Amity Campus Uttar Pradesh India 201303

ASSIGNMENTS
PROGRAM: ADL 56 Cost and Managerial Accounting
Subject Name Permanent Enrollment Number ( PEN) Roll Number (SEN.No.) Student Name : : : :

INSTRUCTIONS a) Students are required to submit all three assignment sets. ASSIGNMENT Assignment A Assignment B Assignment C b) c) d) e) DETAILS Five Subjective Questions Three Subjective Questions + Case Study Objective or one line Questions MARKS 10 10 10

Total weightage given to these assignments is 30%. OR 30 Marks All assignments are to be completed as typed in word/pdf. All questions are required to be attempted. All the three assignments are to be completed by due dates and need to be submitted for evaluation by Amity University. f) The students have to attached a scan signature in the form.

Signature : Date :

_________________________________ _________________________________

( ) Tick mark in front of the assignments submitted Assignment Assignment B Assignment C A

Cost and Managerial Accounting

Assignment A
Q1 Q1 ZEE is product, manufactured out of three raw materials M,N, & Q. Each unit of ZEE requires 10 kg, 8 kg, & 6 kg of M,N,Q, respectively. The reorder levels of M, & N are 15000 & 10,000 kg respectively., while the minimum level of Q is 2500 kg. The weekly production of ZEE varies from 300 to 500 units, while the weekly average production is 400 units. You are required to compute:1. The minimum stock level of M 2. The maximum stock level of N 3. the reorder level of Q Additional Information:Re-order quantity (kg) M N Q 20000 15000 20000 Delivery time (in weeks) Minimum Average maximum 2 3 4 4 5 6 3 4 5

Q2 M/s Cotton Mills Ltd. Take a periodic inventory of their stocks on chemical Y at the end of each month, The physical inventory taken on June 30th shows a balance of 1,000 litres of chemical Y in hand@Rs.2.28litre. The following purchases were made during July. July 1 14,000Litres @ Rs.2.30 per litre July 7 10,000Litres @ Rs.2.32 per litre July 9 20,000Litres @ Rs.2.33 per litre July 25 5,000Litres @ Rs.2.35 Per Litre A physical inventory taken on July 31st discloses that there is a stock of 10,000 Litres. You are required to compute the inventory value on July 31, by each of the following methods: i) LIFO ii) FIFO Q3 From the following figures find B.E volume: S.P.per tonne Rs.69.50 V.C per tonne Rs.35.50 F.C. Rs.18.02 Lacs If this volume represents 40% capacity, what is the additional profit for an added production of 40% cpacity, the selling price of which is 10% lower for 20% capacity production and 15% lower than the existing price for the other 20% capacity. Q4 State whether the following statements are true or false. Give reasons. a) Direct costs are costs which vary with variation in output. b) Total fixed cost remains unaffected by changes in the volume of output.

c) In relation to normal sales, a low margin of safety alongwith a high P/V ratio is generally an indication of high fixed cost. d) Cost unit and cost centre have the same meaning. Q5 P Ltd. Manufactures two products using one type of material. Shown below is an extract from the companys papers for the next period budget. Product A Product B Budgeted Sales(In units) 3,600 4,800 Budgeted material consumption per product(kg) 5 3 Budgeted material cost Rs.12 per Kg. There are 12 five days weeks in a budget period and it is anticipated that sales and production will occur evenly throughout. Opening stock : Product A 1,020units, Product B 2,400units, Raw material 4,300kgs. The target closing stock: Product A = 15 days sales, Product B = 20 days sales, Raw material = 10days consumption. Prepare material purchase budget showing the quantities and values for the next period.

Assignment B
Q1 Comment on the relative profitability of the following products when there is a) no key factor. b) Machine Hrs are limited(Key factor) Alpha Beta Rs. Rs. Selling price 100 150 Material 25 30 Wages 5 10 Machine hr rate: Variable 2 3 Fixed 1 1 Variable overhead 15 20 Fixed Expenses 2 2 Machine hrs.used 10 15 Production 300Units 250Units Q2 Define the term Budgetary Control. Discuss its limitations. Q3 (a) Discuss various classifications of costs. (b) Determine the amount of fixed expenses from the following particulars: Sales Rs.2,40,000, Direct Material Rs. 80,000, Direct Labour Rs.50,000, variable overheads Rs. 20, 000, Profit Rs. 50,000 Q4 A product passes through two distinct process A & B & thereafter it is transferred to finished stock. From the following information you are required to prepare Process Accounts: Process A Process B Rs Rs Material consumed 24000 12000 Wages 28000 16000 Manufacturing expenses` 8000 8000 Input in Process A (units) 20,000 ----

Input in process A (value in Rs) Output (units) 31th Dec 2003 Normal wastage percentage of input Value of normal wastage (per 100 units)

20000 18,800 5% 8

----16,600 10% 10

Assignment C
Q1 Which of the following statements is/are true? a) Cost accounting is not a part of management accounting. b) Cost accounting is a system to record, summarize and report cost information. c) Cost accounting is a post mortem of past costs. d) Cost accounting is not necessary if financial accounting provides necessary analysis.

