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Cost and Management Accounting
- X is the
manufacture of Mumbai purchased three chemicals A, B and C from U.P.The
bill gave the following information:
Chemical A: 6000 kgs @ Rs. 4.20 per kg Rs 25,200
Chemical B: 10000 kgs @ Rs. 3.80 per kg 38,000
Chemical C: 4000 kgs @ Rs. 4.75 per kg 19,000
VAT
2,055
Railway Freight 1,000
Total Cost 85,255
A shortage of 100 kgs in chemical A, of
140 Kgs in chemical B and Of 50 kgs in chemical C was noticed due to breakages.
At Mumbai, the manufacture paid octroi duty @ 0.20 kg. He also paid hamali, Rs
20 for the chemical a, Rs 58.12 for chemical B and Rs 35.75 for chemical C.
Calculate the stock rate that you would suggest for pricing issue of chemicals
assuming a provision of 4 % towards further deterioration and also show the
quantity (kgs) of chemicals available for issue.
- ABC Ltd has
collected the following data for its two activities. It calculates
activity cost rates based on cost driver capacity.
Activity Cost
driver Capacity Cost
Power Kilowatt
hours 50000
hrs Kilowatt Rs 200000
Quality Inspection Numbers of inspection 10000 inspection Rs 300000
The Company makes three products, A, B
and C.For the year ended March
31, 2004, the following consumption of cost drivers was reported:
Product Kilowatt-hours Quality
Inspection
A 20000 7000
B 40000 5000
C 30000 6000
Compute the costs allocated to each
product from each activity
Calculate the cost of unused capacity
for each activity.
- Reliable
company wishes to discontinue the sale of one of the products in vew of
unprofitable operations. Following details are available with regard to
turnover, cost and activity for the current year ending 31st
March.
Products
P Q R S
Sales Turnover Rs.600000 Rs.1000000 Rs.500000 Rs.900000
Cost of sales
350000 800000 370000 480000
Storage area (square meters)
40000 60000
70000 30000
Number of cartons sold
200000 300000 150000 350000
Number of bills raised 100000 120000 80000 100000
Overhead costs and basis of
apportionatement are:
Fixed Expenses
Basis
of Apportionatement
Administration wages & salaries Rs.100000 Number of bill raised
Salesmen salaries a & expenses 120000 Sales
turnover
Rent and insurance 60000 Storage
area
Depreciation 20000 Number
of cartons
Unfixed Expenses
Commission 3
% of sales
Packing material & wages Re
1 per carton
Stationery Re
0.50 per bill
You have to prepare
1. Staement showing summary of Selling
& Distribution Costs to the products
2. Profit & Loss Statement showing
contribution and profit or loss of each of the products to enable the Company
take an appropriate decision on discontinuance of the sale of a product.
- The Tata
Infrastructure Co. is involved in two contracts Contract 69 & Contract
96 during the current year. The following information relates to these
contracts, which were started on January 1 and July 1, respectively.
Contracts
A B
Contract Price Rs.300000 Rs.400000
Direct material issued 55000
40000
Material returned to store 1500
2500
Direct Labour 36000 22000
Wages accrued on Dec 31 2000 2500
Plant installed (at cost) 30000
40000
Establishment Charges 20000 15000
Direct Expenses 20000 30000
Direct expenses accrued, December 31 2000 3000
Work certified by architect 320000 120000
Cost not work not yet certified 10000 30000
Material on site, 31 December 11000 5500
Cash received from contractees 60000 150000
Depreciation of plant p.a 12
% 34%
Prepare Contract & Contractees
Account for Contract 69 & Contract 96.
- A company
manufactures a product which involves two processes, namely, pressing and
polishing. For the months of January, the following information is
available:
Pressing Polishing
Opening Stock
Inputs of unit in process 1200 1000
Units completed 1000 750
Unit under process 200 250
Material Cost Rs.69000 Rs.17500
Conversion Cost 328500 82500
For incomplete unit in process, charge
material costs at 100% and conversion costs at 60% in the pressing process and
50 % in the polishing process. Prepare a statement of cost and calculate the
selling price per unit which will result in 25 % on the sale price.
- M/s Modern
Company Ltd furnishes the following summary of Trading & Profit and
Loss account for the current year ending March 31.
To Raw Material 140000 By sales (12000 units) 510000
To direct wages 72000 By
finished stock (200 units) 6000
To production overheads 45000 By
work in Process
To selling & distribution overheads
43500 Material 26800
To administration overheads 41010 Wages 11786
To Preliminary Expenses w/off 3250 Production
overheads 8000 46586
To Goodwill w/off
2541 By interest on
securities (gross) 5000
To dividend (net) 4000
To income-tax 5870
To net profit 210415
567586 567586
The Company manufactures a standard
unit. The scrutiny of cost records for the same period shows that-
- factory
overheads have been allocated to production at 20 percent on prime cost
- Administration
overheads have been charged at Rs.3 per cent on units produced
- Selling &
distribution expenses have been charged at Rs.4 per unit on unit sold.
You are required to prepare a statement
of cost, to work out profit as per cost accounts, and to reconcile the same
with that shown in the financial accounts.
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