Sam - Cost Accounting

MAHAVIR COMMERCE ACADEMY___________T.Y.B.
COM / Vl SEM / COST ACCOUNTING
CHP:-1 Cost Control Accounts

Q.1
Midland Engineering Co.s cost ledger indicates the following opening balance as on 1-1-2014:
Rs.
Rs.
General ledger adjustment account
15,200
Stores ledger control account
8,700
Work-in-progress ledger control account
4,300
Finished goods ledger control account
2,200
15,200
15,200
Purchase for stores
57,600
Purchase for special jobs
1,700
Direct wages
38,600
Indirect factory wages
9,500
Administration salaries
9,700
Selling and distribution salaries
4,300
62,100
At the year-end, the following information is obtained :
Production expenses
12,400
Administration expenses
8,500
Selling and distribution expenses
5,400
Stores issued to production
54,700
Stores issued to maintenance
2,500
Returns to supplier
200
Production overheads absorbed by production
24,500
Administration overheads absorbed by finished goods
15,200
Selling and distribution overheads recovered on sales
9,600
Page 1 of 52
MAHAVIR COMMERCE ACADEMY___________T.Y.B.COM / Vl SEM / COST ACCOUNTING
Products finished during the year
1,17,700
Finished goods sold at cost
1,32,300
Sales
1,50,000
You are required to record the entries in the cost ledger for the year and prepare a Trial Balance.
Q.2
Costman Ltd. maintains separate set of books for financial accounts and cost accounts. The following information
Is furnished for the year 2013.
Particulars
Material Control A/c
Work-in-progress Control A/c
Finished Good Control A/c
Cost Ledger Control A/c
Transactions for the year are :
Materials purchased
Materials issued as :
Direct materials
Indirect materials
Wages paid allocated as :
Direct cost
Indirect cost
Production expenses
Value of finished goods produced
Closing Stock of finished goods
Selling expenses
Sales
Prepare the necessary control accounts in books of costing records.
Rs.
60,000
90,000
1,40,000
2,90,000
6,60,000
4,50,000
1,20,000
2,70,000
90,000
2,40,000
10,80,000
1,20,000
2,40,000
1,80,000
18,00,000
Page 2 of 52
Q.3
On 31st March 2013 the following balances were extracted from the books of Turf and Surf company.
Particulars
Stores Ledger Control A/c
Finished Goods Control A/c
Total
Dr. Rs.
3,50,000
3,80,000
2,50,000
9,80,000
Cr. Rs.
9,80,000
9,80,000
The following transactions took place in March, 2013 :
Particulars
Rs.
Raw materials : Purchased
9,50,000
Returned to Suppliers
30,000
Issued to production
9,80,000
Returned to stores
30,000
Productive Wages
4,00,000
Indirect Labour
2,50,000
Factory Overheads
5,00,000
Selling and Distribution Overheads
4,00,000
Cost of finished goods transferred to warehouse
21,30,000
Cost of goods sold
21,00,000
Sales
30,00,000
Factory Overheads are applied to production at 150% of Direct Wages, any under/over absorbed overhead being
Carried forward for adjustment in the subsequent months. All selling and distribution overheads are treated as
Period costs and charged off to the Profit and Loss Account of the month in which they are incurred.
Show the necessary Control Accounts, Costing Profit and Loss A/c and the Trial Balance.
Q.4
As on 31st March, 2013, the following balances existed in Sharad Co. Ltd.s Cost Ledger.
Particulars
Stores Ledger Control Account
Work in Progress Control Account
Finished Stock Ledger Control Account
Manufacturing Overhead Control Account
Cost Ledger Control Account
Total
Dr. Rs.
6,02,870
2,44,730
5,03,890
13,51,49
0
Cr. Rs.
21,050
13,30,440
13,51,490
During the next three months, the following items arose :
Page 3 of 52
Particulars
Finished Product (At Cost)
Manufacturing Overhead Incurred
Raw Materials Purchased
Factory Wages
Indirect Labour
Cost of Sales
Material Issued to Production
Sales return at Cost
Materials returned to Suppliers
Manufacturing Overhead Charged to Production
You are required to write up :
Q.5
Rs.
4,21,670
1,83,020
2,46,000
1,01,060
43,330
3,71,780
2,54,630
10,760
5,800
1,54,400
(a)
(b)
Store Ledger Control Account
(c)
Overhead Control Account
(d)
Work in Progress Control Account
(e)
(f)
Trial Balance (indicating, in brief, what each balance represents)
(g)
Cost of sales A/c
A Ltd. follows non-integrated system of Accounting. Following is the Trial Balance as on 01-01-2014:
Particulars
Work-in-Progress Control A/c
Total
Following were the transactions during the month of January :
Dr. Rs.
2,50,000
2,00,000
3,50,000
8,00,000
Cr. Rs.
8,00,000
8,00,000
Materials Purchased
7,50,000
Material issued to Production
3,00,000
Page 4 of 52
Factory
40,000
Office
10,000
Total Wages Paid
3,00,000
Direct Wages charged to Production
2,50,000
Indirect Wages
50,000
Office Overheads Paid
30,000
Office Overheads applied to Finished Goods
38,000
Selling and Distribution Overheads Incurred
30,000
Selling and Distribution Overheads applied to Cost of Sales
31,000
Factory Overheads charged to Production @ 35% of Direct Wages

Finished Goods Produced
8,00,000
Cost of Finished Goods Sold
10,00,000
Sales
12,00,000
Prepare the following accounts for the Month :
Q.6
(a)
(b)
(c)
Finished Goods Ledger Control A/c
(d)
(e)
Factory Overhead Control A/c
(f)
Office Overhead Control A/c
(g)
Selling and Distribution Overhead Control A/c
(h)
Profit and Loss A/c
As on 31st March, 2014, the following balances were extracted from books of the Supreme Manufacturing
Company,which follows Non-integrated System of Cost Accounting :
Page 5 of 52
Particulars
General ledger Control A.c
Dr. Rs.
56,000
60,000
40,000
1,56,800
Cr. Rs.
1,56,800
1,56,800
The following transactions took place in April 2014 :
Particulars
Raw materials :
(i) Purchased
(ii) Returned to suppliers
(iii) Issued to production
(iv) Returned to stores
Productive wages
Rs.
1,52,000
4,800
1,56,800
4,800
64,000
Particulars
Indirect labour
Factory overhead expenses incurred
Selling and administrative expenses
Cost of finished goods transferred to warehouse
Cost of goods sold
Sales
Rs.
40,000
80,000
64,000
3,40,800
3,36,000
4,80,000
Factory overheads are applied to production at 150% of direct wages, any under/over-absorbed overheads being carried
forward for adjustment in the subsequent months. All administrative and selling expenses are treated as period costs and
charged off to the Profit and Loss Account of the month in which they are incurred.
Show the following accounts in the Companys books :
(a)
General Ledger Control A/c
(b)
(c) Work-in-progress Control A/c
(d)
Finished Goods Stock Control A/c
(e)
(f)
Costing Profit and Loss A/c
(g) Trial Balance as at 30th April, 2014.
Q.7
The following balances are shown in the cost ledger of Vinak Ltd. as on 31st March, 2013 :
Particulars
Work in Progress Account
Factory Overhead Suspense Account
Finished Stock Account
Stores Ledger Account
Administrative Overhead Suspense Account
General Ledger Adjustment Account
Dr. Rs.
7,056
360
5,274
9,450
180
Cr. Rs.
22,320
Page 6 of 52
Transactions for the year ended 31st March, 2014 were :
Particulars
Stores issued to production
Stores purchased
Material purchased for direct issue to production
Wages paid (Including indirect labour Rs. 2,520)
Finished goods sold
Selling expenses
Factory overheads
Stores issued for capital work in progress
Finished goods transferred to warehouse
Stores issued for factory repairs
Factory overheads applied to production
Administration Overheads charged to production
Factory overheads applicable to unfinished work
Selling overheads allocated to sales
Store lost due to fire in stores (Not issued)
Administration expenses on unfinished work
Finished goods stock on 31-3-2014
Rs.
45,370
52,400
1,135
57,600
1,18,800
5,400
6,000
15,600
1,500
1,08,000
2,000
16,830
4,580
3,080
5,500
150
850
14,274
You are required to record the entries in the cost ledger for the year ended 31-3-2014 and prepare a trial balance
As on that date.
Q.8
The following balances were extracted from a companys ledger as on 31st December 2013.
Particulars
Raw Material Control A/c
Finished Stock Control A/c
General Ledger Control A/c
Rs.
48,836
14,745
21,980
85,561
Rs.
85,561
85,561
Further transaction took place during the following quarter as follows :
Rs.
Factory overhead Allocated to WIP
11,786
Goods Finished At cost
36,834
Raw materials purchased
22,422
Direct wages Allocated to WIP
18,370
Page 7 of 52
Cost of goods sold
42,000
Raw materials issued to production
17,000
Raw materials Credited by suppliers
1,000
Inventory audit Raw material losses
1,300
WIP rejected (with no scrap value)
1,800
Customers returns (at cost) of finished goods
3,000
Prepare all the Ledger Accounts in Cost Ledger.
Q.9
Following information have been extracted from the cost records of XYZ Pvt. Ltd.
Particulars
Rs.
Stores :
Opening Balance
54,000
Purchases
2,88,000
Transfer from WIP
1,44,000
Issue to WIP
2,88,000
Issue for repairs
36,000
Deficiency found in Stock
10,000
Work-in-Progress :
Opening Balance
1,08,000
Direct Wages Applied
1,08,000
Overheads Charged
4,32,000
Closing Balance
72,000
Finished Production :
Entire production is sold at a profit of 15% on cost at WIP
Wages Paid
1,26,000
Overheads Incurred
4,50,000
Draw the Stores Ledger Control Account, Work-in-Progress Control Account, Overheads Control Account and Costing
Profit and Loss Account.
Page 8 of 52
Q.10
Following are the balances in Cost Ledger of a Manufacturing Company on 1st April, 2014.
Debit (Rs.)
Credit (Rs.)
17,000
Work-in-Progress Ledger Control Account
22,800
12,000
51,800
You are given the following information for the year ending 31st March, 2015.
Particulars
Purchase of Materials
Direct Factory Wages
Manufacturing Expenses
Selling and Distribution Expenses
Manufacturing Expenses Recovered
Selling and Distribution Expenses Recovered
Sales
Stock of Materials at end
Stock of Finished Goods at end
Work-in-Progress at end
Prepare related Cost Control Accounts.
Q.11
Rs.
50,000
70,000
44,600
15,400
47,200
44,440
15,320
1,60,000
19,800
14,700
24,700
Following are the balances in Cost Ledger of a Manufacturing Company on 1st April, 2015.
Debit (Rs.)
Credit (Rs.)
4,580
1,020
Work-in-Progress Control Account
2,465
4,420
12,485
Page 9 of 52
Following are the transactions for the month ending on 30th April, 2015 :
Particulars
Raw material purchased
Factory wages
Factory overhead incurred
Indirect labour
Factory overhead charged to production
Cost of sales
Sales return at cost
Finished product at cost
Sales
Prepare the following cost control accounts :
(i)
Rs.
64,500
51,520
12,480
8,120
2,460
11,600
57,850
1,000
67,500
60,000
(ii) Work in Progress Ledger Control Account