Q2 Which of the following is least likely to be an objective of cost accounting system? (a) Product costing (b) Optimum sales mix determination (c) Maximization of profit (d) Sales commission determination Q3 Costing Technique in which all costs, variable as well as fixed, are charged to product, operations or services is (a) Historical costing (b) Absorption costing (c) Marginal costing (d) Direct costing

Q4 The costing approach wherein actual costs are ascertained after they have been incurred is (a) Marginal costing (b) Direct costing (c) Standard costing (d) Historical costing Q5 The cost which reflects the policies of the top management which result in periodic appropriations are called as (a) Future cost (b) Discretionary cost (c) Committed cost (d) Programmed cost Q6 In a given situation if a product is not produced the company can save on the salary of workers to the tune of Rs.1,00,000. In this case the salary of the worker is (a) Imputed cost (b) Unavoidable cost (c) Avoidable cost (d) None of the above Q7 Depreciation charged on Plant & Machinery is (a) Future cost (b) Discretionary cost (c) Committed cost

(d)

Programmed cost

Q8 Costs that are not relevant for decision-making and are not affected by increase or decrease in volume are (a) Out of pocket cost (b) Sunk cost (c) Differential cost (d) Imputed cost Q9 Which of the following statements is not true of pricing of inventories?

Q10 Which of the following statements is false?

11. A cost centre is: (a) (b) (c) (d) The part of the business where all costs are paid to suppliers A production department where all production costs are aggregated An area of the business accountable for both costs and revenues An area for which costs are accumulated

12. An investment centre is a responsibility centre where the manager has control of: (a) (b) (c) (d) Costs, profits and product quality Costs Costs and profits Costs, profits and assets

13. Responsibility accounting aims to: (a) Ensure that a manager is punished if things go wrong (b) Reduce the costs that a department incurs

(c) Allocate costs to all areas of a business (d) Ensure that costs become the responsibility of a specific manager 14. Prime cost can be defined as: (a) (b) (c) (d) The total costs of operating the production department where the product is made The total direct costs of manufacturing a product The total costs of manufacturing a product The cost of the first stage of the manufacture of a product

15. Which of the following best describes a fixed cost? (a) (b) (c) (d) Has a direct relationship with output Increases proportionately with output Remains constant irrespective of the level of activity Represents a fixed proportion of total costs

16. A business has the following transactions in a month: 2 Jan Bought 80 units at a total cost of 160 12 Jan Bought 50 units at a total cost of 150 19 Jan Sold 90 units earning total revenue of 540 22 Jan Bought 70 units at a total cost of 280 29 Jan Sold 80 units earning a total revenue of 480 Using the first-in, first-out (FIFO) method of stock valuation the cost of sales is: (a) 470 (b) 510 (c) 1,020 (d) 120 17. A business has bought and sold identical items of stock during 2006 as follows: 1/6/06 Bought 1,000 units @ 10 each 1/9/06 Bought 1,000 units @ 16 each 5/9/06 Sold 1,200 units @ 20 each Using the first-in, first-out (FIFO) method what is the value of the 800 units of stock left unsold at 31/12/06?

(a) (b) (c) (d)

10,400 8,000 16,000 12,800

18. The weighted average method of stock valuation would be most appropriate for: (a) A food retailer (b) A motor components retailer

(c) A building contractor (d) A chemical manufacturer 19. Direct labour costs will include: (a) (b) (c) (d) Total direct labour hours at the normal hourly rate of pay All labour costs attributable to a product Direct labour costs plus any bonuses Direct labour costs plus any bonuses and overtime premiums

20. An example of a production overhead would be: (a) (b) (c) (d) Labour costs Rent Supervisory costs Materials

21.Absorption costing is closely related to which of the following cost elements? (a) (b) (c) (d) Overheads Direct labour Total costs Prime costs

22.Which of the following would not be classed as a service department? (a) (b) (c) (d) The assembly department The finance department The canteen The maintenance department

