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Cost Accounting 1st Edition K. Alex - Solutions
The contract, which is complete up to one fourth, one fourth of the profit can be transferred.
In cost-plus contracts, the contractor runs a risk of incurring a loss.
SV Ltd. has furnished you the following information from the financial books for the year ended 31 March 1998.Profit and loss account for the year ended 31 March 1998 Opening stock Rs Sales Rs 500 units at Rs 35 each 17,500 10,250 units 7,17,500 Materials consumed 2,60,00 Closing Stock:Wages
The following is the summarized version of trading and profit and loss account of Continental Enterprises Limited for the year ended 31 March 1998.Rs Rs To materials 48,000 By sales 96,000 To wages 36,000 By closing stock of finished goods 20,400 To works expenses 24,000 By work-in-progress:To
From the following details of Small Tools Ltd, compute the profit in financial accounts as well as in cost accounts and reconcile profit between cost and financial accounts showing clearly the reasons for the variation of the two profit figures:Rs Rs Sales 20,000 Bad debts 100 Purchase of materials
From the following figures prepare a reconciliation statement:Rs Net loss as per costing records 1,72,400 Works overheads under-recovered in costing 3,120 Administrative overheads recovered in excess 1,700 Depreciation charged in financial records 11,200 Depreciation recovered in costing 12,500
During the year ended 31 March 1998 a company’s profit as per financial accounts was Rs 16,624.Prepare a reconciliation statement and arrive at the profit as per cost accounts using the additional information given below:Profit and loss account year ended 31 March 1998 Rs Rs Opening stock
A company maintains separate cost and financial accounts, and the costing profit for the year 1998 differed to that revealed in the financial accounts, which was shown as Rs 50,000.The following information is available:Cost accounts Financial account Rs Rs Opening stock of raw material 5,000 5,500
In the reconciliation between cost and financial accounts, one of the areas of differences is different methods of stock valuation used. State with reasons, in each of the following circumstances whether costing profit will be higher or lower than the financial profit:Items of stock Cost valuation
Financial profit and loss account of a manufacturing Company for the year ended 31 March 1998 is as follows:Rs Rs To material consumed 50,000 By sales 1,24,000 To carriage inwards 34,000 To works expenses 12,000 To direct wages 1,000 To administration expenses 4,500 To selling and distribution
From the following profit and loss account and additional information given, prepare: (a) a cost sheet and (b) reconciliation statement Profit and loss account Particulars Rs Particulars Rs To opening stock 8,000 By sales 1,85,000 To purchases 52,000 By closing stock (materials) 15,000 To wages
The profit as per cost accounts in 1987 was Rs 1,65,300. The following details are ascertained on comparison of the cost and financial accounts:Particulars Cost books Rs Financial books Rs(a) Opening stocks Materials 32,600 33,000 Work-in-progress 20,000 21,000(b) Closing stocks Materials 36,000
‘Native’ Co. Ltd suffered a loss of Rs 25,000 as per the financial accounts. On comparison with its costing records for the same year, the following differences were observed:Prepare a reconciliation statement, with the help of the differences.Rs Overvaluation of opening stock of materials in
Discuss the effect of under or over charge of depreciation in cost accounts and financial accounts.
How will you treat under or overvaluation of stocks in cost accounts while preparing reconciliation statement.
State briefly the treatment of under or over absorption of overheads while reconciling costing profits with financial profits.
Discuss the need for reconciliation of cost and financial accounts.
What is the accounting procedure when both the profits are not given?
What are the items to be deducted when cost profit is taken as the base?
What are the items to be added when cost profit is taken as the base?
State the possible reasons for difference in profits shown by financial accounts and cost accounts.
Why is the reconciliation of cost and financial accounts necessary?
Give the accounting procedure when only one of the profits is given.
At what situation reconciliation statement need not be prepared?
How do you solve the sum when both the profits are given?
State the importance of reconciliation.
What is reconciliation?
