95, 000
Cost of goods sold in 2006 Rs. 1 60,000
No office and administration expenses were incurred during the year 2006. Prepare a
statement of cost for the year ending 2006 giving maximum possible information and its
break-up.
B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
13. Calculate prime cost, factory cost, cost of production, cost of sales and profit from the
following particulars :
Particulars Rs. Particulars Rs.
Direct materials 1,00,000 Depreciation
Direct wages 30,000 Factory plant 500
Wages of foreman 2,500 Office premises 1,250
Electric power 500 Consumable stores 2,500
Lighting : factory 1,500 Manager‟s salary 5,000
office 500 Directors „ fees 1,250
Repairs and renewals: Office stationery 500
Factory plant 3,500 Telephone charges 125
Office premises 500 Postage and telegrams 250
Transfer to reserves 1,000 Salesmen‟s salaries 1,250
Discount on shares written off 500 Travelling expenses 500
Dividend 2,000 Advertising 1,250
Storekeeper‟s wages 1,000 Warehouse charges 500
Oil and water 500 Sales 1,89,500
Rent factory 5,000 Carriage outward 375
Rent office 2,500 Income tax 10,000
14. Prepare the cost sheet to show the total cost of production and cost per unit of goods
manufactured by a company for the month of July, 2006. Also find the cost of sales and
profits.
Particulars Rs. Particulars Rs.
Stock of raw materials 1-7-2006 3,000 Factory rent and rates 3,000
Raw materials purchased 28,000 Office rent 500
Stock of raw materials 31-7-
2006
4,500 General expenses 400
Manufacturing wages 7,000 Discount on sales 300
Depreciation on plant 1,500 Advertisement expenses to be
charged fully
600
Loss on sale of a part of plat 300 Income tax paid 2,000
Sales 50,000
The number of units produced during July, 2006 was 3,000.
The stock of finished goods was 200 and 400 units on 1-7-2006 and 31-7-2006
respectively. The total cost of the units on hand on 1-7-2006 was Rs.2, 800. All these
had been sold during the month.
B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
15. In a factory two types of radios are manufactured, viz., Orient and Sujon Models.
From the following particulars prepare a statement showing cost and profit per radio
sold. There is no opening or closing stock.
Particulars Orient (Rs.) Sujon (Rs.)
Materials 27,300 1,08,680
Labour 15,600 62,920
Works overhead is charged at 80% on labour and office overhead is taken at 15% on
works cost. The selling price of both radios is Rs. 1,000. 78 Orient radios and 286 Sujon
radios were sold.
B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
Unit 2 Material Accounting
Answer the following. (1 mark)
1. List down the methods of valuing materials issue.
2. Give full form of LIFO method.
3. Give full form of FIFO method.
4. Write down the formula for calculating weighted average price for issuing materials
5. How is danger level of materials calculated?
6. Re-order level = maximum level ×?
7. Draw the diagram of EOQ.
8. Write down the formula of Minimum stock level.
9. Write down the formula of Average stock level.
10. Write down the formula of Maximum stock level.
11. Define material turnover ratio.
12. If the minimum stock level and average stock level of a material are 5,000 and 7,000
units respectively, find out its re-order quantity.
13. From the following information. Find out Material turnover ratio.
Opening stock 1,400 kgs. , purchase 23,000 kgs. , closing stock 400 kgs.
Briefly answer the following. (2 marks)
1. State the difference between Bin card and Stores ledger.
2. Draw a specimen of a bin card.
3. About 50 items are required everyday for a machine. A fixed cost of Rs. 50 per order
is incurred for placing an order. The inventory carrying cost per item amounts to Rs.
0.02 per day. The lead period is 32 days. Compute: (1)Economic order quantity(2)
Re-order level
4. From the following information calculate Economics order quantity:
Annual consumption 9,000 units
Cost per unit Rs.30
Cost of placing an order Rs. 15
Cost of storing unit 10%
5. From the following information calculate (a) Economics order quantity (b) the
number of orders to be placed in one quarter of the year:
Quarterly consumption of material 2000 kgs.
