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The Standard specification for a batch of 500 kg of Output of a factory is as under (l).
In October 2017, the factory obtained a production of 9,750 kg. of output for which 20 batches constituting standard inputs of material were issued in the following ratio at the actual price indicated against each (II).
(I)
| Material | Input (Kgs.) | Rate (Rs.) |
| A | 250 | 4.00 |
| B | 100 | 3.00 |
| C | 200 | 2.00 |
| D | 50 | 1.00 |
(II)
| Material Issued | Ratio (%) | Actual Rate (Rs.) |
| A | 250 | 4.00 |
| B | 100 | 3.00 |
| C | 200 | 2.00 |
| D | 50 | 1.00 |
Calculate the various 'Material Variances' .
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From the following information, compute:
(i) Material Cost Variance,
(ii) Material Price Variance,
(iii) Material Usage Variance,
(iv) Material Mix Variance.
| Material | Standard Mix | Actual Mix |
| X | 40 kg at Rs. 10 per kg | 20 kg at Rs. 35 per kg |
| Y | 20 kg at Rs. 20 per kg | 10 kg at Rs. 20 per kg |
| Z | 20 kg at Rs. 40 per kg | 30 kg at Rs. 30 per kg |
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From the following figures ascertained from Costing Records and Financial books of a Factory, you are required to pass necessary entries in the Cost Journal (Assume that a system maintaining Control Accounts prevails in the Organisation).
| (a) | Purchases | Rs. | 3,90,000 |
| (b) | Carriage Inward | Rs. | 5,850 |
| (c) | Stores Issued | Rs. | 3,58,800 |
| (d) | Productive Wages | Rs. | 13,46,320 |
| (e) | Unproductive Labour | Rs. | 1,21,680 |
| (f) | Works on Cost | Rs. | 3,48,400 |
| (g) | Materials used in repairs | Rs. | 3,120 |
| (h) | Cost of Completed Jobs | Rs. | 12,80,630 |
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Journalise the following transactions in the Cost Journal assuming that separate cost records are maintained :
| Particulars |
Amount (Rs.) |
|
| (a) | Credit Purchases for Special job | 1,000 |
|
(b) |
Cash Purchases | 1,000 |
| (c) | Returns toSuppliers | 1,000 |
| (d) | Materials Returned from Production to Store | 1,000 |
| (e) | Materials transferred from Job No. 101 to job No. 102 | 1,000 |
| (f) | Normal idle time of direct labour | 1,000 |
| (g) | Abnormal idle time of labour | 1,000 |
| (h) | Direct Expenses | 1,000 |
| Particular | Amount(Rs.) | ||
| (i) | Production Overhead incurred | 10,000 | absorbed 9,900 |
| (j) | Admn. Overhead incurred | 10,000 | absorbed 10,100 |
| (k) | Selling and Distribution Overhead Incurred | 10,000 | absorbed 10,000 |
| (l) | Material lost from stores by theft | 1,000 | |
| (m) | Normal Shortage of materials in stores durlng physical verification | 1,000 | |
| (n) | Excess of materials found in stores during physical verification | 1,000 | |
| (o) | Depreciation on Plant and Machinery | 10,000 | |
| (p) | Material purchased for immediate repair work | 1,000 | |
| (q) | Return of indirect materials to stores | 1,000 | |
| (r) | Spoiled work-abnormal | 1,000 | |
| (s) | Cost of Sales | 1,00,000 | |
| (t) | Sales | 1,20,000 | |
| (u) | Transfer of cost incurred on capital order and capitalised in financial A/c. | 10,000 | |
| (v) | Net profit | 20,000 |
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From the following Particulars pass the Journal Entries in an integral accounting system:
(a) Issued materials Rs. 3,00,000 of which Rs. 2, 80,000 (Standard Rs. 2,40,000) is direct material.
(b) Net wages paid Rs. 70,000 deductions being Rs. 12,000 (Standard Rs. 750,00).
(c) Gross salaries payable for the period is Rs. 26,000 (Standard Rs. 25,000). Deduction Rs. 2,000.
(d) Sales (Credit) Rs. 8,00,000.
(e) Discount allowed Rs. 5,000.
(f) Salaries and Wages allocation: Rs. 60,000 direct (Standard Rs. 62,000) and out Of the balance, 50% production, 30% admn. and 20% selling and distribution overheads.
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A product passes through three processes A, B and C. The
normal wastage of each process is as follows: Process A - 3%, Process B - 5% and Process C - 8%. Wastage of Process A was sold at Rs. 0.25 per unit, of Process B at Rs. 0.50 per unit, and that of Process C at Rs. 1 per unit. 10,000 units were issued to
Process A in the beginning of October 2017 at the cost of R. 1 per unit. The other expenses were as follows:
| Process A(Rs.) | Process B(Rs.) | Process C(Rs.) | |
| Sundry materials | 1,000 | 1,500 | 500 |
| Labour | 5,000 | 8,000 | 6,500 |
| Direct expenses | 1,050 | 1,188 | 2009 |
| Actual output | 9,500 units | 9,100 units | 8,100 unit |
Prepare the Process Accounts, assuming that there were no opening or closing stocks. Also give the Abnormal Wastage and Abnormal Gain Accounts.