23. Cost apportionment involves: (a) (b) (c) (d) The sharing out of costs to products The sharing out of common costs to departments The allocation of direct costs to departments The sharing out of overheads to service departments

24. Which of the following would be an inappropriate method of apportioning service department costs? (a) (b) (c) (d) Apportioning on the basis of service department activity Apportioning on the basis of floor area Sharing costs out equally between departments Apportioning on the basis of number of employees

25. Which of the following is an unsatisfactory method of dealing with reciprocal service costs? (a) Ignore the service department costs

(b) Use mathematical apportionment techniques (c) Apportion the service costs over production departments only (d) Use a specified order of apportioning service department costs 26. The most appropriate method of apportioning the rent of a building would be: (a) (b) (c) (d) On the basis of value of assets To share them out equally amongst all departments On the basis of number of employees On the basis of area of each department

27. Absorption costing refers to the process of: (a) (b) (c) (d) Absorbing the direct costs of production and service departments into products Absorbing direct costs of production into products Absorbing only production service cost centre costs into product costs Absorbing both production and non-production service cost centre costs into product costs

28. Which of the following would not normally be a suitable method of absorbing costs into products (a) (b) (c) (d) Total cost centre overhead / Number of employees Total cost centre overhead / Number of units processed in department Total cost centre overhead / Cost centre total machine hours Total cost centre overhead / Total cost centre direct labour cost

29. The following details relate to a particular company: i. ii. iii. iv. Machining Assembly Total cost centre overhead 120,000 180,000 Machine hours 15,000 9,000 Labour hours 2,000 8,000

The most appropriate overhead rate to use for the machining department would be:

(a) (b) (c) (d)

5 per direct machine hour 7.06 per hour 8 per direct machine hour 60 per direct labour hour

30. The following details were extracted from the cost records of a company: Machining Assembly Maintenance Administration Area sq/m 5,000 6,000 2,000 1,200 No. of employees 6 13 2 3 If it cost 3,500 to insure the buildings, the amount that would be apportioned to the assembly department would be:

(a) (b) (c) (d)

1,479 72 1,896 372

31.Which of the following is true? (a) (b) (c) (d) Overhead absorption rates will normally be based on estimates of what costs are expected to be Once set, overhead absorption rates will not change from one year to the next Absorption rates will change continuously to reflect changes in output and costs Overhead absorption rates will only be calculated when all actual costs are known

32.The total cost of a product will include: (a) (b) (c) (d) Prime cost only Prime cost plus non production overhead Prime costs plus direct production overhead plus indirect production overhead plus tax Prime costs plus direct production overhead plus indirect production overhead

33.Overhead absorption exercises will be most useful where: (a) (b) (c) (d) The market determines the selling price of a product The total direct cost of a department is needed Selling prices can be based on costs A departmental manager will be held responsible for the costs that are apportioned to them

34.A company has a budgeted level of fixed overheads of 385,000 and the overhead recovery rate is 4.25 per machine hour, What is the number of machine hours we expect to use? (a) (b) (c) (d) 90,600 4,250 385,000 1,636,25

35.Under-recovery of overheads occurs when: (a) (b) (c) (d) The overhead charged to production is lower than the actual overhead incurred The basis of apportioning overheads has changed during the period Actual overheads have fallen in relation to what they were expected to be The actual overhead incurred is less than the overhead that has been charged to production

36.A semi variable cost would: (a) Be more than zero if no products were made and would then increase in direct proportion to output (b) Be zero if output were zero and would change erratically as output increased (c) Be zero when output is zero and would increase in direct proportion to output

(d) Be a fixed amount when output was zero and would not increase in direct proportion to output

37.An example of a semi variable cost would be: (a) (b) (c) (d) The costs of insuring assets The costs of material to be used for production The salaries of supervisors in a department Electricity costs

38. If actual units produced are lower than the budgeted level of production which of the following types of cost would you expect to be lower than the budget? (a) (b) (c) (d) Variable costs per unit Fixed costs per unit Total fixed costs Total variable costs

39. In the long run a business must: (a) (b) (c) (d) Charge a price that covers its variable costs only Charge a price that covers both fixed and variable costs Charge a price that covers its fixed costs only Charge a price that leads to a positive contribution

40.The break even point in units is represented by the equation: (a) (Sales revenue - Fixed costs) / Contribution per unit (b) Fixed costs / selling price per unit (c) Fixed costs / Contribution per unit (d) Fixed costs / Variable costs

1.