Cost of placing one order Rs.50
Cost per unit Rs. 40
Storage and carrying cost 8% on average inventory
B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
6. Calculate EOQ from the following:
Consumption during the year 600 units
Ordering cost Rs. 12 per order
Carrying cost 20%
Price per unit Rs. 20.
7. From the following particulars, calculate the economic order quantity.
Annual requirements 1,600 units
Cost of materials per unit Rs. 40
Cost of placing and receiving one order Rs. 50
Annual carrying cost of inventory 10% of inventory value.
8. From the following information find out material turnover rate:-
Opening stock Rs. 1, 20,000
Closing stock Rs. 84,000
Purchase of material Rs. 3, 95,000
Generally stock are valued at cost price plus (+) 20%
9. From the following data, you are required to determine E.O.Q and also state how
many times during the year order should be placed:
Bi- monthly consumption 1,500 units
Cost per unit Rs. 200
Cost of placing an order Rs. 400
Per unit cost of annual storage expenses 10%.
10. EOQ units 1,500, price per unit Rs.10, order cost per order Rs.30 carrying cost per
unit (Annual) Rs. 1.50.
Find out:
(a) Usage per annum
(b) No. of orders per year
11. EOQ 200 units
Cost of placing an order Rs. 100
Annual carrying cost 10%
Price per unit Rs. 130
Compute:
(a) Weekly consumption of material
(b) Number of orders to be placed in a year
12. From the following information of March 2010 of Saloni Co. Ltd.:
Find out the purchase of that month
Inventory Turnover: 3
Average stock: Rs. 15,000
Closing stock was double the amount of opening stock.
B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
13. From the following information. Calculate the economic ordering quantity.
Monthly consumption units 12,000
Cost per unit Rs. 48
Ordering cost Rs. 25
Cost of placing an order 15%
14. From the following particulars calculate the Economic Order Quantity and state how
many times during the year order should be placed:
Bi-monthly consumption 600 units
Cost of placing an order Rs. 1,000
Carrying cost 5%
Selling price per unit Rs.400
15. From the following data obtained in respect of an item of store, calculate the
economic ordering quantity for the item:
(a) Total annual consumption 10,000 kgs.
(b) Cost of carrying inventory: 10%
(c) Ordering cost Rs. 8
(d) Purchase price per kg. 40 paise.
Answer the following (limit 250 words). (5 marks)
1. Explain the concept of “ABC” analysis as a technique of inventory control.
2. Write a brief note – Bin card.
3. Write a brief note – stores ledger.
4. Record the following transactions in the stores ledger account. The issues are priced at
the weighted average price
1-4-2006 Balance 1,000 units @Rs. 5 per unit Rs. 5,000.
2-4-2006 Issued 250 units
6-4-2006 Received 4,000 units @Rs. 6 per unit.
7-4-2006 Issued 1,500 units
8-4-2006 Returned to stores 100 units, issued on April 2.
10-4-2006 Received 1,500 units @Rs. 7.50 per unit.
15-4-2006 Issued 1,600 units
18-4-2006 Received 500 units @Rs. 7.50 per unit.
21-4-2006 Issued 600 units
23-4-2006 Returned to vendor 200 units, received on April 18.
25-4-2006 Received 1,000 units @Rs. 7.50 per unit.
29-4-2006 Issued 1,250 units
B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
5. The following information is provided by SUNRISE INDUSTRIES for the month of
April
Stock on 1st April 100 units at Rs. 5 per unit.
Purchases:
5th
April 300 units at Rs. 6
8th
April 500 units at Rs.7
12th
April 600 units at Rs. 8
Issues:
6th
April 250 units
10th
April 400 units
14th
April 500 units
Required calculate using FIFO and LIFO method of pricing issues.
6. Show the stores ledger entries as they would appear when using;
(a) The weighted average method
(b) The LIFO method
Of pricing issues, in connection with the following transactions:
Date Particulars Units Value (Rs.)
