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Refer/WI/ACAD/18

SHRI RAMSWAROOP MEMORIAL COLLEGE OF MANAGEMENT


BBA [SEM III]
TUTORIAL SHEET-2
(Session : 2010-11)
MANAGEMENT ACCOUNTING
(BBA-304)
Unit: II Topic: Job costing ,process costing
Date of Distribution: Name of Faculty: Gaurav Singh

Q1. Explain Normal Loss and Abnormal Loss and its treatment in Process Costing. Give example to
support your answer.

Q2. Discuss the various components of Cost Sheet. Also give a Proforma of a Cost sheet of a
manufacturing company.

Q3. What is the scope of job costing?

Q4. Explore the ABC system of costing.

Q5.Illustrate the Job costing and Batch costing system.

Q6. JP Limited ,manufacturers of a special product, follows the policy of EOQ for one of its
components. The component’s detail are as follows:
Purchase price per component 200
Cost of an order 100
Annual cost of carrying one unit in inventory 10% of Purchase Price
Total cost of inventory and ordering per annum 4000

The Company has been offered a discount of 2% on the price of the component provided the lot size is
2000 components at a time.
You are required to (a) Compute EOQ (b) Advise whether the quantity discount offer can be accepted.
(Assume that the inventory carrying cost does not vary according to discount policy). (c) Would your
advise differ if the company is offered 5 % discount on a single order?

Q7. From the following information, prepare a cost sheet for period ended on 31st March 2006.

Opening stock of raw material 12,500


Purchases of raw material 1,36,000
Closing stock of raw material 8,500
Direct wages 54,000
Direct expenses 12,000
Factory overheads 100% of direct wages
Office and administrative overheads 20% of works cost
Selling and distribution overheads 26,000
Cost of opening stock of finished goods 12,000
Cost of Closing stock of finished goods 15,000

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Profit on cost 20%

Q8.The product of a company passes through three distinct processes to completion. From past experience
, it is ascertained that normal wastage in each process is as under:

Process Wastage Sale value of wastage

A 2% 0.25 per unit


B 4% 0.50 per unit
C 2.5% 0.60 per unit
The expenses were as follows
Process A Process B Process C
Materials 12000 10000 9000
Direct Labour 16000 5000 4900
Manufacturing expenses 2000 3400 3590
Other Factory expenses 3500 2005 2004

4000units were initially introduced in process A at a cost of Rs.13560. The output of each process was as
under
Process Output in Units
A 3850
B 3600
C 3500

Prepare process accounts and also workout the sale price per unit of finished stock so as to realise 20 %
profit on selling price.

Q9. The information given below has been taken from the records of an engineering works in respect of
Job No.309
Material 4000
Wages:
Department A 50 hrs at 5 per hour
Department B 50 hrs at 2 per hour
Department C 30 hrs at 7 per hour

Work overhead are as follows

Department A 5000 for 5000 labour hours


Department B 3000 for 1500 labour hours
Department C 2000 for 500 labour hours

Fixed expenses 20000 for 10000 working hours. Calculate the cost of Job 309

Q10. In a factory three process are employed. The output of process A is transferred to B and of B to C. It
has been experience that wastage in process A is 2 % , process B is 5 %, process C is 10 %. The scrap
value of wastage in process A and B is 200 per hundred units and process C 500 per hundred units.

The expenses were as follows

Process A Process B Process C

Material 100000 80000 60000

Wages 50000 40000 30000


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Manufacturing expenses 30000 30000 10000

Overheads 20000 20000 5000

In process A 5000 units were introduced at a cost of 1,00,000

The output were as follows


Process A 4500 units
Process B 4400 units
Process C 3500 units

Prepare process accounts

Supplementary Questions:

Q1. The following information is given to you from which you are required to prepare Cost
Sheet for the period ended on 31St march 2006:

Consumable material:
Opening stock 20,000
Purchases 1,22,000
Closing stock 10,000
Direct wages 36,000
Direct Expenses 24,000
Factory overheads 50 % of direct wages
Office and administration overheads 20% of works cost
Selling and distribution expenses 3 per unit sold

Units of finished goods Units


In hand at the beginning of the period (Value 12500) 500
Units produced during the period 12,000
In hand at the end of the period 1,500
Find out the selling price per unit if 20% profit on selling price. There is
no work-in-progress either at the beginning or at the end of the period.

Q2. From the following information find EOQ

1. Total annual consumption 170000 units


2. Purchase price per unit 3
3. Ordering cost 160 per order
4. Cost of carrying inventory 20 per annum

References:-
1. MY Khan, PK Jain , The Mc Graw Hill Companies & Fourth Edition, ‘Management
Accounting’.
2. Dr. S.P.Gupta ,Sahitya Bhavan Publications, Management Accounting.
3. Ravi M Kishore, Taxmann’s, Cost Accounting and Financial Management.

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