(iii) Finished Stock Ledger Control Account
(iv) Stores Ledger Control Account
(v) Cost of Sales Account
(vi) Work Overheads Control Account
(vii) Costing P & L Account.
Page 10 of 52
Page 11 of 52
CHP:-2 Contract Costing

Q.1
Siddesh Construction company has undertaken three contracts during the year and the following particulars are
Available as on 31-12-2014.
Contract Price
Material issued to Contract
Labour
Sub-contract charges
Supervision charges
Architect fees
Insurance charges
Contract
A
Rs.
10,00,000
1,65,200
1,02,800
72,800
12,000
10,000
3,000
Contract
B
Rs.
25,00,000
2,24,500
1,26,500
65,900
18,000
15,000
6,100
Contract
C
Rs.
7,50,000
1,89,600
1,75,500
28,500
15,000
25,000
7,400
Page 12 of 52
Work Certified
Work Uncertified
Amount
received
from
contractee
Closing stock of Material
4,00,000
35,000
3,20,000
9,000
5,00,000
40,000
4,50,000
10,000
5,00,000
25,000
3,75,000
20,000
All contracts were commenced during the current year. Total Depreciation on plants amounted to Rs. 11,200 and allocate
the same to all contracts in the ratio of work certified.
Prepare Contract Accounts. Show the calculation of profit transferred to Profit and Loss Account.
Q.2
M/s Rajkumar and company has undertaken two contracts viz A and B. The following particulars are available for the
Year ended 31st March, 2014.
Particulars
Date of Commencement
Contract A
Contract B
1st July 2013
1st Dec. 2013
(Rs.)
(Rs.)
Contract Price
6,00,000
5,00,000
Materials sent to site
1,60,000
60,000
Materials returned
4,000
2,000
Closing stock of materials at site
22,000
8,000
Direct Labour
1,50,000
42,000
Direct Expenses
66,000
35,000
Establishment Expenses
25,000
7,000
Plant installed at site
80,000
72,000
Work Uncertified
23,000
10,000
Work Certified
4,20,000
1,35,000
Architect Fees
2,000
1,000
During the year materials costing Rs. 9,000 have been transferred from contract A to contract B. The contractor charges
Depreciation @ 25% p.a. on Plant.
You are required to prepare contract Accounts, working for profits, if any, and show how the relevant items would appear
in the Balance-sheet assuming that contractee had paid 90% of the work-certified.
Q.3
Madhuri Construction Pvt. Ltd. obtained two contracts viz. Contract A and Contract B. Contract A commenced on 1 st
April, 2013 and Contract B started on 1st June, 2013, following information extracted from their books for the year ended
31st March, 2014.
Particulars
Materials issued
Direct wages
Direct expenses
Sub. Contract charges
Architect fees
Administrative overheads
Contract A
Rs.
4,45,000
2,74,000
1,23,300
73,350
24,000
3,24,750
Contract B
Rs.
4,95,000
3,23,500
94,750
45,470
35,000
3,74,800
Page 13 of 52
Electric services and fittings