1-4-2008 Balanced in hand 300 600
2-4-2008 Purchased 200 440
4-4-2008 Issued 150 -
6-4-2008 Purchased 200 460
11-4-2008 Issued 150 -
19-4-2008 Issued 200 -
22-4-2008 Purchased 200 480
27-4-2008 Issued 250 -
7. The following is a history of the receipts and issues of materials in a factory during
February, 2007.
Date Particulars Quintals Value (Rs.)
1-2-2008 Balanced in hand 500 @Rs.25
3-2-2008 Issued 70 -
4-2-2008 Issued 100 -
8-2-2008 Issued 80 -
13-2-2008 Received from vendor 200 @Rs. 24.50
14-2-2008 Refund of surplus from a work order 15 @Rs.24
16-2-2008 Issued 180 -
20-2-2008 Received from vendor 240 @Rs.24.375
24-2-2008 Issued 304 -
25-2-2008 Received from vendor 320 @Rs.24.315
B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
26-2-2008 Issued 112 -
27-2-2008 Refund of surplus from a work order 12 @Rs.24.50
28-2-2008 Received from vendor 100 @Rs. 25
Issues are to be priced on the principle of “FIFO” method. The stock verifier of the
factory noted that on 15th
he had found a shortage of 5 quintals and on 27th
another
shortage of 8 quintals.
Write on the complete Stores Ledger Account in respect of the above materials.
8. At the beginning of October, 2006, quality Brush Company had in stock 10,000
brushes valued at Rs. 10 each. Further purchases were made during the month as
follows:
7th
October 4,000 Brushes @Rs. 12.50
14th
October 6,000 Brushes @ Rs. 15
24th
October 8,000 Brushes @ Rs. 16.50
Issues to shop floor were as follows:-
16th
October 16,000 Brushes
28th
October 10,000 Brushes
You are required prepare stores ledger account under the LIFO, FIFO and Weighted
average method.
9. Shriram enterprises manufacture a special product „ZED‟ the following particulars are
collected for the year.
Cost of placing an order Rs.100
Annual carrying cost per unit Rs. 3.25
Normal usage 50 units per week
Minimum usage 25 units per week
Maximum usage 75 units per week
Reorder period 4 to 6 weeks
Compute from the above
(a) Reorder level (b)Maximum level
(c)Minimum level (d)Average stock level
(e)Reorder quantity
B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
10. Receipts and issues of goods of Ashok Traders were as follows. Prepare stock
register on weighted average method. The stock on 1st April 2008 was 6 dozones
at Rs. 8per piece.
Date Receipts Qty.
(doz.)
Rate per
piece (Rs.)
Date Issues Qty.
(pieces)
2-4-2008 Purchases 16 9 10-4-2008 Issued to jobs 180
6-4-2008 Purchases 18 10 17-4-2008 Issued to jobs 120
14-4-2008 Purchases 240
(pieces)
Rs.144 per
doz.
22-4-2008 Shortage 15
21-4-2008 Purchases 20 8 25-4-2008 Issued to jobs 14 doz.
26-4-2008 Purchases 324 Rs.132 per
doz.
27-4-2008 Issued to jobs 46
29-4-2008 Return from
job (from
issue of 27)
6 piece 30-4-2008 Shortage 20
11. A company uses three raw materials in the production of its sole product. The
following information is available:
Raw
materials
Usage per unit
of product
Reorder
quantity
Price
per kg.
Delivery
period
Order
level
Minimum
level
Kg. Kgs. Rs. Weeks Kgs. Kgs.
A 5 5,000 10 1 to 3 4,000 ?
B 2 2,500 30 3 to 5 2,375 ?
C 3 5,000 15 2 to4 ? 1,000
Weekly production varies from 80 to120 units, averaging 100 units. You are required to
find out:
(1) Minimum stock of A (2) Maximum stock of A and B
(3) Reorder level of C (4) Average stock level of A.
12. From the following information calculate:
(1) EOQ
(2) Re-order level
(3) Minimum level
(4) Danger level
(5) Average stock level
Maximum stock level 6,450 units
Minimum consumption 100 units per day
Average consumption 300 units per day
Minimum time 3 days
EOQ is 50% of Re-order stock level
Maximum time for emergency purchase 2 days.
