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ELEMENTS OF COSTING

BACHELOR'S DEGREE PROGRAMME


Term-End Examination


June, 2010


ELECTIVE COURSE : COMMERCE


ECO- 10 : ELEMENTS OF COSTING


Time : 2 hours                                             Maximum Marks : 50


(Weightage 70 %)


       Note :Attempt any two question from Section - Aand any two

Question from Section - B.

SECTION– A




  1. "Various defeciencies and limitations of financial accounting


give rise to the need for cost accounting." Elaborate on this statem-


ent, and state the importance of cost accounting. 6+4=10




  1. (a) Name the four main steps taken for distribution of factory


overheads and explain briefly any one of them.


(b) Explain weighted average cost method of pricing the mater-


ials with the help of an example.                                          5+5=10




  1. Write short notes on any two of the following :



  • Treatment of idle time in cost accounts

  • Perpetual Inventory System

  • Methods of Time Booking

  • Bill of Materials


SECTION-B




  1. From the following Particulars, prepare cost sheet showing : 15



  • cost of materials consumed

  • prime cost

  • works cost

  • cost of production and

  • cost of sales (total cost)


Output and sales for the month                500 units Rs.


Stock of raw materials (opening)                         15,000


Stock of raw materials (closing)                           20,000


Counting house salaries (office)                           6,000


Drawing office salaries (factory)                          9,000


Direct wages paid                                                   58,000


Direct Expenses                                                   20,000


Purchase of raw materials                                  92,000


Carriage inwards                                                  3,000


Carriage outwards                                               4,500


Cash discount allowed                                         1,500


Power used                                                            12,000


Indirect wages                                                      15,000


Lighting of factory                                               5,500


Repairs of plant and machinery                        6,500


Depreciation of plant and machinery              5,000


Office rent                                                            12,000


Director's fees                                                      6,000


Travelling expenses                                           7,500


Salesmen salaries                                               18,000


Office salaries                                                     7,000


General expenses                                                9,000


Advertisement                                                     10,000


Outstanding direct wages                                  2,000


Sales proceeds of factory scrap                        3,000




  1. (a) Compute Labour hour rate from the following information.  Total number of workers is 50 in the department. The number of working days are 300 in a year and the working hours are 8 hours per day. Idle time is 4% of the total number of days. The overheads of the department amounted to Rs. 2,60,800.


(b) Estimated overheads in Department B were Rs. 21,000 fixed and Rs. 39,000 variable.          Estimated machine hours were 30,000. Actual machine hours worked were 28,500. Actual overheads incurred were Rs. 24,000 fixed and Rs. 30,000 variable. Find out the under absorbed/over absorbed amounts of overheads based on predetermined rates, and state as to how will you dispose off the under absorption and over absorption of the overheads ?                                                                                                                                                                                     6+9=15

  1. (a) Explain the need for reconciliation of cost and financial accounts                                                                                                                                                                                                                     (b) 600 kgs. of a material was charged to process I at the rate of Rs. 40 per kg. The direct labour accounted for Rs. 2,000 and the other departmental overheads amounted to Rs. 7,600. The normal loss is 10% of input and the net production was 500 kgs. Assuming that the scrap is sold for Rs. 20 per kg., prepare the process I Account showing clearly the values of normal and abnormal loss. Also prepare the Abnormal Loss Account.  6+9=15

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