15,270
18,380
Plant issued at commencement
5,00,000
6,00,000
Contract price
25,00,000
30,00,000
Work certified
13,00,000
18,00,000
Work uncertified
30,000
75,000
Cash received
10,40,000
16,20,000
Accured wages as on 31st March, 2014
15,000
18,000
Material at site
40,000
70,000
Materials returned to store
3,000
10,000
On 20th October, 2013, Materials costing Rs. 5,330 have been transferred to Contract A from contract B. Provide
Depreciation @ 25% p.a. on original cost of plant.
You are required to prepare both Contract Accounts for the year ended 31st March, 2014.
Q.4
Mohan Construction Pvt. Ltd. obtained two contracts viz. Angel and Paradise. Contract Angel commenced on 1 st
October, 2013 and Contract Paradise started on 1st December, 2013. Following information was extracted from their
Books for the period ended 31st March, 2014.
Particulars
Contract Price
Cash Received
Plant issued at commencement
Work Certified
Work Uncertified
Direct Wages
Direct Expenses
Supervision Charges
Administrative Overheads
Sub-contract Charges
Electricity Charges
Architect Fees
Indirect Materials
Direct Materials
Direct Material Returned to Stores
Direct Material at site at the end of Period
Contract Angel
Rs.
70,00,000
14,00,000
22,50,000
17,50,000
52,000
2,95,000
1,36,500
27,500
2,72,500
63,700
48,800
52,000
1,47,000
3,58,000
14,000
73,000
Contract Paradise
Rs.
60,00,000
7,65,000
12,00,000
9,00,000
28,000
1,77,500
88,700
22,500
1,47,500
44,200
28,600
27,000
89,800
1,97,200
12,000
42,000
Other Information :
(1)
On 15th December, 2013 Direct Material costing Rs. 22,000 have been transferred to contract Paradise from
Contract Angel.
(2)
On 21st February, 2014 Indirect Material costing Rs. 15,000 have been transferred from contract Paradise to
Contract Angel.
(3)
Provide depreciation @ 20% p.a. on the original cost of plant.
Page 14 of 52
You are required to prepare Contract Angel A/c and Contract Paradise A/c for the period ended 31st March, 2014.
Q.5
A firm of contractors commenced three contracts viz. A, B, C on 1st April, 2012, on 1st October, 2012 and on 1st January,
2013 respectively. The following particulars about above three contracts are obtained for the year ended 31 st March, 2013.
Particulars
Contract A
Contract B
Contract C
Contract Price (Rs.)
8,00,000
2,50,000
2,50,000
Materials Issued (Rs.)
1,44,000
58,000
20,000
Wages Paid (Rs.)
2,20,000
1,12,400
14,000
Direct Expenses Paid (Rs.)
10,400
3,600
1,400
Plant Installed (Rs.)
40,000
16,000
12,000
Material at site at end of the year (Rs.)
8,000
4,000
2,000
Wages Outstanding (Rs.)
6,800
3,600
1,600
Work Certified (% of contract price)
50%
64%
14.4%
Cash Received
75%
75%
75%
Work Uncertified (Rs.)
12,000
8,000
2,100
Direct Expenses Prepaid (Rs.)
1,200
400
200
The plants are installed on respective dates of the contracts and depreciation is to be provided at 10% p.a.
Prepare Contract Accounts A, B and C and show the calculation of profit transferred to Profit and Loss Account.
Q.6
Navketan Ltd. has undertaken two contracts. It furnishes the following information for the year ended 31st March, 2013.
Particulars
1. Balances on 1st April, 2012 :
Material at site
Uncertified work
Plant at site
Work Certified
Provisions for Contingencies
2. Transactions during the year :
Material issued
Subcontract charges
3. Balances on 31st March, 2013 :
Material at site
Sangli
Contract
Rs.
Satara
Contract
Rs.
300
7,500
6,600
58,500
3,000
6,000
12,000
9,300
4,200
1,800
1,800
18,600
35,400
3,000
Page 15 of 52
Uncertified work
Plant at site
Work certified
75,000
4. Contract price
75,000
5. Amount received
75,000
6. Value of plant transferred from Sangli contract to Satara contract Rs. 4,650.
3,000
6,000
90,000
1,20,000
81,000
The Company consistently adopts to policy of taking credit for the contract profit considering the proportion of amounts
Received to the contract price.
You are required to :
Prepare Sangli contract account and Satara contract account for the year ended 31st March 2013.
Q.7
The following particulars relate to the building which a firm of builders had in course of construction under contract :
Particulars
Building A
Rs.
35,000
Building B
Rs.
Work-in-progress
(Excluding Rs. 2,000 estimated profit which was taken to
Profit and Loss Account in 2012)
Material Purchased
57,000
41,500
Wages
50,000
35,000
Electrical Services and Fitting
3,500
750
Road Making Charges
20,000
Contract Price (including Road making)
1,50,000
1,00,000
Cash Received to 31-12-2013
1,50,000
60,000
Percentage of Cash received to Work certified
100%
66.67%
Value of Materials in Hand on 31-12-2013
1,000
1,350
Completed Work on Certified
6,250
Value of Plant used on Sites
30,000
15,000
Period of Plants remained on Sites during the year
10 months
8 months
The total establishment expenses incurred during the year 2013 amounted of Rs. 30,600. These are to be charged to the
Two contracts in proportion of wages. Depreciation on plant to be taken into account at the rate of 10% per annum.
Prepare the Building A and Building B contract accounts showing the Profit and Loss on each building for the year 2013
and sums which you consider appropriately transferable to the Profit and Loss account.
Q.8
Highway Flyovers Construction Ltd., has received a contract for construction of a flyover for a contract price of
Rs. 820 lacs. The contractee has agreed to pay 90% of the Work Certified. The Company has decided not to book any
Profit to the P & L Account until 25% of the total work is completed and thereafter in that ratio which the amount received
Page 16 of 52
bears to the total contract price. The entire amount was received by 31-3-2014.
Highway Flyovers Construction Ltd. has commenced their project work on 1 st August, 2012 and completed the work by
31st January, 2014. The value of Plant and Machinery bought for the contract was Rs. 57 lacs and the estimated scrap value
of the machinery at the end of the contract was Rs. 12 lacs. The accounts are maintained on financial year ending 31 st
March and the details are as under.
Particulars
2012-2013
2013-2014
Rs.
Rs.
Materials
2,28,00,400
26,01,000
Wages
1,09,27,800
38,10,000
Direct Expenses
92,85,400
29,44,000
Indirect Expenses
87,88,400
11,05,000
Supervision Charges (monthly)
40,000(p.m.)
30,000 (p.m.)
Administrative Overheads (monthly)
82,500 (p.m.)
40,000(p.m.)
Architect Fees
5% of work certified
RCC Consultant Fees
Work uncertified at the year end
11,35,000
Materials at site at the year end
3,37,000
Amount received during the year
5,90,40,000
2,29,60,000
You are required to prepare Contract Accounts for the years ended 31st March, 2013 and 31st March, 2014 and compute
Profit/Loss from the Contract.
Q.9
Bal Ram contractors undertook a contract for Rs. 15,00,000 on 1st July, 2012. The contract was completed on 31st
March, 2014. The contractor prepares his accounts on 31st March. The details of the contract are :
Particulars
Period
Period
From 1-7-12 to 31-3-13
From 1-4-13 to 31-3-14
Material issued
1,52,000
3,30,000
Direct wages
1,25,000
4,65,000
Direct Expenses
30,000
45,000
Materials returned to stores
22,000
15,000
Material at site
20,000
8,000
Uncertified work
48,000
Office overheads
23,000
66,000
Material lost by fire
5,000
Work certified
3,00,000
15,00,000
Plant issued
3,00,000
1,50,000
Provide depreciation @ 20% p.a. on plant. Prepare Contract Accounts for the years ended 31-3-2013 and 31-3-2014.
Q.10
M/s Jadhav Contructions undertook contract for Rs. 5,00,00,000 on 1st August, 2012. The contract was completed on
31st March, 2014. The contractor closes his accounts on 31st March. The details of the contract are as follows :
Page 17 of 52
Particulars
For the period

For the year
Ended 31-3-13
Ended 31-3-14
Rs.
Rs.
Material Issued
95,48,500
1,17,65,000
Direct Labour
31,37,800
45,40,000
Subcontract Charges
7,88,900
28,13,000
Administrative Overheads
15,85,400
31,42,000
Supervision Charges
3,45,600
8,05,500
Material Returned to Stores
1,32,400
2,44,300
Work Uncertified
5,23,200
Work Certified (Cumulative)
2,00,00,000
5,00,00,000
Material at Site
1,00,600
Cash Received
1,80,00,000
3,20,00,000
Architects Fees
4% of Work Certified
4% of Work Certified
The Plant and Machinery purchased on 1-8-2012 for the contract was Rs. 84,25,000 and the estimated scrap value of the
Plant and Machinery at the end of the contract was Rs. 4,25,000. It realized on completion of contract at its estimated
Scrap value.
You are required to prepare :
Q.11
(a)
Contract Account for the period ended 31st March, 2013 and
(b)
Contract Account for the year ended 31st March, 2014.
Jai Hind Construction Ltd., obtained the contract to construct a Housing Complex for Rs. 300 lakh. The Contractee agrees
to pay 90% of the work certified immediately upon the receipt of the certificate from the Archetect and the balance
amount
would be paid on the completion of contract.
The work was commenced on 1st August, 2010 and completed on 31st March, 2012. A machine costing Rs. 30,00,000 was
specially bought for use on contract and it would fetch Rs. 3,00,000 as scrap value on completion of the contract. The
accounts are closed on 31st March, every year. Further details are as follows :
Particulars
31-3-2011
Rs.
31-3-2012
Rs.
Page 18 of 52
Monetary Information
Wages
10,50,000
Indirect Materials
18,30,000
Direct Expenses
3,95,000
Office Expenses
5,79,000
Price per ton of Steel
42,000
Price per Brick
8
Scrapped Value of Bricks
1,20,00,000
Work Certified
5,00,000
Quantitative Information :
Steel Purchased
Ton
105
Returned
Ton
4
Lost in Accident Ton
Sold
Bricks Purchased
Nos.
1,20,000
Returned
Nos.
3,000
Lost in Accident Nos.
1,500
Prepare Contract Accounts for the year ended 31-3-2011 and 31-3-2012.
Q.12
19,80,000
31,40,000
6,80,000
8,64,000
44,000
9
32,000
3,00,00,000
120
3
5
3
1,50,000
2,000
-
The following information relates to a building contract undertaken by M/s. Asmit Ltd. for Rs. 10,00,000 and for which
80% of the value of work certified by the architect is being paid by the contractee.
The value of plant

was Rs. 11,200, Rs. 7,000
Prepare Contract
Account for these
Q.13
Particulars
Material Issued
Direct Wages
Direct Expenses
Indirect Expenses
Work Certified
Uncertified Work
Plant Issued
Material on Site
1 year
1,20,000
1,10,000
5,000
2,000
2,35,000
3,000
14,000
2,000
II Year
1,45,000
1,55,000
17,000
2,600
7,50,000
8,000
5,000
III Year
84,000
1,10,000
6,000
500
10,00,000
8,000
at the end of I, II, III year

and Rs. 3,000 respectively.
three years.
The following information relates to a contract for Rs. 2,00,00,000 and for which 80% of the value in progress as
Certified by the architect was paid by the contractee.
Particulars
Material Issued
Direct Wages
Direct Expenses
Indirect Expenses
Uncertified Work
I Year (Rs.)
9,20,000
14,00,000
1,00,000
20,000
45,00,000
1,00,000
II Year (Rs.)
18,80,000
27,00,000
1,90,000
40,000
1,50,00,000
1,00,000
III Year (Rs.)