B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
13. The following figures are taken from the records of a co. for the year 2006. The
valuation of inventory is Rs. 2.00 per kg.
Materials Opening stock Purchases Closing stock
X 2,800 kgs. 46,000 kgs. 800 kgs.
Y 4,000 kgs. 7,200 kgs. 4,800 kgs
Calculate the material turnover ratio of the above two materials and express in number of
days the average inventory is held.
14. In manufacturing its product, Vina Company uses two types of raw materials „A‟
and „B‟. information is given as under:
Raw materials Reordering
level units
Delivery
period days
Average
consumption
per day units
E.O.Q. units
„A‟ 8,000 4 to 6 1,200 2,500
„B‟ 2,800 3 to 5 700 1,500
Maximum delivery period for emergency purchase of „A‟ material is one day: find
out:
(1) Minimum level of „A‟
(2) Average stock level of „A‟
(3) Danger level of „A‟
(4) Maximum level of „B‟
(5) Safety stock level of „B‟
15. Write short notes on: LIFO method.
B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
Unit-3 Labor Cost
Answer the following. (1 mark)
1. Define labour turnover rate.
2. What is time wage system?
3. What is piece wage system?
4. Which formula used to find out labour turnover according to replacement method?
5. Which formula used to find out labour turnover according to separation method?
6. List down various labour costs.
7. Which formula used to find out labour turnover according to flux method?
8. List down the methods of labour turnover rate?
9. Average number of employees for the year 500 and No. of employees replaced during the
year 17 and No. of employees resigned during the year 8. Labour turnover rate as per flux
method is 10% find out the number of employees dismissed during the year.
Briefly answer the following. (2 marks)
1. Write any two advantages of Halsey premium plan.
2. Write any two advantages of Rowan plan.
3. From the following data provided to you find out the Labour Turnover Rate by applying :
(a) Replacement method (b) Separation method
No. of workers at the beginning of the month 500
No. of workers at the end of the month 600
During the month, 5 workers left, 20 persons were discharged and 75 workers were
recruited. Of these, 10 workers were recruited in the vacancies of those leaving, while the
rest were engaged for an expansion scheme.
4. Calculate total wages earned(including bonus) by a worker for a working day of 8 hours
under Halsey and Rowan plans:
Standard production per hour : 6 units
Total production during the day : 64 units
Rate of wages : Rs. 2 per hour
5. Find out wages under piece rate method and Halsey plan.
TA = 15 minutes, T = 10 minutes and R = Rs.2 per hour.
6. The following is the details of workers of Devsar Cotton Mill for the month of March
2007. Find out No. of workers recruited in the mill.
Number of employee at the beginning of the month 1,900
Number of employee at the end of the month 1,100
Number of employee at the beginning of the month 950
Number of employee who left the mill 180
B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
Rate of labour turnover as per flux method 23.6%.
7. Dipesh has taken 20 hours to complete a job. The wage rate per hour is Rs. 8. If he
has received Rs. 192 as total wages according to Rowan plan, what would be the
amount of wages earned by him according to Halsey Plan and Piece wage plan?
8. Following information has been obtained from personnel department of a factory
for the year 2004:-
Number of workers as on (1-1-2004) 270
Number of workers resigned 27
Number of workers dismissed 6
Number of workers retired 3
Number of workers newly appointed 96 (including 72 workers employed due to
expansion scheme) Calculate labour turnover rate: (1) By Replacement method
(2) By Separation method
9. Shri Ashok takes 40 hours time to finish job work. Wage per hour Rs. 15. He
receives Rs. 900 under Rowan plan. Calculate wages under Halsey plan.
10. A job can be done in 15 minutes by an average worker. Give three different
methods of payment by results and show the cost per article for each method if the
job is done in 10 minutes. Time rate of Rs. 3 per hour. Calculate wages as per
(a) Rowan premium plan (b) Halsey premium (40%)
11. The following particulars apply to a job. Standard time 50 hours, time taken 40
hours, material cost of a product is Rs. 150. Factory cost Rs. 300. Factory
overheads are recovered at Rs.1.50 per hour of actual time taken. Calculate direct
wages and rate of wage per hour under Halsey plan.
