1. 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|
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.
2. ABC Ltd has collected the following data for its two activities. It calculates activity cost rates based on cost driver capacity.
|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:
Compute the costs allocated to each product from each activity
Calculate the cost of unused capacity for each activity.
3. 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
|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|
|Commission||3 % of sales|
|Packing material & wages||Re 1 per carton|
|Stationery||Re 0.50 per bill|
You have to prepare
- Staement showing summary of Selling & Distribution Costs to the products
- 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.
4. 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.
|Direct material issued||55000||40000|
|Material returned to store||1500||2500|
|Wages accrued on Dec 31||2000||2500|
|Plant installed (at cost)||30000||40000|
|Direct expenses accrued, December 31||2000||3000|
|Work certified by architect||280000||140000|
|Cost not work not yet certified||10000||30000|
|Material on site, 31 December||11000||5500|
|Cash received from contractees||160000||50000|
|Depreciation of plant p.a||12 %||34%|
Prepare Contract & Contractees Account for Contract 69 & Contract 96.
5. A company manufactures a product which involves two processes, namely, pressing and polishing. For the months of January, the following information is available:
|Inputs of unit in process||1200||1000|
|Unit under process||200||250|
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.
6. 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 net profit||210415|
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.