In cost accounts, the stock is valued at(a) Cost (b) Market price(c) No value (d) Cost plus profit
Dividend interest on investment and discount are shown in(a) Cost accounts (b) Management accounts(c) Book keeping (d) Financial accounts
When costing loss is Rs 7,600, office overheads under absorbed being Rs 800, the loss as per financial accounts should be(a) Rs 6,800 (b) Rs 7,600(c) Rs 8,400 (d) None of these
While reconciling costing profits with financial profits, capital expenses and losses in financial accounts are(a) Doubled (b) Added(c) Not included (d) Subtracted
While reconciling costing profits with financial profits, under recovery of works overheads is(a) Deducted (b) Added(c) Not included (d) Doubled
When costing profit is Rs 13,500 and a charge in lieu of rent is Rs 2,000, then the financial profit should be(a) Rs 13,500 (b) Rs 15,500(c) Rs 11,500 (d) None of these
Which of the following items shall be added to costing profit to arrive at financial profit?(a) Income tax paid (b) Interest on debentures(c) Under absorption of overheads (d) Rent receivable
Which of the following items is not included in financial books?(a) Loss on sale of fixed assets (b) Interest on capital(c) Notional rent (d) Donations
Cost and financial accounts are reconciled under(a) Integral system (b) Cost-control accounts system(c) Both a and b (d) None of these
Which of the following items is include in cost accounts?(a) Notional profit (b) Rent receivable(c) Transfer to general reserve (d) None of these
Under absorptions are caused by clerical errors.
Capital losses shown in financial accounts are deducted while reconciling costing profits with financial profits.
Costing profit and loss account and financial profit and loss account are the same.
Over absorption = actual > estimated.
Under absorption = actual > estimated.
Under valuation of closing stock in cost accounts is added while reconciling cost profit with financial profits.
Under-absorption of production overheads is deducted while reconciling cost profit with financial profits.
Income tax is provided only in cost accounts.
Rent on owned buildings is not included in cost accounts.
Cost and financial accounts are reconciled under non-integral accounting.
The following figures have been extracted from the books of a manufacturing company. All jobs pass through the company’s two departments:Working department (Rs) Finishing department (Rs)Materials used 6,000 500 Direct labour 3,000 1,500 Factory overheads 1,800 1,200 Direct labour hours 12,000
The following annual charges are incurred in respect of a machine in a shop where manual labour is almost nil and work is done by means of five machines of exactly same type of specification.(i) Rent and rates (proportional to the floor space) for the shop Rs 4,800(ii) Depreciation on each machine
Calculate the MHR for the recovery of overheads for a group of three machines from the following data:Original cost of 3 machines Rs 56,800 Depreciation at 10% per annum (straight line method)Repairs and maintenance cost average Rs 16 per day Power 30 paise per running hour per machine Supervision
A machine costs Rs 90,000 and is deemed to have a scrap value of 5% at the end of its effective life(19 years). Usually, the machine is expected to run 2,400 hours per annum, but it is estimated that 150 hours will be lost for normal repairs and maintenance and further 750 hours will be lost due to
(A) Compute comprehensive MHR from the following data:(a) Total cost of machine to be depreciated: Rs 2,30,000(b) Life: 10 years(c) Depreciation on straight line(d) Departmental overheads (annual):Rent Rs 50,000 Heat and light Rs 20,000 Supervision Rs 1,30,000(e)Departmental area 70,000 square
A machine shop has 8 identical drilling machines manned by 6 operators. The machines cannot be worked without an operator wholly engaged on it. The original cost of all these 8 machines works out to Rs 8 lakh. These particulars are furnished for a 6-month period.Normal available hours per month 208
A machine shop contains four newly purchased machines each occupying practically equal amount of space and costing, respectively, A: Rs 20,000; B: Rs 25,000; C: Rs 30,000 and D: Rs 40,000.The following are the expenses per annum of the machine shop.Rent Rs 10,000 Rates and water Rs 4,250 Light and
Calculate the MHR from the following:Cost of the machine Rs 8,000 Cost of installation Rs 2,000 Scrap value after 10 years Rs 2,000 Rates and rent for a quarter for the shop Rs 300 General lighting Rs 20 per month Shop supervisor’s salary Rs 600 per quarter Insurance premium for a machine Rs 60
A machine costs Rs 90,000 and is deemed to have a scrap value of 5% at the end of its effective life of 19 years. Usually, the machine is expected to run for 2,400 hours per annum, but it is estimated that 150 hours will be lost for normal repairs and further 750 hours will be lost due to