Answer the following (limit 250 words). (5 marks)
1. State how Rowan scheme is batter than Halsey scheme.
2. The following information is extracted from the record of Bharat & Company Ltd. for
the month of March 2003:
Number of employee at the beginning of the month 950
Number of employee at the end of the month 1,050
Number of employees resigned 10
Number of employees discharged 30
Number of employees replaced in the vacancies 20
B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
Number of employees appointed due to expansion scheme 120
Calculate labour turnover rate: (1) By Replacement method (2) By Separation method
(3) Flux method.
3. The following information available from the personnel department of Chikhli Cotton
Mills Ltd. calculate labour turnover rate: (1) By Replacement method (2) By
Separation method (3) Flux method.
Number of workers on 1-3-2007 5,360
Number of workers on 31-3-2010 4,640
During the month of March 2007
Number of workers resigned 280
Number of workers retired 570
Number of workers dismissed 450
Number of workers newly appointed 500 (of which 40% workers were taken under
expansion plan)
4. The number of workers in shyam ltd. was 765 on 1st January 2003. The number of
workers who left the factory was 105 up to 30th
June, 2003 and new employees
recruited were 75. Between 1st July, 2003 and 31
st December, 2003 90 workers left
the factory and 80 workers were recruited (out of which14 workers were recruited due
to expansion scheme.
Calculate labour turnover rate by replacement method for first six months and by
separation method for the remaining six methods.
5. From the information of Arpit Ltd. for the month April 2010. Find out labour turnover
rate: (1) By Replacement method (2) By Separation method (3) Flux method.
Workers on 1-4-2010 4,500
Separated by resignation 300
Workers suspended 500
Workers on 30-4-2010 5,500
Workers retired 600
Workers newly appointed 700 (out of the new appointment 60% of the works are
appointed under expansion plan)
6. The following information available from the personnel department of virag Silk
Mills Ltd. calculate labour turnover rate: (1) By Replacement method (2) By
Separation method (3) Flux method.
Number of workers on 1-4-2010 4,380
Number of workers on 30-4-2010 3,720
During the month of April 2010
Number of workers resigned 380
Number of workers retired 460
Number of workers dismissed 320
Number of workers newly appointed 500 (of which 140 workers were taken under
expansion plan)
B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
7. A worker is allowed 150 hours to complete a job. He completed the job in 130 hours.
Basic rate of wages is Rs. 12.50 per hours. The material cost Rs. 6,500 and the factory
overheads are recovered at 150% of total direct wages. Calculate the factory cost of
the product under:
(a) Time wage method (c) Piece wage method
(b) Halsey premium plan (d) Rowan premium plan
8. During first week of April 2007 the workman Mr. Kalyan manufactured 300 articles.
He receives wages for a guaranteed 48 hour week at the rate of Rs. 4.5 per hour. The
estimated time to produce one article is 10 minutes and under incentive scheme the
time allowed is increased by 20%.calculate his gross wages according to:
(a) Piece work with a guaranteed weekly wage
(b) Rowan premium plan
(c) Halsey premium plan
(d) Time wage method
9. A worker takes 9 hours to complete a job on daily wages and 6 hours on a scheme of
payment by result. His daily rate is 75 paise an hour: the material cost of the product
is Rs. 4 and the overheads are recovered at 150% of the total direct wages. Calculate
the factory cost of the product under: (1) Piece rate method (2) Rowan premium
plan (3) Halsey premium.
10. From the following information calculate wages as per week (a) Rowan premium plan
(b) Halsey premium (40%) (c) Time wage system (d) Piece rate method
Working hours per week 48
Wage rate per hour Rs. 3.75
Normal tine for preparing 1 unit 24 minutes
Normal production per week 120 units
Actual production per week 150 units
11. One of the workers, Mr. Raja is allowed 10 minutes as standard time to produce one
unit. He takes 10 hours to produce 120 units. He is paid Rs. 10 per hour find out his
wages as per (a) Rowan premium plan (b) Halsey premium (40%) (c) Time wage
system (d) Piece rate method
12. Find out total incomes of Nilkumar under following circumstances:
Rowan premium plan
40 % Bonus under Halsey Premium plan
Rate per hour 60 paise
Standard time for preparing 1 dozen units 2 hours.