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An article passes through 3 processes of manufacture From the following figures show the cost of each of the three processes during the month of March, 2018:
| Particulars | Processes-1 | Process-2 | Process-3 |
| Material used (Rs.) | 15,000 | 5,000 | 2,000 |
| Labour(Rs.) | 8,000 | 20,000 | 6,000 |
| Direct Expenses(Rs.) | 2,600 | 7,200 | 2,500 |
The indirect expenses of Rs. 8,500 shall be apportioned on the basis of Labour Cost. No account need be taken of stocks in hand and work-in-progress at the beginning and close of the month. The articles produced during the month were 240.
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A product is obtained after passing it through three process. The following information is collected for March, 2018 :
| Particulars | Process | ||
| I | II | III | |
| Direct Materials (Rs.) | 10,400 | 7,920 | 11,848 |
| Direct Wages (Rs.) | 8,000 | 12,000 | 16,000 |
| Output (Units) | 1,900 | 1,680 | 1,500 |
| Normal Loss | 5% | 10% | 15% |
| Value of Scrap per Unit (Rs.) | 8 | 16 | 20 |
Additional Information :
2,000 Units@ Rs. 12 was introduced in Process I. There was no stock of materials or W.l.P. at the beginning or at the end of that month. The Production Overhead was Rs. 36,000 for that month.
Prepare Process Accounts.
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'Uptodate Ltd.' processes a patent material shows the following cost records for manufacturing 400 units of Product A in a process :
| Material | (Rs.) 8,000 |
| Labour | (Rs.) 3,000 |
| Overheads | (Rs.) 1,000 |
The standard normal wastage in production is 10%, and it can be sold in the market at Rs. 30 per unit. The actual production is 300 Units due to gross carelessness of the workers.
Show : (a) Process A/c; (b) Abnormal Wastage A/c.
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Ruby Industries Ltd. furnish the following information for the year 2018.
| Sales | (Rs.) 2,00,000 |
| Variable Cost | (Rs.) 1,00,000 |
| Fixed Cost | (Rs.) 50,000 |
(1) Find: PN Ratio, BEP (Sales) and Margin of Safety.
(2) Calculate the effect of the following :
(a) 10% increase in Selling:Price,
(b) 5% Decrease in Variable Cost, and
( c) 10% Decrease in Fixed Cost.
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A company has 3 alternative choices of Product Mix. It produces 2 Products, A and B. It can produce either: (a) 200 units of A and 400 units of B, (b) 300 units of A and 300 units of B, (c) 400 units of A and 200 units of B.
Other details:
| A(Rs.) | A(Rs.) | |
| (1) Selling Price | 400 | 300 |
| (2) Variable Cost | 320 | 240 |
| (3) Fixed Cost | (Rs.)16,000 | |
You have to decide the best profitable mix.
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Gajanan Construction, Mumbai took a Contract No. 51 for the construction of a school building on 1st January, 2017. The contract price is fixed at Rs. 15,00,000; subject to a retention of 20% of work certified. The following are the details of expenditure made by contractor on this contract during the year :
| Particulars | (Rs.) |
| Direct labour charges | 4,05,000 |
| Material issued from stores | 4,20,000 |
| Materials directly purchased | 81,200 |
| Plant installed at site on 30th June, 2017 | 60,000 |
| Direct expenses (inclusive of Direct Expenses due but not paid Rs. 3,000) | 23,000 |
| Management overheads | 37,200 |
| Materials transferred to Contract No. 55 | 6,300 |
| Outstanding Wages | 7,800 |
| Material transferred from Contract No. 55 | 1,600 |
| Work certified | 11,00,000 |
| Work uncertified | 16,500 |
Depreciation on plant is provided @ 40% p.a. on the original cost.
Prepare:
(A) Contract Alc
(B) Contractee A/c
(C) Extracts of Balance Sheet as on 31st December, 2017.
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The following information is relating to a building contract of Rs. 50,00,000. The contractee has a reed to a 90% of the work certified in cash.
| Particulars | 2017(Rs.) | 2018(Rs.) | 2019(Rs.) |
| Materials | 7,00,000 | 8,00,000 | 4,00,000 |
| Wages | 3,20,000 | 4,80,000 | 5,00,000 |
| Direct expenses | 20,000 | 30,000 | 10,000 |
| Indirect expenses | 10,000 | 7,000 | 3,000 |
| Work certified | 10,00,000 | 30,00,000 | 50,00,000 |
| Work uncertified | - | 40,000 | - |
| Plant issued | 2,00,000 | - | - |
| Value of lant on 31st Dec. | 1,80,000 | 1,60,000 | 1,30,000 |
Prepare Contract A/c for the year 201 7, 2018, and 2019.
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ABC Company Ltd. furnishe.s the following data.