The following particulars relate to a processing machine treating a typical material: 1. Cost of the machine Rs 10,000 2. Estimated life 10 years 3. Scrap value Rs 1,000 4. Yearly working time (50 weeks of 44 hours each) 2,200 hours 5. Machine maintenance 200 hours per annum 6. Setting up time
The following particulars relate to a machine:Purchase price of machine Rs 80,000 Installation expenses Rs 20,000 Rent per quarter Rs 3,000 General lighting for the whole area Rs 200 per month Supervisor’s salary Rs 6,000 per quarter Insurance premium for the machine Rs 600 per annum Estimated
From details furnished below, compute a comprehensive MHR.(1) Original purchase price of the machine(subject to depreciation at 10% per year on original cost) Rs 21,600(2) Normal working hours for the month (the machine works to only 75% of capacity) 200 hours(3) Wages of machine man Rs 4 per day
A machine costs Rs 90,000 and is deemed to have a scrap value of 5% at the end of its effective 19 years. Usually, the machine is expected to run for 2,400 hours per annum, but it is expected that 150 hours will be lost for normal repairs and maintenance and further 750 hours will be lost due to
The following annual charges are incurred in respect of a machine in a shop where manual labour is almost nil and work is done by means of five machines of exactly similar type.(a) Rent and rates for the shop: Rs 4,000(b) Depreciation on each machine: Rs 400(c) Power consumed (as per metre) at 10
An engineering company gives you the following details about a new machine installed by them.Calculate the MHR for the machine.(1) Cost of the machine Rs 24,000,000(2) Customs duty, insurance, freight etc. Rs 11,00,000(3) Installation expenses Rs 3,00,000(4) Cost of tools for the first 2 years Rs
From the following information, calculate the MHR. 1. Cost of asset: Rs 1,05,000 with a scrap value of Rs 15,000 at the end of its working life 2. Installation charges: Rs 10,000 3. Life of asset: 10 years at 2,000 working hours per year 4. Repair charges: 50% of depreciation 5. Lubricating oil:
Compute the MHR from the following data:Cost of machine Rs 1,00,000 Installation charges Rs 10,000 Estimated scrap value after the expiry of life (15 years) Rs 5,000 Rent and rates for the shop per month Rs 200 General lighting for the shop per month Rs 300 Insurance premium for the machine per
The production department of a factory furnishes the following information for the month of August.Materials used Rs 54,000 Direct wages Rs 45,000 Labour hours worked 36,000 Hours of machine operation Rs 30,000 Overheads chargeable for the department Rs 36,000 For an order executed by the
A machine was purchased on 01 January 1990 for Rs 5 lakh. The total cost of all machinery inclusive of the new machine was Rs 75 lakh. Further particulars are available as follows:Expected life of machine: 10 years Scrap value at the end of 10 years: Rs 5,000 Repairs and maintenance for the machine
Compute MHR from the following data.Cost of the machine Rs 1,00,000 Installation charges Rs 10,000 Estimated scrap value after the expiry of its life (15 years) Rs 5,000 Rent and rates for the shop per month Rs 200 General lighting for the shop per month Rs 300 Insurance premium for the machine per
Calculate the MHR from the following.Cost of the machine Rs 80,000 Cost of installation Rs 20,000 Scrap value after 10 years Rs 20,000 Rent and rates per quarter for the shop Rs 3,000 General lighting (per month) Rs 200 Shop supervision per quarter Rs 6,000 Insurance premium per annum Rs 600
Calculate MHR for machine no. 7, which is one of seven machines in operation in a department of a factory.(a) Cost of the machine no. 7: Rs 1,000(b) Estimated scrap value at finish of working life (10 years): Rs 100.(c) Normal running hours per year: 1,800 hours(d) Machine no. 7 occupies one-fifth
Work out the MHR for the following machine for January 1989.Cost of the machine Rs 90,000 Freight and installation Rs 10,000 Working life 10 years Working hours 2,000 per annum Repair charges 50% of depreciation Power 10 units per hour at 10 paise per unit Lubricating oil at Rs 2 per day of 8 hours
A machine was purchased on 01 January 1998. The following relate to the machine.Cost of the machine Rs 40,000 Estimated life 15 years of 1,800 hours per year Estimated scrap value Rs 2,500 Estimated repairs for whole life Rs 10,500 Power consumed per hour 15 units at 0.07 paise per unit Insurance
Compute the MHR from the following.Cost of the machine Rs 2,00,000 Installation charges Rs 20,000 Estimated scrap value after expiry of its life of 15 years Rs 10,000 Rent for the shop Rs 400 per month General lighting for the shop Rs 600 per month Insurance premium for the machine Rs 1,920 per