Actual time taken for preparing 25 dozen unit 40 hours
B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
If price of material is Rs. 20 and factory overhead is recorded at 150 % of direct
wages.
13. Calculate the earnings of a worker under (a) Rowan premium plan (b) Halsey
premium (40%) (c) Time wage system (d) Piece rate method
Hourly rate of wages Rs. 0.75
Standard time for producing 1 dozen articles is 3 hours. Actual time taken by the
worker to produce 20 dozen articles is 48 hours.
14. A workman‟s wage for a guaranteed 44 hour week is Rs. 0.19 per hour. The estimated
time to produce one article is 30 minutes and under incentive scheme the time allowed
is increased by 20%. During one week the workman manufactured 100 articles.
Calculate his gross wages under each of the following methods of remuneration:
(a) Time rate
(b) Piece work with a guaranteed weekly wage
(c) Rowan premium plan
(d) Halsey premium plan
15. Calculate the earnings of a worker from the following information:
1. Time wage system
2. Piece rate method 3. Halsey plan
4. Rowan plan
Standard time 30 hours and Time taken 20 hours
Hourly rate of wages is Rs. 1 per hour plus a dearness allowance @ 50 paise per
hour worked.
B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
Unit-4 Overhead Accounting
Answer the following. (1 mark)
1. Define overhead.
2. What is machine hour rate?
3. Define fixed overhead.
4. Define variable overhead.
5. What is the basis of apportionment of depreciation on plant?
6. List down element wise overhead.
7. List down behavior wise overhead.
8. List down functional overhead.
9. What is the basis of apportionment of canteen expense?
10. What is the basis of apportionment of power expense?
11. What is the basis of apportionment of general lighting?
12. Which formula used to find out depreciation according to machine hour rate?
13. State the ratio of rent and rates incurred by the factory.
Briefly answer the following. (2 marks)
1. Write any two differences between allocation and apportionment.
2. Classify the following into Fixed, Semi Fixed and Variable cost.
Cost of materials, salary of foremen, wages of regular workers, rent of factory.
3. Mention the basis of apportionment of following expenses of departments.
Employees State Insurance scheme
Supervisor‟s salary
4. Classify the following items of overhead by function.
Foremen‟s salary
Depreciation of office furniture
Salesmen salary
Printing and stationery
5. Write any two advantages of machine hour rate.
6. Calculate Machine Hour rate from the following:
Cost of machine Rs. 19,200
Estimated scrap value Rs. 1,200
Average repairs and maintenance charges per month Rs. 150.
Standing charges allocated to machine per month Rs. 50.
Effective working life of machine 10,000 hours
Running time per month 166 hours
Power used by machine: 5 units per hour @ 19 paise per unit.
B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
7. Calculate from the following data the Machine Hour Rate for a machine.
Cost of machine Rs. 10,500
Estimated scrap value Rs. 500
Effective working life 20,000 Hours
Running time of 4 weekly period 200 Hours
Weekly payable maintenance expenses Rs. 50
Standing charges for 4 week Rs. 100
Power used: 5 units per hour, Rate Rs. 3 per unit
Answer the following (limit 250 words). (5 marks)
1. Define machine hour rate. Write down advantages and disadvantages of machine hour
rate
2. Explain the following items:- (a) Cost apportionment (b) cost allocation
3. Explain fixed overhead, variable overhead and semi variable overhead.
4. Draw a chart of classification of overhead. Explain functional overhead.
5. Discuss the difference between direct and indirect expense.
6. Compute the machine hour rate from the following data :
Particulars Rs.