29,00,000
19,00,000
2,20,000
50,000
2,00,00,000
-
Page 19 of 52
Plant Issued
1,50,000
Material on site at the year end
50,000
70,000
1,00,000
Architects fees
The value of plant at the end of 1st year, IInd year and IIIrd year was Rs. 1,20,000, Rs. 90,000 and Rs. 75,000
respectively.Prepare Contract Account for these three years and show the calculation of profit transferred to
Q.14
Bhushan Contractors Ltd. obtained the contract to construct a Building for Rs. 35,00,000. The contractee agrees to pay
90% of the work certified immediately upon the receipt of the certificate from the Architect and the balance amount
Would be paid on the completion of contract.
The work was commenced on 1st July, 2012 and completed on 30-09-2014.
A machine costing Rs. 45,000 was specially bought for use on contract and it would not fetch any value upon completion
Of the contract.
Further details are as follows :
Particulars
Work Uncertified
Materials Purchased
Steel
Price Per Ton
Bricks
Price Per Brick
Wages
Direct Overheads
Indirect Materials
Materials Returns
Steel
Bricks
Materials Lost in Accident
Steel
Materials Sold
Steel
Sale Price Per Ton
Scrapped Value of Bricks
Rs.
Rs.
Year
2012
8,75,000
-
Year
2013
28,25,000
50,000
`Year
2014
35,000
-
(Tons)
Rs.
Nos.
Rs.
Rs.
Rs.
Rs.
16
25,000
16,000
5.00
4,25,000
17,500
7,500
20
26,000
20,000
5.50
5,65,000
44,500
10,000
15
26,500
10,000
6.00
4,17,000
10,000
4,000
Ton
Nos.
1
1,000
Tons
Tons
Rs.
Rs.
4
27,000
18,000
Page 20 of 52
You are required to prepare Contract Account and Contractee accounts for the year 2012, 2013 and 2014 in the books of
the company. The accounts are closed on 31st December each year.
Q.15
A Company took up a Contract for Rs. 10 crore and as per the agreement, it would receive 75% of the work certified
Each year. The contract was commenced on 1st April, 2010 and completed on 1st October, 2013, Further details are as
Follows :
Particulars
Machinery Purchased
Materials Purchased
Labour
Other Expenses
Stock of materials at year end
Work Uncertified
2010-2011
Rs.
50,00,000
20,00,000
10,00,000
5,00,000
1,00,000
20,00,000
8,00,000
2011-2012
Rs.
2012-2013
Rs.
50,00,000
30,00,000
12,18,000
2,00,000
2,00,00,000
10,00,000
1,00,00,000
50,00,000
40,00,000
3,20,000
5,00,00,000
60,00,000
2013-2014
Rs.
200,00,000
1,40,00,000
90,00,000
5,50,000
10,00,00,000
-
During 2010-2011 materials costing Rs. 20,000 were returned to stores.

During 2012-2013 certain materials costing Rs. 30,000 were found unsuitable and sold at a loss of Rs. 4,000. Materials
Worth Rs. 8,000 were stolen from site.
During 2013-2014 there was an accident at site due to which a worker had to be paid Rs. 50,000 as compensation.
This amount is included in wages. On completion of of contract the machinery was sold for Rs. 25,00,000. The company
Provides depreciation at 20% p.a. on Machinery on diminishing balance method. The company closes its accounts on
31st March every year.
Prepare Contract Account for each of the above years. Also show contactees Account.
Q.16
The Perfect Construction Company Ltd. has undertaken the construction of a bridge for a value of Rs. 45,00,000
subject to A retention of 20% until one year after the certified completion of the contract.
The following information is available for the year ended 31st March 2014 :
Particulars
Rs.
Page 21 of 52
Labour on site
Material sent to site
Material from stores
Plant hire
Direct expenses
General overheads allocated to the contract
Material at site (31-3-2014)
Wages accrued on 31-3-2014
Direct expenses accrued on 31-3-2014
Work not yet certified at cost
Value of work certified
Cash received on account
You are required to prepare :
(i)
11,55,000
12,30,000
2,35,500
34,800
63,000
1,18,200
22,800
28,800
5,100
43,500
39,00,000
31,20,000
Contract account
(ii) Contractees account and

(iii) Show relevant items in the Balance Sheet.
Q.17
Following details are related to Contract P for the year ended 31st March, 2014.
Particulars
Materials issued
Materials at site
Plant issued
Depreciation on Plant
Work Certified
Work Uncertified
Reserves
Cash Received (80% of the Work Certified)
Outstanding Expenses
Direct Wages paid
Rs.
8,00,000
50,000
4,50,000
90,000
?
30,000
1,40,000
14,40,000
16,000
2,30,000
You are required to show the relevant items in the Balance Sheet in respect of above contract as on 31st March, 2014.
Q.18
Mr. Vivek undertook a contract for the construction of building on 1st January, 2013, the contract price being
Rs. 1,50,000.The following details are available for the year 2013 :
Rs.
Materials purchased
2,40,000
Materials issued from stores
3,00,000
Labour employed on site
90,000
Page 22 of 52
Plant installed on site
1,20,000
Direct Expenses
60,000
Proportionate establishment charges
15,000
Cash received (80% of work certified)
6,00,000
Work un-certified
1,50,000
Materials returned to stores
15,000
Materials in hand at the end
6,000
Wages outstanding
18,000
Direct expenses accrued
24,000
Prepare the Contract Account and show the amount that would appear in the Balance Sheet. A part of plant costing
Rs. 20,000 was stolen at the beginning of the year and the Insurance Co. paid Rs. 12,000. Plant is depreciated @ 20% p.a.
Q.19
The following trial balance was extracted on 31-12-2013 :
Particulars
Land and Building
Bank Balance
Contract A/c : Materials
Plant
Wages
Expenses
Rs.
Particulars
Rs
64,000 Capital
1,00,000
18,000 Sundry Creditors
12,000
1,00,000 Cash Received
2,70,000
40,000 (90% of work certified)
1,50,000
10,000
3,82,000
3,82,000
The contract price is Rs. 5,00,000. It began on 1st January 2013. Out of the plant and material charged to the contract,
Plant costing Rs. 4,000 and materials costing Rs. 6,000 were destroyed by an accident.
On 31-12-2013 plant costing Rs. 10,000 was returned to store, the value of materials on site was Rs. 5,000 and the
Cost of work done but not certified was Rs. 10,000. Depreciate plant at 10% p.a. and 2% land and building.
Prepare Contract A/c after taking 2/3 profit on cash basis to profit and loss A/c and balance sheet as on 31-12-2013.
Page 23 of 52
Q.20
M/s. AB & Associates, a partnership firm comprising of partners A and B, undertook a contract to build a Bridge for
Rs. 20,00,000 and commenced the work on 1-10-2013.
The following is the Trial Balance of firm as on 30-9-2014 :
Particulars
Plant & Machinery
Office Buildings
Materials Purchased
Wages
Sub-contracting Charges
Interest
Office Overheads
Debit
Rs.
2,50,000
3,00,000
4,20,000
1,40,000
80,000
10,000
50,000
12,50,000
Particulars
Capitals : A
B
Advanced From Contractee
Bank Overdraft
Outstanding Wages
Creditors
Loans
Credit
Rs.
1,20,000
80,000
6,00,000
1,40,000
10,000
1,50,000
1,50,000
12,50,000
Additional Information :
(1)
Materials worth Rs. 4,00,000 were sent to site.
(2)
Out standing sub-contracting charges Rs. 20,000 at the year end.
(3)
Allocate 50% of Office overheads and 10)% wages to contract.
(4)
Plant and Machinery were used for the whole year on contract and provide depreciation @ 10% p.a.
(5)
Partner A was entitled to salary of Rs. 20,000 for site supervision for the year. Provide the same in Account.
(6)
Contractee pays 75% of the work certified.
(7)
Partner A & B share profit and Losses in the ratio of 6 : 4 respectively.
(8)
At the end of the year, work uncertified valued at Rs. 10,000 and materials at site Rs. 20,000.
Prepare Contract Account. Profit and Loss Account for the year ended 30-9-2014 and Balance Sheet as on that date.
Page 24 of 52
Page 25 of 52
CHP:-3 Process Costing