(Rs.)
| Sales | 1,50,000 |
| Variable Overheads | 1,20,000 |
| Gross Profit | 60,000 |
| Fixed Overheads | 20,000 |
| Net Profit | 40,000 |
Find: (i) P/V Ratio, (ii) BEP, (iii) Net Profit when the Sales are Rs. 4,00,000, (iv) Sales required to earn a Profit of Rs. 80,000, (v) Margin of Safety when the Sales are Rs. 4,00,000.
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The following data relate to a company:
| Year Ended | Total Sales (Rs.) | Total Cost (Rs.) |
| 31-3-2017 | 22,23,000 | 19,83,600 |
| 31-3-2018 | 24,51,000 | 21,43,200 |
Assuming stability in prices, with variable costs carefu11y controlled to reflect determined relationships and an unvarying figure for fixed costs, calculate :
(i) The P/V ratio, (ii) Fixed Cost, (iii) Fixed Cost as % of Sales, (iv) BEP, and (v) Margin of Safety for years 2017 and 2018.
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Product A is obtained after it passes through three distinct processes, I, II and III. The following information is obtained from the accounts for the month of March, 2018 :
| Particulars | Total(Rs.) | Process | ||
| I(Rs.) | II(Rs.) | III(Rs.) | ||
| Direct material | 15,084 | 5,200 | 3,960 | 5,924 |
| Direct wages | 18,000 | 4,000 | 6,000 | 8,000 |
| Production Overheads | 18,000 | |||
1,000 units at Rs. 6 each were introduced into Process I. There was no stock of material or 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 | Output during the Month (Units) | Percentage of Normal Loss to Input | Value of Scrap per unit |
| I | 950 | 5% | Rs. 4 |
| II | 840 | 10% | Rs. 8 |
| III | 750 | 15% | Rs. 10 |
Prepare Process Accounts, Abnormal Loss Account and Abnormal Gain Account.
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A product is finally obtained after it passes through three distinct processes.
The following information is available from the cost records :
| Process A (Rs.) | Process B (Rs.) | Process C (Rs.) | Total (Rs.) | |
| Materials | 2,600 | 2,000 | 1,025 | 5,625 |
| Direct wages | 2,250 | 3,680 | 1,400 | 7,330 |
| Production | 7,330 | |||
| Overheads |
500 units @ Rs. 4 per unit were introduced in Process A. Production overheads are, absorbed as a percentage of direct wages. The actual output and normal loss of the
respective processes are given below.
| Output (units) | Normal Loss as a Percentage of Input | Value of Scrap per Unit | |
| Process A | 450 | 10% | Rs. 2 |
| Process B | 340 | 20% | Rs. 4 |
| Process C | 270 | 25% | Rs. 5 |
Prepare Process Accounts and Abnormal Loss and Abnonnal Gain Account.
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A product of a company passes through three processes. From the following information prepare Process Accounts :
Material introduced into Process A 20,000 units at a cost of Rs. 8,000. Other particulars are :
| Process -A | Process - B | Process - C | |
| Sundry Materials | Rs. 6,000 | Rs. 2,000 | Rs. 2,000 |
| Direct Labour | Rs. 4,000 | Rs. 3,000 | Rs. 3,000 |
| Overheads | Rs. 4,000 | Rs. 2,000 | Rs. 1,000 |
| Normal Loss | 2% | 5% | 10% |
| Scrap Value per 100 units | Rs. 5 | Rs. 20 | Rs. 10 |
| Output (units) | 19,600 | 18,400 | 16,700 |
Prepare Process Accounts, Abnormal Loss Account and Abnormal Gain Account.
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The product of a manufacturing concern passes through two processes A and B and then to finished stock. It is ascertained that in each process normally 5% of the total weight is lost and 10% is scrap which from processes A and B realises Rs. 80 per tonne and Rs. 200 per tonne respectively.
The following are the figure relating to both the processes :
| Process A | Process B | |
| Materials in tonnes | 1,000 | 70 |
| Cost of materials per tonne (in Rs.) | 125 | 200 |
| Wages (in Rs.) | 28,000 | 10,000 |
| Manufacturing expenses (in Rs.) | 8,000 | 5,250 |
| Output in tonnes | 830 | 780 |
Prepare Process Accounts showing cost per tonnes of each process. There was no stock or work-progress in any process.
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In a factory the product passes through two processes, A and B. A loss of 5% is etlowed in Process A and 2% in Process B, nothing being realised by disposal of wastage.
During April 2018, 10,000 units of material costing~ 6/- per unit were introduced in process A. The other costs are as follows.
| Process A (Rs.) | Process B (Rs.) | |
| Materials | - | 6,140 |
| Labour | 10,000 | 6,000 |
| Overheads | 6,000 | 4,600 |
The output was 9,300 units from Process A. 9,200 units were produced by Process B, which were transferred to the finished stock.
8,000 units of the finished product was sold at Rs 15/- per unit the selling and distribution expenses were Rs. 2/- per unit.
Prepare (a) Process Accounts, (b) Statement of Profit and Loss for the month April, 2018; assuming there were no opening stock of any type.
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