Cost of machine 1,00,000
Installation charges 10,000
Estimated scrap value after the expiry of its life (15 years) 5,000
Rent and rates for the shop per month 200
General lighting for the shop per month 300
Insurance premium for the machine per annum 960
Repairs and maintenance expenses per month 1,000
Power consumption 10 units per hour -
Rate of power per 100 units 20
Estimated working hours per annum 2,200 hours
This includes setting up time of 200 hours
Shop supervisor‟s salary per month 600
The machine occupies 1/4th
of the total area of the shop. The supervisor is expected to
devote of his time for supervising the machine.
7. Calculate Machine Hour Rate from the following:
Particulars Per annum (Rs.)
Rent of the department (space occupied by machine of the
department)
18,000
Lighting (number of men in the department 24, three men engaged on
this machine)
1,200
Insurance (three months) 200
Cotton, waste, oil etc.(annual) 600
B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
Salary of foremen ( of the foremen‟s time is occupied by this
machine and the remainder equally by the other two machines)
18,000
The cost of the machine is Rs. 72,000 and it has an estimated scrap value Rs. 6,000.
It is assumed from past experience:
(a) That the machine will work for 2,000 hours per annum.
(b) That it will incur an expenditure of Rs. 22,000 in respect of repairs and maintenance during
Its entire life.
(c) That it consumes 5 units of power per hour at a cost of 40 paise per unit.
(d) That the working life of the machine will be 22,000 hours.
8. A machine costing Rs. 20,000 is expected to run for ten years at the end of which its
scrap value is estimated to be Rs.2, 000. Installation charges are Rs.200. Repairs during
the entire ten years‟ life of the machine are estimated to be Rs. 1,800 and the machine is
expected to run for 2,190 hours in a year.
Its power consumption would be 15 units per hour at Rs. 5 per 100 units. The machine
occupies of the area of the department and has two points out of a total of ten for
lighting.
The foreman has to devote about of his time to this machine.
The rent for the department is Rs. 300 per month and charges for lighting Rs. 80 per
month. Foreman is paid a salary of Rs. 960 per month.
Find out the hourly rate assuming that insurance is @ 1% per annum of the capital cost of
the machine and the expenses on oil, etc., are Rs. 9 per month.
9. The following information relates to a machine:
Particulars Rs.
Cost of machine (including installation charges of Rs. 5,000) 50,000
Estimated scrap value (at the end of effective working life of 10
years)
10,000
Supervisor‟s salary per month 1,000
General lighting of the shop per month 100
Rent and rates of the shop per quarter 1,500
Insurance premium for the machine per annum 300
Estimated repairs and maintenance charges for the machine per
annum
500
Power 10 units per hour
Rate of power per 100 units Rs.5
Estimated working hours of the machine per annum 2000 hours
The machine occupies of the total floor area of the factory. The supervisor is
expected to devote of time for supervising the machine. General lighting
expenses are to be apportioned on the basis of the floor area. Calculate machine hour
rate.
10. Calculate the Machine Hour Rate from the following details :-
Value of machine Rs. 2, 00,000
Useful life of machine 20 years
B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
The annual working hours of machine 1,000
Electricity of factory (Annual) Rs. 1,600
Annual sundry expenses allocated to the machine Rs. 2,080
Annual factory rent Rs. 2,400
Annual insurance premium of machine Rs. 1,000
Repairs of machine during its life Rs. 40,000
1. The consumption of power in the machine is 2 units per hour. The rate of power is
Rs. 0.40 per unit.
2. The machine occupies th space in the factory.
3. of the total employees work on this machine.
The electricity of the factory is to be distributed on the basis of number of
employees.
11. The following data were obtained from the books of light engineering company for
the half year ended 31st March, 2007:
Particulars Production department Service department
P1 P2 P3 S1 S2
Direct wages (Rs.) 7,000 6,000 5,000 1,000 1,000
Direct Materials (Rs.) 3,000 2,500 2,000 1,500 1,000
Employees (Nos.) 200 150 150 50 50
Electricity (kwh.) 8,000 6,000 6,000 2,000 3,000
Light points (Nos.) 10 15 15 5 5
Asset values (Rs.) 50,000 30,000 20,000 10,000 10,000
Area occupied
(sq.meters)
800 600 600 200 200
The expenses for 6 months were: stores overhead Rs. 400 ; Motive power Rs.
