M.Com. (Semester II) (CBCS) Examination, 2017
ADVANCED COSTING(PAPER-I)
Day Date: Wednesday, 19-04-2017 Max. Marks: 70
Time: 10.30 AM to 01.00 PM
N.B. All questions are compulsory.
Figures to the right indicate full marks.
Use of Calculator is allowed.
Q.1 Choose the correct alternatives form the following. 14
When the actual loss is more than the estimated loss, the
difference between the two is considered to be
Normal loss Abnormal loss
Abnormal gain None of the above
Batch costing is a form of
Process Continuous Process
Specific order Operation
The sum of value of work certified and uncertified appearing in the
Contract Account is called
Work in Progress Work in Process
Work Completed Work done
In Sugar manufacturing, production of molasses used for
industrial alcohol is an example of
By-product Co-products
Scrap Waste
When there is a loss on an incomplete contract, it is treated as
Reserve Loss
Work-in-progress None of the above
Standard cost is used
As a basis for price fixation and cost control through variance
analysis.
To ascertain the break-even point
To establish cost-volume-profit relationship
All of above
In Process costing, cost per unit increases because of
Normal loss Abnormal loss
Normal gain Abnormal gain
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SLR-Q-15
Individual products, each of significant sales value, produced
simultaneously from the same raw material, should be known as
By-products Main products
Joint products Common products
In a building contract of Rs. 2,40,000 at the end of the year work
certified is Rs. 1,60,000 and estimated profit is Rs. 15,000. What
is the amount of profit to be credited to Profit and Loss A/c
assuming cash ratio is 80%.
Rs. 15,000 Rs. 12,000 Rs. 8,000 Rs. 6,000
10) Which method of costing is suitable in chemical industries
Job costing Contract costing
Batch costing Process costing
11)Material Price Variance (Standard price Actual price).
Standard quantity Actual quantity
Revised standard quantity Standard quantity for actual output
12) An unfavorable material usage variance arises because of:
Price increase in raw material
Less than anticipated normal wastage in the manufacturing
process
More than anticipated normal wastage in the manufacturing
process
None of the above
13) Under Job Costing system, each job is assigned one identifying
job
Number Classification
Codification None
14) Higher productivity means
More efficient use of all type of resources.
Production at lower and lower costs.
Minimum use of resources for achieving a set of targets.
All of above.
Q.2 Write short notes on: 14
1. Distinction between cost control and cost reduction.
2. Measurement of overall productivity.
Q.3 "Z" company is asked to send a quotation for a machine. The
costing department estimated the expenditure as under:
07
Direct Material Rs. 60,000
Direct Labour Rs. 40,000
It is also estimated that works overhead is 60% of direct
labour, office overhead is 20% labour cost and selling and
distribution overhead 15% on works cost. Prepare Job Cost
Sheet.
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SLR-Q-15
Compute the economic batch quantity for a company using
batch costing with the following data.
07
Annual demand for the component 12,000
Set-up cost per batch Rs. 60
Carrying cost per unit of production Rs. 0.18
Q.4 Product ABC passes through three processes B and C before
completion and transferred to finished stock. There was no stock in
hand on 1st January and no work in progress on 1st January. The
following data is supplied in respect of the three processes for the
month of January.
14
Process
A
Process
B
Process
C
Material 8,000 9,000 5,000
Labour 12,000 11,000 15,000
Stock on 31st January 4,000 8,000 12,000
Sale of finished goods amounted to Rs. 72,000 and finished stock on
31st January was valued at Rs. 8,000. The output of each process at
an amount that yields a profit of 20% on transfer price. The transfer
from process C for finished stock is to be similarly treated.
Prepare Process Accounts showing the profit element at each stage
and the actual profit realized.
OR
PQ Pvt. Ltd. runs a canteen for the benefit of its workman and
necessary subsidy to the canteen. During the month of March 2013.
The following purchases were made.
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Commodity Qty. Rate per kg.
Tea Powder 4 40
Sugar 50 8
Milk 60 5
Flour 200 5
Oil 30 30
Dal 30 8
Potato 100 3
Green vegetables 20 2
Other expenses for the month were:
Auto charges Rs. 20
Salary to a cook Rs. 250 p.m.
Wages of two waiters Rs. 150 p.m. each
Supervisors Salary Rs. 300 p.m.
Fuel, Gas Coal Rs. 400 p.m.
Table cloth Rs. 100 p.m.
Depreciation on utensils and furniture Rs. 50
Prepare Operating Cost Sheet and find out cost per customer
charged by the canteen, assume that 3000 employees were working
in the factory.
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SLR-Q-15
Q.5 Three contracts which commenced on 1st January, 1st July and 1st
October, 2014 respectively were undertaken by a contract and their
accounts on 31st December 2014, showed the following position.
14
Contract 1

Contract 2

Contract 3

Contract price 2,00,000 1,35,000 1,50,000
Materials 36,000 29,000 10,000
Wages paid 55,000 56,200 7,000
Plant installed 10,000 8,000 6,000
General charges 2,000 1,400 500
Material on hand 2,000 2,000 1,000
Wages accrued 2,000 2,000 2,000
Work certified 1,00,000 80,000 18,000
Cash Received 75,000 60,000 13,500
Work Uncertified 3,000 4,000 1,550
The plant was installed on the date of commencement of each
contract, depreciation, thereon is be taken at 10% per annum.
Prepare the Contract Account in tabular form and show how they
would appear in the balance sheet.
OR
The following standards have been set to manufacture a product: 14
Direct Materials:
2 units of A at Rs. 4 p.u.
3 units of B at Rs. 3 p.u.
15 units of C at Re. 1 p.u.
Direct Labour
3 hours at Rs. 8 per hour
The company manufactures and sold 6000 units of the product
during the year. Direct Material cost were as follows:
12,500 units of A at Rs. 4.40 p.u.
18,000 units of B at Rs. 2.80 p.u.
88,500 units of C at Rs. 1.20 p.u.
The company worked 17,500 direct labour hours during the year.
For 2500 of those hours the company paid at Rs.12 per hour while
for the remaining the wages were paid at standard rate.
Calculate: Material Price and Usage variance and Labour Rate
and Efficiency variance.