Calculate from the following data the MHR for Machine A.Cost of machine Rs 1,050 Estimated scrap value Rs 50 Effective working life 20,000 hours Running time in 4 weekly periods 150 hours Weekly amount payable under maintenance agreement covering all repairs Rs 7.50 Standing charges allocated to
Calculate the MHR for Machine A from the following data:Cost of machine Rs 1,600 Estimated scrap value Rs 100 Effective working life 10,000 hours Running time per 4 weekly period 160 hours Average cost of repairs and maintenance charges per four-weekly period Rs 12.00 Standing charges allowed to
Calculate MHR from the following data.Cost of machine Rs 58,000 Estimated scrap value Rs 3,000 Estimated working life 20,000 hours Estimated cost of maintenance during working life of machine Rs 12,000 Power used Re 1 per hour Rent & Rates per month (10% should be charged to this machine) Rs 1,500
The overhead expenses of a factory are allocated on the machine-hour method. You are required to calculate the hourly rate for a certain machine from the following information:Cost Rs 58,000 Estimated scrap value Rs 3,000 Estimated working life 20,000 hours Estimated cost of maintenance for whole
From the following particulars, calculate the MHR for a drilling machine.Cost of the drilling machine Rs 42,000 Estimated scrap value Rs 2,000 Estimated working life 10 years of 2,000 hours each Running time for a 4-week period 150 hours Estimated repairs for life Rs 10,000 Standing charges
Calculate MHR from the following:(a) Cost of machine Rs 12,000(b) Average repairs and maintenance charges per month Rs 150(c) Estimated scrap value Rs 1,200(d) Standing charges allocated to machine per month Rs 50(e) Effective working life of machine 10,000 hours(f ) Running time per month 166
Calculate the MHR for Machine A from the following data:Electric power: 75 paise per hour Repairs: Rs 530 per annum Steam: 10 paise per hour Rent: Rs 270 per annum Water: 2 paise per hour Running hours: 2,000 per annum Original cost of machine: Rs 12,500 Book value: Rs 2,870 Present replacement
Work out the MHR for the following machine:Cost of machine Rs 95,000 Installation charges Rs 10,000 Scrap value after 10 years Rs 5,000 Working hours per month 200 hours Lighting Rs 150 per month Rent Rs 200 per month Insurance premium Rs 500 per year Repair charges 50% of depreciation Other
Calculate the MHR from the following:(1) Cost of the machine Rs 19,200(2) Estimated scrap value Rs 1,200(3) Average repairs and maintenance Rs 150 p.m.(4) Standing charges allocated Rs 50 p.m.(5) Effective working life of the machine 10,000 hours(6) Running time per month 166 hours(7) Power used by
Calculate the MHR for Machine A from the following data:Cost of machine Rs 16,000 Estimated scrap value Rs 1,000 Effective working life 10,000 hours Running time per 4 weekly period 160 hours Average cost of repairs and maintenance per 4 weekly period Rs 120 Standing charges allocated to Machine A
List out the advantages of calculating MHR
Explain blanket overhead rate and multiple overhead rate
Explain actual overhead rate and predetermined overhead rate
Explain ordinary MHR and composite MHR.
Why do underabsorption and overabsorption arise?
Describe the various methods of absorption of overheads?
What do you understand by absorption of overheads?
Discuss the importance of MHR.
Explain the terms underabsorption and overabsorption.
The process of grouping costs according to their common characteristics is called(a) cost allocation (b) cost apportionment(c) cost department (d) cost classification
MHR is computed for(a) factory (b) all the machines(c) each machine (d) computers Ans: (c)
Factory overheads include all of the following except(a) salary of plant manager (b) depreciation on delivery department(c) small tool expenses (d) taxes on factory building Ans: (b)
Which of the following is usually classified as stepped cost?(a) telephone (b) raw materials(c) rates (d) supervisor’s wages Ans: (d)
Allotment of proportions of items of cost to cost centres or cost units is known as(a) allocation (b) absorption(c) measurement (d) apportionment Ans: (d)
The difference between the practical capacity and the capacity based on sales expectancy is termed as(a) idle capacity (b) ideal capacity(c) return capacity (d) ordinary capacity Ans: (a)
When the amount of overhead absorbed is less than the amount of overhead incurred, it is known as(a) underabsorption of overhead (b) overabsorption of overhead(c) proper absorption of overhead (d) none of these Ans: (a)
Wages of machine operator is included in(a) ordinary MHR (b) depreciation(c) plant (d) comprehensive MHR
The allotment of whole items of cost to cost centres or cost units is known as(a) allocation (b) absorption(c) measurement (d) apportionment Ans: (a)
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