1,500 ; Electric light ; Rs. 200 ; Labour Rs. 3,000 ; Depreciation Rs. 6,000 ; Repairs
and Maintenance Rs. 1,200 ; General overheads Rs. 10,000 ; Rent and Taxes
Rs.600.
From the above information, apportion the expenses among departments on suitable
basis.
12. PH. Ltd. is a manufacturing company having three production departments A,B,
and C and two service departments E and F. The following is the budget for
December, 2007:
Particulars Total
(Rs.)
Production department Service department
A B C E F
Direct material 1,000 2,000 4,000 2,000 1,000
Direct wages 5,000 2,000 8,000 1,000 2,000
Factory rent 4,000
Power 2,500
Depreciation 1,000
Other overheads 9,000
B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
Additional information A B C E F
Area (sq. ft.) 500 250 500 250 500
Capital value of
assets(Rs.)
20,00,000 40,00,000 20,00,000 10,00,000 10,00,000
Machine hours 1,000 2,000 4,000 1,000 1,000
Horse power of machines 50 40 20 15 25
Prepare a statement showing distribution of overheads to various departments.
13. In a factory, there are three production department A, B, and C and two service
department D and E. The details of the expenses during February, 2009 are as
under:
Indirect wages Rs. 3,000
Insurance Rs. 1,500
Canteen expenses Rs. 4,500
Lighting Rs. 2,000
Rent and rates Rs. 3,800
Contribution to ESI Rs. 1,000
Depreciation Rs. 12,000
Power Rs. 22,500
Other information:
Particulars A B C D E
Lighting points 6 4 4 3 3
Direct wages (Rs.) 6,000 5,000 4,000 3,000 2,000
Cost of machine (Rs.) 72,000 48,000 36,000 12,000 12,000
Horse power of machine 6 6 3 - -
Space occupied (Sq. feet) 600 400 500 200 200
Number of workers 5 6 4 2 1
Prepare statement showing: distribution of overheads to various departments
14. The modern company is divided into four departments: P1, P2, P3 are producing
departments and S1 is a service department. The actual costs for a period are as
follows:
Particulars Rs. Particulars Rs.
Rent 1,000 Supervision 1,500
Repairs to plant 600 Fire insurance in respect of stock 500
Depreciation of plant 450 Power 900
Employer‟s liability for
insurance
150 Light 120
The following information is available in respect of the four departments:
Particulars Dept. P1 Dept. P2 Dept. P3 Dept. S1
Area (sq. metres) 1,500 1,100 900 500
Number of Employees 20 15 10 5
Total wages (Rs.) 6,000 4,000 3,000 2,000
Value of plant (Rs.) 24,000 18,000 12,000 6,000
B.V. Patel Institute of Business Management, Computer & Information
Technology, Uka Tarsadia University
Question Bank 030100304: Fundamentals of Cost Accounting
Value of stock (Rs.) 15,000 9,000 6,000 -
H.P. of plant 24 18 12 6
Apportion the costs to the various departments on the most equitable basis.
15. ABC Ltd. has three production departments P1, P2, and P3 and two service
departments S1 and S2. The following figures are extracted from the records of the
company:
Rs. Rs.
Rent and rates 5,000 General lighting 600
Indirect wages 1,500 Power 1,500
Depreciation of machinery 10,000 Sundries 10,000
Following further details are available:
Particulars Total P1 P2 P3 S1 S2
Floor space (sq.meters) 10,000 2,000 2,500 3,000 2,000 500
Light points 60 10 15 20 10 5
Direct wages (Rs.) 10,000 3,000 2,000 3,000 1,500 500
H.P. of Machinery 150 60 30 50 10 -
Value of Machinery (Rs.) 2,50,000 60,000 80,000 1,00,000 5,000 5,000
Apportion the costs to various departments on the most equitable basis by preparing a
primary departmental distribution summary.