Cost_Accounting_&_Financial_Management - PAPER 4 COST...

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PAPER – 4 : COST ACCOUNTING AND FINANCIAL MANAGEMENT All questions are compulsory. Working notes should form part of the answer. Question 1 Answer any five of the following: (i) Two workmen, A and B, produce the same product using the same material. A is paid bonus according to Halsey plan, while B is paid bonus according to Rowan plan. The time allowed to manufacture the product is 100 hours. A has taken 60 hours and B has taken 80 hours to complete the product. The normal hourly rate of wages of workman A is Rs.24 per hour. The total earnings of both the workers are same. Calculate normal hourly rate of wages of workman B. (ii) Distinguish between product cost and period cost. (iii) A lorry starts with a load of 24 tonnes of goods from station A. It unloads 10 tonnes at station B and rest of goods at station C. It reaches back directly to station A after getting reloaded with 18 tonnes of goods at station C. The distance between A to B, B to C and then from C to A are 270 kms, 150 kms and 325 kms respectively. Compute ‘Absolute tonnes kms’ and ‘Commercial tones-kms’. (iv) Following details relating to product X during the month of April, 2009 are available: Standard cost per unit of X : Materials : 50 kg @ Rs.40/kg Actual production : 100 units Actual material cost : Rs.42/kg Material price variance : Rs.9,800 (Adverse) Material usage variance : Rs.4,000 (Favourable) Calculate the actual quantity of material used during the month April, 2009. (v) Discuss the components of budgetary control system. (vi) Following information is available for the first and second quarter of the year 2008-09 of ABC Limited: Production (in units) Semi-variable cost (Rs.) Quarter I 36,000 2,80,000 Quarter II 42,000 3,10,000
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PROFESSIONAL COMPETENCE EXAMINATION : JUNE, 2009 2 You are required to segregate the semi-variable cost and calculate : (a) Variable cost per unit; and (b) Total fixed cost. (5 × 2 = 10 Marks) Answer (i) A B Time Allowed (Hrs.) 100 100 Time Taken (Hrs.) 60 80 Time Saved (Hrs.) 40 20 Let the rate of wages of the worker B is Rs.x per hour Normal Wages 1440 80x (Time taken × Hourly rate of wages) (60×24) Bonus 480 16x (1/2 × 40 × 24) ) x 80 ( 100 20 1920 96x According to the problem, Total earnings of A = Total earnings of B 1920 = 96x x = 96 1920 = Rs.20 Hourly rate of wages of the worker is Rs.20 per hour. Alternative Solution: In case of worker B, in place of x, it can be written as ‘80x hourly rate’. Hence final equation will be 96x hourly rate = 1920 Hourly rate of B = 96 1920 = Rs. 20 (ii) Product Cost vis-à-vis Period cost Product costs are associated with the purchase and sale of goods. In the production scenario, such costs are associated with the acquisition and conversion of materials and
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PAPER 4 : COST ACCOUNTING AND FINANCIAL MANAGEMENT 3 all other manufacturing inputs into finished product for sale. Hence under absorption cost, total manufacturing costs constitute inventoriable or product cost. Periods costs are the costs, which are not assigned to the products but are charged as
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Cost_Accounting_&_Financial_Management - PAPER 4 COST...

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