Q.1
Samantar Ltd. manufactures a product which passes through two consecutive processes viz. Purvardha and Uttarardha.
The company furnishes you with the following information for the year ended 31st March, 2014.
Particulars
Basic Material
Rate per unit
Purvardha
Uttarardha
5,000 Units
Rs. 2.20
Rs.
Rs.
Process Material
4,000
3,000
Wages
3,000
4,000
Factory Overheads
2,000
2,630
Process Loss as percentage of input
10%
10%
Scrap value of process loss (per 100 units)
40
60
Prepare process account and other relevant accounts under the following two alternative circumstances assuming that the
Entire process loss is :
Circumstance 1 : Normal Loss and
Circumstance 2 : Abnormal Loss
The entire output of Uttarardha process was sold for Rs. 30,000. Show the consequent reflection of the final results in
Profit and Loss Account under both the circumstances.
Q.2
Y Ltd. manufactures a chemical product which passes through three processes. The cost records show the following
particulars for the year ended 30th June, 2014.
Page 26 of 52
Input to I process 20,000 units @ 28 per unit.
Prepare Process
Gain/Loss Account. Also
unit for each process.
Particulars
Materials
Labour
Expenses
Normal Loss
Scrap value per unit
Actual Output (Units)
Q.3
Product A is
processed through process X, Y and Z.
Process I
Rs.
48,620
32,865
2,515
20%
1
18,000
Process II
Rs.
1,08,250
84,553
10,588
15%
2
16,000
Process III
Rs.
1,03,345
77,180
16,275
10%
3
15,000
Accounts,
Abnormal
show process cost per
obtained
after
it
is
is no stock in
You
are
prepare
the
Accounts.
The following cost information is available for the month ended 31st March, 2014.
Process
X
Number of Units introduced in the process
500
Rate per Unit of units introduced (Rs.)
04
Cost of Material
2,600
Direct Wages
2,250
Production Overheads
2,250
Normal Loss (% on units introduced in each process i.e. input)
10%
Value
of
Scrap
per
unit
02
Q.4
The
Output
in
units
450
company
through three distinct processes to completion. These processes are known as X, Y & Z.
There
any process.
required
to
Process
Particulars
Y
2,000
1,400
1,400
20%
04
340
1,025
1,400
1,400
25%
05
270
product of a
passes
From the past experience, it is ascertained that wastage is incurred in each process as under : Process X 2%, Process Y
4%, Process Z 10%.
The wastage at each process possesses scrap value. The wastage of processes X and Y is sold at Rs. 2,50 per unit, and that
of process Z at Rs. 5.00 per unit. The output of each process passes immediately to the next process and finished units are
transferred from process Z into stock. The following information is obtained.
Particulars
X
Y
Z
Rs.
Rs.
Rs.
Material
2,70,000
2,60,000
1,20,000
Wages
4,30,000
2,40,000
1,30,000
Direct Expenses
1,37,500
1,45,000
1,80,000
50,000 units were put in process X at a cost of Rs. 10 per unit. The output of each process is as follows :
Process X 48,750 units. Process Y 47,000 units, Process Z - 42,000 units.
There is no stock of work in progress in any process. Prepare the process accounts, abnormal gain account and
Abnormal loss account.
Page 27 of 52
Q.5
A product passes through three processes. The following cost data have been extracted from the books of a
Manufacturing company.
Particulars
Total (Rs.)
Process I
Process II
Process III
Material
1,50,840
52,000
39,600
59,240
Direct wages
1,80,000
40,000
60,000
80,000
Production Overhead
1,80,000
10,000 units at Rs. 6/- each were introduced into process I. There was no stock of material of work-in-progress at the
Beginning or at the end. The output of each process passes directly to the next process and finally to the finished
Stock. Production overhead is recovered at 100% of Direct wages.
The following additional data are obtained :
Process
Percentage of Normal
Value of Scrap per Unit
Loss to Input
I
9,500
5%
4
II
8,400
10%
8
III
7,500
15%
10
Prepare Process Accounts and Abnormal Loss Account / Gain Account and Normal Loss Account.
Q.6
Output Unit
M/s. XYZ and Company manufacture a chemical which passes through three processes. The following particulars
Gathered for the month of January, 2014 :
Particulars
Process I
Process II
Process III
Materials (litre)
400
208
168
Materials Cost
Rs. 38,400
Rs. 18,800
Rs. 6,000
Wages
Rs. 7,680
Rs. 7,600
Rs. 2,200
Normal Loss (% of input)
4%
5%
5%
Scrap Sale Value
Rs. 3 Per Litre
Output transferred to next process
50%
40%
Output transferred to Warehouse
50%
60%
100%
Overheads are charges @ 50% of Direct Wages. You are required to prepare Process Accounts.
Q.7
Reliable Yarn Ltd. manufactures a yarn product. The product passes throught three consecutive processes. F.Y., S.Y.,
Page 28 of 52
And T.Y. Relevant details for the month of March, 2014 are as under :
Particulars
F.Y.
Process
Quantitative Information in Kilograms :

Basic Input Kilograms @ Rs. 10 per Kilogram
Output during the month
Stock of Process
- On 1st March, 2014
- On 31st March 2014
Percentage of Normal Loss to Input in Process
Monetary Information :
Process Material
Wages
Value of Opening Stock
Scrap Value per Kilogram
Closing Stock is to be value at the respective cost of each process.
S.Y.
Process
T.Y.
Process
2,000
1,950
1,925
1,679
200
150
2%
Rs.
9,000
9,064
3,880
Rs.1
300
400
5%
Rs.
2,100
1,860
6,720
Rs. 2
100
50
8%
Rs.
2,716
4,000
2,800
Rs. 4
Prepare Process Accounts, Process Stock Accounts, Abnormal Loss and Abnormal Gain Account.
Find out the costing profit, when the sales out of T.Y. process stock are made at Rs. 40 per Kilogram.
Q.8
Satyug Times Ltd. submits the following information in respect of its product which passes through three consecutive
Processes viz. Ingestion, Process, Digestion Process and Assimilation Process, for the month ended 31 st January, 2014.
Particulars
Quantitative Information (Kgs.)
Basic Raw Material @ 40 per Kg.
Normal Yield
Output during the month
Stock of Process Output :
31-12-2013
31-01-2014
Other Additional Information :
Process Material
Labour Man Days
Ingestion
Process
Digestion
Process
Assimilation
Process
80,000
80%
62,000
60%
36,000
5-%
21,000
8,000
10,000
8,000
4,000
5,000
4,000
Rs. 3,45,000
2,400
Rs. 8,26,000
1,500
Rs. 6,17,000
1,000
Page 29 of 52
Labour Rate per Man Day

