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Seat No.: Enrolment
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA SEMESTER-II • EXAMINATION SUMMER 2018
Subject Code: 820001 Date:29/05/2018
Subject Name: Cost and Management Accounting
Time: 10:30 AM To 01:30 PM Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1

Explain the advantages of and objections against Cost Accounting.
07

Explain in detail the classification of costs according to Variability and Controllability.
07
Q.2

Mr. Manish furnishes the following data relating to the manufacture of X-standard products during the month of April:
Raw Materials Consumed
Rs. 15,000
Direct Labour Charges
Rs. 9,000
Machine Hours Worked
900 hours
Machine Hour Rate
Rs. 5
Administrative Overheads
20% on works cost
Selling Overheads
50 paise per unit
Units Produced
17,100 units
Units Sold
16,000 Rs. 4 per unit
You are required to prepare a cost sheet from the above, showing
Cost per unit
Profit per unit sold
07

What do you understand by Job Order Costing? Under what conditions, it is suitable?
07
OR

What do you mean by Activity Based Costing? Explain different stages involved in ABC system of costing?
07
Q.3

Define by products and joint products, what are the distinctions between them? Give examples.
07

The cost records show the following expenses of manufacturing 200 units of Product X in a process:
Material
Rs. 4000/-
Labour
Rs. 1500/-
Overhead
Rs.
The standard normal wastage in production is 10% and it can be sold in the market at Rs.15 per unit. The actual production is 150 units which is attributable to gross carelessness of the workers. Prepare Process A/c and Abnormal Wastage A/c.
07
OR
Q.3

What do you mean by Operating Costing? Explain characteristics, features and types of cost units used in operating costing.
07
2

Kamlesh Company Ltd. is divided into four department C production department and D is service department. The actual costs for October, 2009 are as follows:
Rent Rs. 1000
Repairs to plants Rs. 600
Depreciation of plant Rs. 450
Light Rs. 100
Supervision Rs. 1500
Fire insurance stock Rs. 500
Power Rs. 900
Employees state insurance contribution Rs. 150
The following information is available in respect of four departments.
Departments
A
B
C
D
Area sq ft.
1500
1100
900
500
No. of employees
20
15
10
5
Total wages Rs.
6000
4000
3000
2000
Value of Plant Rs.
24000
18000
12000
6000
Value of stock Rs.
15000
9000
6000

Apportion the cost to the various departments by preparing overhead distribution chart.
07
Q.4

Define decision-making. Explain the various steps involved in the decision-making process.
07

Shah Industries manufactures small capacity motors. The cost break-up of a motor is as under:
Material
Rs. 50
Labour
Rs. 80
Variable Overheads
75% of labour cost
Fixed overheads of the company amount to Rs. 2,40,000 p.a. The sales price of the motor is Rs. 230 each.
Determine the number of motors that have to be manufactured and sold in a year in order to break even.
How many motors to be made and sold to make a profit of Rs. 1,00,000.
If the sale price is reduced by Rs. 15 each, how many motors have to be sold to break even.
07
OR
Q.4

Explain the concept of transfer price. Elaborate in detail the different techniques available to work out the transfer price.
07

From the following details, which product would be recommended if time is the limiting factor?
Particulars
Product A
Product B
Direct Material Per Unit
Rs. 24
Rs. 14
Direct Labour Rs. 2 per hour
Rs. 20
Rs. 30
Variable Overheads of labour cost)
200%
300%
Selling Price Per Unit
Rs. 150
Rs. 200
07
Q.5

Define Budget. Elaborate in detail the necessary features of budgets.
07
3

Find out labour rate variance, labour efficiency variance and labour cost variance using the following data:
Standard: 48 hours Rs. 3 per hour
Actual: 50 hours Rs. 3.50 per hour
07
OR
Q.5

Explain in detail the advantages of standard costing system.
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A department attaints a sale of Rs. 6,00,000 at 80% of its normal capacity and its expenses are given below:
Administrative Expenses
Rs.
Selling
Costs
Rs.
Office Salaries
90,000
Salaries
of sales
General Expenses
of sales
Travelling Expenses
of sales
Depreciation
7,500
Sales Office Expenses
of sales
Rates Taxes
8,750
General Expenses
of sales
The distribution costs are: Wages Rs. 15,000, Rent of sales, and other expenses of sales.
Draw up a flexible administration overhead, selling and distribution overhead costs budget, operating at 100% and 110% normal capacity.
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