B.Com II Cost Accounting

Instructions: Attempt FIVE questions.

Q.1. (a) Briefly describe the objective of Cost Accounting (06).
Q.1. (b) Discuss the elements of Cost involved in each product. (14)

Q.2. Manufacturing Cost (20)

The following data relates to the operation of Salman Manufacturing Company for the year ended Dec 31, 2005.

Sales ……………………………………………………………… 6,08,600
Machinery Repair Expenses ……………………………………. 7,500
Sales Return and Allowance …………………………………… 8,000
Factory Insurance ……………………………………………… 7,000
Purchases of Raw Material ……………………………………. 3,15,500
Bad Debts Expense …………………………………………….. 1,500
Purchases Return and Allowance …………………………….. 13,000
Factory Rent and Taxes ………………………………………. 20,200
Sales Discount ………………………………………………….. 2,600
Selling and Administrative Expenses …………………………. 35,000
Purchase Discount ……………………………………………… 2,500
Direct Labour ……………………………………………………. 90,000
Freight In ………………………………………………………… 5,000
Factory Supplies Expenses ……………………………………. 1,300
Import Duty ……………………………………………………… 3,000
Office Supplies Expense ………………………………………… 500
Foreman’s Salary ………………………………………………… 30,000
Indirect Labour ………………………………………………….. 15,000

INVENTORIES ……………………………. 01-01-2005 ……… 31-12-2005
Raw Material ………………………………. 30,000 ……………… 68,000
Goods Process …………………………….. 40,000 ……………… ?
Finished Goods …………………………… 70,000 ……………….. 56,000

Factory Manager estimated work in process as follows:
Raw Material ……………………………… 20,000
Direct Labour …………………………….. 30,000

The Company assigns FOH on the basis of Direct Labour Cost

Required:
i. Determine FOH Rate
ii. Compute the Cost of W.I.P on Dec 31, 2005.
iii. Prepare Statement of Cost of Goods Manufactured and Income Statement for 2005.

Q.3. Material Costing
NOTE: Not Included in the New Course

Q.4. Accounting for Labour Cost
NOTE: Not Included in the New Course

Q.5. Process Cost System (20)

Mansoor Industries Limited uses a process cost system of three processes, the following data relates to its process-01.

Beginning Inventory ……………………………… Rs. 1,60,000
Raw Material Uses ……………………………….. Rs. 2,50,000
Direct Labour Cost Used ………………………… Rs. 3,68,000
Factory Overhead Cost Applied ………………… Rs. 2,76,000

The data extracted from a quantity schedule relating to the above processes are as follows:

Units in Process Beginning ……………………………… 1,30,000
(100% completed as to Material 70% as
conversion cost).
Units placed in production ………………………………. 4,75,000
Units Completed ………………………………………….. 4,00,000

Units still in process at the end at the end 90% complete as to Material and 50% complete as to conversion cost.

Required: Compute the Equivalent Production units, the unit cost, the total cost of unit completed and the total cost of units in process at end.

Q.6. Material Losses
NOTE: Not Included in the New Course

Q.7. (a) General Ledger / Factory Ledger
NOTE: Not Included in the New Course

Q.7. (b) Standard Costing (10)

The standard and actual cost Data of Ahmed Limited is as follows;

Direct Material …………………………….. 10,000 Units @ Rs. 4 per unit.
Direct Labour …………………………….. 5,000 Hours @ Rs. 6 per hours.

Direct Material …………………………… 9,800 Units @ Rs. 3.50 per unit
Direct Labour ………………………….. 6,000 Hours @ Rs. 6.50 per hours

Required:
i. Material Price Variance and Material Quantity Variance
ii. Labour Rate Variance and Labour Time Variance
iii. General Journal Entries to record the above information and to close the variance accounts.

Q.8. (a) Job Order Cost System (15)

Master sons uses job order cost system Factory Overhead is charged to individual jobs through the use of predetermined overhead rate-based on Direct Labour Cost.
The following appears in the Company’s Goods in process account for the month of Jan 2006.

Balance Jan 01 2006 …………………………….. Rs. 10,300
Raw Material ……………………………………… Rs. 15,000
Direct Labour …………………………………….. Rs. 9,000
FOH ……………………………………………….. Rs. 11,700
……………………………………………………….Rs. 46,000

Transferred to Finished Goods Accounts Rs. 34,000
Balance Jan 31 2006 ……………………. Rs. 12,000

Required:
i. Assuming the overhead application rate used by the company.
ii. Assuming that the Direct Labour Charged to the job still in process at Jan 31, amounts to Rs. 3,000. Compute the amount of FOH and amount of Raw Material which have been charged to these jobs as Jan 31 2006.
iii. Prepare General Journal Entries to record
a. The Manufacturing Cost (Material Labour and O.H.)
b. The transfer of production completed during Jan 31 to the Finished Goods inventory acounts.
c. The Credit sales of total of finished goods completed at 30% above cost.

Q.8. (b) Karachi products limited applies FOH @ 150% of the Direct Labour during the current period, company incurred Rs. 1,60,000 of Direct Labour cost and 2,32,000 of Factory Overhead Cost.
What is the amount of Over and Under applied Factory Overhead? (05)