Machine Overheads
Rs. 80
60% of Wages
Other Manufacturing Overheads

Rs. 2,75,800
Value of Opening Stock Per Kg.
Rs. 60
Scrap Value per Kg.
Rs. 10
Finished stock of assimilation process was sold at Rs. 350 per Kg.
Rs.100
50% of Process
Material
Rs. 1,63,000
Rs. 140
Rs. 15
Rs. 150
Rs. 2,34,000
Rs. 1,27,000
Rs. 300
Rs. 20
Prepare the Process Accounts, Process Stock Accounts, Normal Loss Account and the Abnormal Gain/Loss Account.
Q. 9
Particulars
Indirect Material
Direct Wages
Direct Expenses
Value of Opening Stock per Unit
Scrap Value per Unit
Output
Stock of Process Output :
01-01-2013
31-12-2013
Process A
Rs.
1,00,000
56,250
51,250
25
13.50
9,750
Process B
Rs.
18,750
35,000
6,875
31
11.25
9,625
Process C
Rs.
`16,550
44,900
11,500
40
21.00
8,000
1,500
1,250
1,375
2,000
2,000
1,000
Percentage of Wastage
2
5
10
10,000 units of Direct Material were introduced in Progress A at the rate of Rs. 5 per unit. The percentage of wastage is
computed on the number of units entering the process concerned. From the above information of DE Enterprise prepare :
(1) Process Accounts, (2) Process Stock Accounts, (3) Normal Loss Account, (4) Abnormal Loss Account, (5) Abnormal
Gain Account. Value closing stock at the respective Process Cost.
Q.10
V.B. Industries Ltd. is manufacturing a product which passes through three consecutive processes i.e. Process P, Process
Q, and Process R. The following figures have been taken from their books for the year ended 31st March, 2014.
is
to
be
respective
process. You
to prepare :
(a)
Accounts
Particulars
No. of units produced
Rate per unit of units introduced (Rs.)
Output during the year (Units)
Normal loss (% on units introduced in each process)
Scrap value per unit (Rs.)
Process Stock
Opening (units)
Closing (units)
Value of Opening stock per unit (Rs.)
Process Materials (Rs.)
Wages
Manufacturing Overheads (Rs.)
Process P
10,000
400
8,500
10%
100
1,500
1,000
550
8,00,000
3,25,000
2,85,00
Process Q
Process R
7,500
20%
150
6,500
15%
200
2,000
1,500
850
7,27,000
3,75,000
3,26,000
1,500
1,000
1,200
9,42,000
4,09,000
2,13,000
Closing stock
valued
at
cost of each
are required
Process
Page 30 of 52
Q.11
(b)
Process Stock Accounts
(c)
Normal Loss Account
(d)
Abnormal Loss Account and
(e)
Abnormal Gain Account.
Wasan Industries Ltd. manufactures a product which passes through three consecutive processes viz. process A, B
And C. The following figures have been taken from its books for the year ended 31st March, 2014 :
Particulars
A
Number of Units Introduced
Of Raw Materials (Units)
40,000
Rate per unit of Raw Material introduced (Rs.)
80
Output during the year (Units)
36,000
Process Stock :
As on 31st March, 2014 (Units)
3,000
As on 31st March, 2013 (Units)
7,000
Value of Opening stock per unit (Rs.)
112
Indirect Materials (Rs.)
5,20,000
Direct Wages (Rs.)
3,80,000
Manufacturing Overheads (Rs.)
2,28,000
Normal Loss (% of units introduced in the process)
10%
Scrap Value per unit (Rs.)
20
Closing Stock of each process is valued at cost of concerned process.
C
-
31,000
28,200
6,000
8,000
172
4,96,000
3,40,000
3,26,000
20%
30
3,200
5,000
240
6,54,000
4,10,000
2,55,000
15%
40
Prepare Process Accounts and Process Stock Accounts.
Q.12
Product XYZ obtained after it is processed through three distinct processes. The following information is available
For the month of March, 2013.
Particulars
Process
X (Rs.)
Material Consumed
7,875
Direct Labour
6,750
Production Overhead
6,750
1,500 units @ Rs. 3 per unit were introduced in Process X.
Y (Rs.)
6,675
11,040
11,040
Z (Rs.)
3,330
4,200
4,200
Page 31 of 52
Process
Output in
Normal Loss
Value of Scrap
Units
On Input
Per Unit (Rs.)
X
1,350
10%
1.50
Y
1,020
20%
1.50
Z
810
25%
3.00
There is no stock of work-in-progress in any process. You are required to prepare Process X A/c Y A/c and Z A/c.
Q.13
Kt Ltd. provides you the following information for the year ended 31st march 2014.
Particulars
Raw materials (units)
Cost of Raw Material per unit (Rs.)
Direct Wages Rs.
Production Overheads Rs.
Normal Loss (% of total no. of units entering to the process)
Wastage (% of total no. of units entering to the process)
Scrap per unit of wastage Rs.
Output transferred to subsequent process
Output sold at the end of the process
Selling price per unit Rs.
Prepare Process A, B and C Account.
Q.14
Process
A
12,000
5
34,000
16,160
4%
6%
3
70%
30%
12
2,440
5
24,000
16,200
5%
5%
4
60%
40%
16
2,600
5
15,000
9,600
3%
4%
5
100%
17
Assemblers Ltd., have three Assembly shops viz. General Assembly, Lower Assembly and Higher Assembly. Part
Of the output is transferred to the next assembly and part is sold directly. The company furnished the following
Informations.
Prepare
Accounts
Loss Account.
and
Q.15 M/s
Sagar
Provides you the
month of January,
D, C and H :
Particulars
Raw Material (in Litres)
Material Cost per litre
Labour Cost
Direct Expenses
Wastage as percentage of Total Input
(a) Output Transferred :
To Lower Assembly
To Higher Assembly
(b) Output sold in market
Sale Price per litre
Administration overhead Rs. 36,000
Marketing overhead Rs. 48,000
General
5,000
Rs. 60
Rs. 4,28,000
Rs. 88,000
4%
Lower
1,920
Rs. 40
1,06,000
2,85,200
5%
Higher
3,578
Rs. 80
2,10,000
1,04,800
10%
60%
40%
Rs. 200
40%
60%
Rs. 205
100%
Rs. 250
various
Costing
Assembly
Profit &
Enterprises
Ltd.
following data for the
2014 about processes
Page 32 of 52
Particulars
Basic raw Material Introduced
Cost of basic raw material per unit
Labour Charges
Factory Overhead
Normal Loss (% on Total number of units input)
Scrap Value per unit
Output sold at the end of process
Output Transferred to next process
Selling price per unit of the output sold at
The end of process
Process D
18,000
5.00
52,000
30,440
6%
3.00
30%
70%
Process C
3,156
6.00
36,000
14,874
5%
4.00
40%
60%
Process H
3,450
7.00
30,000
15,660
4%
5.00
100%
-
13.50
17.50
18.50
Other common expenses not chargeable to process Accounts :

Office and Administrative overheads Rs. 30,000
Selling and Distribution overheads Rs. 23,636
You are required to prepare process D, C and H Accounts indicating clearly profit or loss in each process and Costing
Q.16
Unique Ltd. provides you the following information for the month of March, 2014 about its process X, Y and Z.
Particulars
Basic Raw Material Introduced (Units)
Cost of Basic Raw Material Per Unit (Rs.)
Labour Charges (Rs.)
Sundry Materials (Rs.)
Factory Overheads
Normal Loss
(% on total number of units input)
Scrap Value Per Unit (Rs.)
Output transfer to the next process (%)
Output sold at the end of the process (%)
Selling Price per Unit of output sold (Rs.)
Prepare Process Accounts.
Q.17
Process X
20,000
24
3,43,500
1,55,700
40% of Basic
Raw Material
3%
Process Y
4,420
28
2,93,700
1,00,160
40% of Labour
Charges
5%
Process Z
3,740
32
2,44,800
89,480
40% of Labour
Charges
7%
12
70%
30%
65
15
60%
40%
88
21
100%
110
Jai Ltd. provides you the following information about their processes for the year ended 31st March, 2014.
Particulars
No. of units introduced
Rate per unit of units introduced (Rs.)
Process A
15,000
40
Process B
4,600
48
Process C
4,000
55
Page 33 of 52
Output during the year (units)

Output transferred to next process (%)
Output sold and end of the process (%)
Output transferred to Finished stock (%)
Normal Loss (% of units introduced
in each process)
Scrap value per unit (Rs.)
Direct wages (Rs.)
Direct Expenses
Factory overheads
Selling price per unit of output sold (Rs.)
Prepare Process Accounts.
Q.18
14,000
60%
40%
-
12,000
50%
50%
-
8,800
80%
20%
5%
15
3,60,000
40% of Direct
Wages
Rs. 1,18,500
8%
35
3,20,000
Rs. 1,28,720
10%
55
2,87,000
50% of Direct
Wages
Rs. 94,500
92
35% of Direct
Wages
120
165
M/s Raigad Production Co. Ltd. manufacture one item which is produced in three stages i.e. A, B and C. From past
Experience the company has ascertained that the normal loss in each process is as follows :
Process A
5%
Process B
10%
Process C
15%
During the month of January 2013 production was started with 20,000 units of raw material costing Rs. 10 per unit.
The following are the details for the month :
Particulars
Process A
Process B
Process C
Indirect Material
20,500
76,250
22,000
Electricity Expenses
6,250
12,500
10,750
Labour Charges
35,000
63,000
48,500
Overheads
33,250
64,250
53,750
Output (Units)
19,000
15,000
10,000
Output Sold (Units)
3,000
3,000
3,000
Sale Price of Output (per unit)(Rs.)
20
35
50
Sale Price of Units Lost (per unit)(Rs.)
10
15
20
You are required to prepare process A, B and C cost accounts indicating clearly the Profit/Loss on units sold for each
process.
Q.19
A product passes through three processes X, Y and Z. 15,000 units @ Rs. 10 per unit were issued to Process X. The
Page 34 of 52
following other details were available :
Particulars
Process X
Process Y
Process Z
Direct Labour (Rs.)
6,000
8,000
10,000
Direct Expenses (Rs.)
12,000
24,000
10,000
Wastages (% of input)
5
4
5
Sale Price per unit of Wastages (Rs.)
0.25
0.5
1
The overheads were charged to the process @ 100% of Direct Labour of the respective process.
The final product was sold at Rs. 20 per unit.
There is no stock either at the beginning or at the end.
Prepare Process X, Y and Z Accounts.
Page 35 of 52
CHP:-4 Introduction to Marginal Costing

Q.1
Following information is available in respect of G Ltd. and D Ltd. :

Particulars
G Ltd. (Rs.)
D Ltd. (Rs.)
Sales
11,00,000
14,00,000
Variable Cost
8,80,000
10,50,000
Profit
1,20,000
2,00,000
Calculate :
(i)
P/V Ratio of both Companies
(ii)
Fixed Cost of both Companies
(iii)
Break Even Point of both Companies
(iv) Sales to earn profit of Rs. 2,10,000 by each company

(v)
Q.2
Margin of Safety of D Ltd.
The following data have been extracted from the books of Alfa Ltd.
Year
Sales
Profit
Rs.
Rs.
2012
5,00,000
50,000
2013
7,50,000
1,00,000
You are required to calculate : (i) P/V Ratio (ii) Fixed Cost (iii) Break-even Sales (iv) Profit on sales of Rs. 4,00,000 (v)
Sales to earn a profit of Rs. 1,25,000.
Q.3
The sales turnover and profit of M/s Amit Ltd. during the year 2011 and 2012 were as follows :
Year
Sales
Profit
Page 36 of 52
2011
9,00,000
1,20,000
2012
10,20,000
1,50,000
You are require d to calculate :

(i) P/V Ratio
(ii) BEP Sales
(iii) Sales required to earn a profit Rs. 2,40,000.
(iv) The profit made when sales are Rs. 15,00,000.
Q.4
From the following particulars, you are required to calculate :

(i) Fixed Cost
(ii) Profit Volume Ratio
(iii) Break Even Sales
(iv) Sales to earn Profit of Rs. 6,00,000
(v) Margin of Safety of the year 2012.
Q.5
Particulars
Total Cost
Sales
From the following particulars you are required to calculate :
2012 (Rs.)
12,96,000
14,40,000
2013 (Rs.)
18,72,000
21,60,000
(1) Profit Volume Ratio (2) Break-even Point (3) Profit when sales is Rs. 2,00,000.
(4) Sales required to earn a profit of Rs. 40,000 (5) Margin of safety in the 2nd year.
Year
Sales Rs.
Profit Rs.
2,40,000
18,000
II
2,80,000
26,000
You may assume that the cost structure and selling prices remain constant in the two years.
Q.6
The X Ltd. furnish the following information :
Page 37 of 52
Ist Period
II Period
Sales
20,00,000
30,00,000
Profit
2,00,000
4,00,000
From the above, calculate the following :

(1) P/V Ratio
(2)
Fixed Expenses
(3) BEP
(4)
Sales to Earn Profit Rs. 5,00,000
(5) Profit when sales are Rs. 15,00,000.
Q.7
M/s. EAR Enterprises furnish the following information :

Year
Sales (Rs.)
Profit (Rs.)
2013
6,00,000
60,000
2014
8,00,000
1,00,000
From the above calculate the following :

(i)
P/V Ratio
(ii)
Fixed Cost
(iii)
Break Even Cost
(iv) Sales to earn profit Rs. 2,00,000

(v)
Q.8
Margin of Safety of 2014.
K. T. and Co. has prepared the following budget estimates for the year 2002-2003 : Sales 15,000 units, Sales value Rs.
1,50,000, Fixed Expenses Rs. 34,000. Variable cost per unit Rs. 6/You are required to find :
(i) Profit Volume Ratio
(ii)
Break Even-point
(iii)
Margin of Safety.
Also calculate revised Profit volume ratio, Break-even point and margin of safety, if selling price per unit is reduced by
10%.
Page 38 of 52
Q.9
Z Ltd. produces and sales a single article at Rs. 10 each. The marginal cost of production is Rs. 6 each and fixed cost is
Rs. 400 per annum.
Calculate :
(1) P/V Ratio
(2) The break even sales (in Rs. And Nos.)
(3) The sales to earn a Profit of Rs, 500
(4) Profit at sales of Rs. 3,000
(5) New break even point if sales price is reduced by 10%
(6) Margin of safety at sales of Rs. 1,500 and
(7) Selling price per unit if the break even points is reduced to 80 units.
Q.10
A product is sold at Rs. 80 per unit. Its Variable cost is Rs. 60, Fixed cost is Rs. 6,00,000. Compute the following :
(1) P/V Ratio
(2) Break Even Point
(3) Margin of Safety at a Sale of 50,000 units
(4) At what Sales the producer will earn profit at 15% on Sales ?
Q.11
The following is the cost structure of a product. Selling price Rs. 100 per unit.
Variable Cost per unit
Material
Rs.
38
Labour
Rs.
14
Direct Expenses
Rs.
Rs.
2,80,000
Fixed Overheads for the year

Factory overheads
Page 39 of 52
Office overheads
No. of units produced and sold
Rs.
2,20,000
Rs.
40,000
Calculate :
(1) P/V Ratio
(2) Break Even Point in Units
(3) Margin of Safety Amount
(4) Break Even Point if fixed overheads increased by 20%
(5) Revised P/V ratio when selling price increased by 20%
Q.12
From the following data compute :

(1) P/V Ratio
(2) B.E.P. in Rupees and Unit
(3) Number of Units to be sold to earn a profit of Rs. 7,50,000.
Q.13
Sales Price
Rs. 20 per Unit
Direct Material
Rs. 5 per Unit
Direct Wages
Rs. 6 per Unit
Variable Administrative Overheads
Rs. 3 per Unit
Fixed Factory Overhead
Rs. 6,40,000 per year
Fixed Administrative Overhead
Rs. 1,52,000 per year
A company produces and sells 1,500 units of a commodity at Rs. 20 each. The Variable cost of production is Rs. 12 per
Unit and Fixed cost Rs. 8,000 per annum.
Calculate
(i) P/V ratio
Page 40 of 52
(ii) Sales at break-even point and

(iii) Additional sales required to earn the same amount of profit if selling price is reduced by 10 percent.
Q.14
The following figures relate to M/s. Deepak Industries :

Fixed Overheads
Rs.
2,40,000
Variable Overheads
Rs.
4,00,000
Direct Wages
Rs.
3,00,000
Direct Materials
Rs.
8,00,000
Sales
Rs.
20,00,000
Calculate :
(i) P/V Ratio
Q.15
(ii) BEP
(iii) Margin of Safely
Following particulars are available for A Ltd. and B Ltd. :
Particulars
Sales
P/V Ratio
Fixed Cost
Calculate for each company
A Ltd.
Rs. 6,00,000
25%
Rs. 90,000
B Ltd.
Rs. 6,00,000
20%
Rs. 80,000
(i) Break Even Point

(ii) Margin of Safety
(iii) Sales required to earn a profit of Rs. 90,000.
Q.16
From the following information calculate :

(i) Amount of Sales
(ii) Break Even Sales
(iii) Margin of Safety
Page 41 of 52
Fixed Cost Rs. 80,000

Profit Rs. 30,000
Profit Volume Ratio 25%
Q.17
You are given the following information :

Selling Price Per Unit Rs. 40
Variable Cost Per Unit Rs. 30
Fixed Cost Rs. 1,80,000
Calculate :
(ii) The Break Even Sales (in Rs. And Units)
(iii) Profit at sales Rs. 9,60,000
(iv) New Break Even Sales in rupees if sale price is reduced by 10%.
Q.18
If Margin of Safety is Rs. 4,00,000, which is 25% of total sales, the company earned profit of Rs. 80,000.
Calculate : (i)
Q.19
Total Sales
(ii)
Break Even Sales
(iii)
Fixed Cost.
From the following information :

Variable Cost Per Unit Rs. 19,20 (60% of Selling Price Per Unit) and Fixed Cost Rs. 156,032
Calculate :
(1) Profit Volume Ratio
(2) Break Even Sales in Units
(3) Margin of Safety in Units when sales is 16,000 units.
(4) Sales to earn Profit of Rs. 84,096.
Page 42 of 52
Q.20
Margin of safety is Rs. 4,20,000 which is 30% of total sales and Profit Volume Ratio is 25%.
From the above calculate :
1. Total Sales
2. Profit on Present Sales
3. Fixed Cost
4. Sales to earn profit Rs. 1,40,000
Q.21
The following figures relate to Amit Ltd.

Selling Price per unit
Rs.
40
Direct Materials per unit
Rs.
12
Direct Labour per unit
Rs.
Other Variable overheads per unit
Rs.
Fixed Factory overheads
Rs.
3,20,000
Fixed Office overheads
Rs.
4,30,000
Calculate :
(1) P/V Ratio
(2) Break Even Sales in Units and Rs.
(3) Sales to earn Profit of Rs. 4,50,000
(4) New Break Even Point in Rs. And unit if total fixed overheads are increased by 15%.
Q.22
A company annually manufactures and sells 20,000 units of a product, the selling price of which is Rs. 50 and profit
earned is Rs. 10 per unit.
The analysis of cost of 20,000 units is
Material Cost
Rs. 3,00,000
Labour Cost
Rs. 1,00,000
Page 43 of 52
Overhead (50% variable)
Rs. 4,00,000
You are required to compute :

(i)
Contribution per unit
(ii)
P/V Ratio
(iii)
Break Even Sales in Rs.
(iv)
Break Even Sales in units
(v)
Sales required to earn a profit of Rs. 4,00,000
(vi)
Profit when sales is 18,000 units
(vii) Margin of safety when actual sales is Rs. 7,00,000
Q.23
From the following data calculate :

(ii) Profit when sales are Rs. 60,000 and
(iii) New Break-even point if selling price is reduced by 20%
Fixed Expenses Rs. 12,000 and
Break-Even point Rs. 30,000
Page 44 of 52
CHP:-5 Introduction to Standard Costing

Q.1
From the following particulars calculate :

(i) Material Cost Variance
(ii) Material Price Variance
(iii) Material Usage Variance
Page 45 of 52
Q.2
Standard
Actual
Material
1000 kg
900 kg
Price
Rs. 12 per kg
Rs. 16 per kg
Calculate Material Variances from the following :

Standard For 90 kgs of Finished output
Material 135 kgs @ Rs. 12 per kg
Actual Production 81,000 kgs
Material used 1,24,000 kgs
Cost of Material used Rs. 14,75,600
Q.3
From the following calculate Material Variances :

Standard For 4 units of Production A
Material 14 kgs @ Rs. 12 per kg.
Actual Production 21,000 units
Actual Material used 74,000 kgs
Actual Rate Rs. 11,80 per kg
Q.4
Calculate from the following :

(ii) Material Price Variance and
Standard For 25 Units of Product R
Actual Production 20,000 Units
Page 46 of 52
Actual Material Used 42,000 kgs

Actual Rate Rs. 24,50 per kgs
Q.5

(ii) Material Price Variance
Q.6
Q.7
Standard for 15 Units of Product
Material
60 kg
Standard Rate Per Unit
Rs. 16
Actual Production
18,000 units
Actual Material used
71,600 kgs.
Actual Rate per kg
Rs. 4,10

1.
Material Cost Variance
2.
Material Price Variance
3.
Material Usage Variance.
Standard Material for a unit
Standard Rate per kg
Rs. 3.20
Actual production
22,500 units
Actual Material used
1,75,000 kgs
Actual Rate per kg.
Rs. 3.15
A manufacturing concern which has adopted standard costing furnishes the following informations :
Page 47 of 52
(1) Standard Materials for 70 kg. finished products, 100 kg.

(2) Standard price of material Rs. 1 per kg.
(3) Actual output 2,10,000 kg.
(4) Actual material used 2,80,000 kg.
(5) Cost of material Rs. 2,52,000
Calculate : (1)
Q.8
Material usage variance
(2)
Material price variance
(3)
Material cost variance.
For Producing 80 units of a Product 30 kg of material X and 20 kg of Material Y is the standard requirement. Standard
Price is Rs. 6 per kg of X and Rs. 10 per kg of Y. 80 units were actually produced using 50 kg of Material X purchased for
Rs. 200 and 10 kg of Material Y purchased at Rs. 8 per kg.
Compute : (1)
Q.9
Material Cost Variance
(2)
Material Price Variance and
(3)
Material Usage Variance.
The standard material cost for 200 units of output is :

Material
kg
Rate per Kg
50
12
100
100
10
The Actual cost for 8000 units is as follows :

Material
kg
Rate per Kg
2100
28,350
3750
30,750
4150
46,480
Calculate material cost variance, material price variance and material usage variance.
Q.10
From following, calculate Materials Cost Variance, Materials Price Variance and Materials Usage Variance :
Page 48 of 52
Materials
A
B
C
Q.11
Standard
Units
600
800
1000
Price per Unit

Rs. 3
Rs. 5
Rs.4
Actual
Units
640
960
840
Price per Unit

Rs. 4.00
Rs. 4.50
Rs. 5.00

(i) Labour Cost Variance
(ii) Labour Rate Variance
(iii) Labour Efficiency Variance
Q.12
Standard
Actual
Number of hours per unit
360
400
Rate per hour (Rs.)
1.50
1.40
From the following information, calculate labour variances :

Standard for 100 units
500 Labour Hours
Rate Rs. 24 per Hour
Actual Production 1,000 units were produced.
Total wages paid Rs. 1,30,000 for 5,200 Hours .
Q.13
From the following calculate Labour Variances :

Standard Hours per unit 12 hours
Standard Rate Rs. 5 per hours
Actual Production 1600 units
Actual Hours 19,800 hours
Actual Rate Rs. 4,85 per hours.
Page 49 of 52
Q.14

Standard For 2 Units of output 5 hours
- Labour Rate Rs. 10 per hour
Actual production 1000 units
Actual Hours 2,450 hours
Actual Rate Rs. 12 per hour
Q.15

(i) Labour Cost Variance
(ii) Labour Rate Variance and
(iii) Labour Efficiency Variance
Q.16
Standard Hours for 4 units
24 Hours
Standard Rate
Rs. 18 per unit
Actual Production
1,800 units
Actual Hours
10,500 Hours
Actual Rate
Rs. 3,10 per hour

Standard Hours For 6 Units
42 Hours
Standard Rate Per Unit
Rs. 5.60
Actual Production
2,100 Units
Actual Hours
14,500 Hours
Actual Rate Per Hour
Rs. 0.85
Page 50 of 52
Q.17
Calculate material and labour variances from the following data :

For 5 units of Product A, the Standard Data are :
Material
40 kg.
Rs.
25.00 per kg
Labour
100 hours
Rs.
2.50 per hour
Actual data are :

Actual Production 1000 units.
Q.18
Material
7,840 kg
Rs.
27.00 per kg
Labour
19,800 hours
Rs.
`2.60 per hour
Calculate Material and Labour variances from the following data :

Standard (Per Unit)
Q.19
Material
6 kg @ Rs. 4 per kg
Labour
4 hours @ Rs. 4 per hours
Actual Production for the month
12,500 units
Actual Material Price per kg
Rs. 4,50
Material used during the month
78,000 kg
Direct Labour hours worked
48,000 hours
Actual Wages rate per hour
Rs. 3.50
Standard for a unit of production :

Labour 4 hours @ 6 per hour
Actual Production 4,00,000 units
Actual Material Used 7,90,000 kgs
Actual Rate For Material Rs. 5.20 per kg
Page 51 of 52
- For Labour Rs. 6.40 per hour
Q.20

(i) Material usage variance
(ii) Material price variance
(iii) Labour Efficiency variance
(iv) Labour Rate variance
Standard : For 10 units of product Y
Material 80 kgs @ 25 per kg
Labour 200 hours @ 2.5 per hour
Actual
: For 2000 units of product Y

Material 15,680 kgs @ Rs. 28 per kg
Labour Rs. 1,02,960
Rate of labour per hour Rs. 2,60
Page 52 of 52

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MAHAVIR COMMERCE ACADEMY___________T.Y.B.

COM / Vl SEM / COST ACCOUNTING

CHP:-1 Cost Control Accounts

General ledger adjustment account

Stores ledger control account

Work-in-progress ledger control account

Finished goods ledger control account

Purchase for stores

Purchase for special jobs

Indirect factory wages

Selling and distribution salaries

At the year-end, the following information is obtained :

Selling and distribution expenses

Stores issued to production

Stores issued to maintenance

Production overheads absorbed by production

Administration overheads absorbed by finished goods

Selling and distribution overheads recovered on sales

MAHAVIR COMMERCE ACADEMY___________T.Y.B.COM / Vl SEM / COST ACCOUNTING

Products finished during the year

Finished goods sold at cost

MAHAVIR COMMERCE ACADEMY___________T.Y.B.COM / Vl SEM / COST ACCOUNTING

The following transactions took place in March, 2013 :

During the next three months, the following items arose :

MAHAVIR COMMERCE ACADEMY___________T.Y.B.COM / Vl SEM / COST ACCOUNTING

Cost Ledger Control Account

Store Ledger Control Account

Overhead Control Account

Work in Progress Control Account

Finished Stock Ledger Control Account

Trial Balance (indicating, in brief, what each balance represents)

Cost of sales A/c

Material issued to Production

MAHAVIR COMMERCE ACADEMY___________T.Y.B.COM / Vl SEM / COST ACCOUNTING

Total Wages Paid

Direct Wages charged to Production

Office Overheads Paid

Office Overheads applied to Finished Goods

Selling and Distribution Overheads Incurred

Selling and Distribution Overheads applied to Cost of Sales

Factory Overheads charged to Production @ 35% of Direct Wages

Cost of Finished Goods Sold

Prepare the following accounts for the Month :

Stores Ledger Control A/c

Work-in-progress Control A/c

Finished Goods Ledger Control A/c

Cost Ledger Control A/c

Factory Overhead Control A/c

Office Overhead Control A/c

Selling and Distribution Overhead Control A/c

Profit and Loss A/c

MAHAVIR COMMERCE ACADEMY___________T.Y.B.COM / Vl SEM / COST ACCOUNTING

The following transactions took place in April 2014 :

General Ledger Control A/c

Stores Ledger Control A/c

(c) Work-in-progress Control A/c

Finished Goods Stock Control A/c

Costing Profit and Loss A/c

Factory Overhead Control A/c

(g) Trial Balance as at 30th April, 2014.

MAHAVIR COMMERCE ACADEMY___________T.Y.B.COM / Vl SEM / COST ACCOUNTING

Transactions for the year ended 31st March, 2014 were :

Further transaction took place during the following quarter as follows :

Factory overhead Allocated to WIP