Paper 8 – Cost Accounting

Full Marks: 100 Time allowed: 3 hours

Part-I

Answer Question Number 1. All parts of this question are compulsory

1. Answer the following questions (a) Choose the most appropriate alternative for the following (you
may write only the Roman numeral and the alphabet chosen for your answer):

(i) Labour costs requiring special treatment: (a) Idle time (b) Overtime (c) Fringe benefits (d) Holiday
and vacation pay

(ii) Continuous stock taking is a part of- (a) ABC analysis (b) Annual stock taking (c) Perpetual
Inventory (d) None of these

(iii) In which of the following incentive plan of payment, wages on time basis are not guaranteed? (a)
Halsey plan (b) Rowan plan (c) Taylor’s differential piece rate system (d) Gantt’s task and bonus
system

(iv) Example of Direct Expenses (a) Rent (b) Royalty charged on production (c) Bonus to employee (d)
None of these

(v) Charging to a cost centre those overheads that result solely for the existence of that cost centre is
known as

(a) Allocation (b) Apportionment (c) Absorption (d) Allotment

(vi) Standards deals with the principles and methods of determining depreciation and amortization
cost- (a) CAS 9 (b) CAS 12 (c) CAS 15 (d) CAS 16

(vii) Budgets are shown in ________________ Terms

(a) Qualitative (b) Quantitative (c) Materialistic (d) Both (b) and (c)

(viii) In a process 8000 units are introduced during a period. 5% of input is normal loss. Closing work
in progress 60% complete is 1000 units. 6600 completed units are transferred to next process.
Equivalent production for the period is: (a) 9000 units (b) 7440 units (c) 5400 units (d) 7200 units

(ix) In Reconciliations Statements, Incomes shown only in financial accounts are.

(a) Added to financial profit (b) Deducted from financial profit (c) Ignored (d) Deducted from costing
profit

(x) Which of the following is not an element of works overhead? (a) Sales manager’s salary (b) Plant
manager’s salary (c) Factory repairman’s wages (d) Product inspector’s salary
(c) Say True or False for the following question: [5×1=5]

(i) Differential Cost is the change in the cost due to change in activity from one level to another.

(ii) ABC analysis is based on the principle of management by exception.

(iii) Identification of direct expenses shall be based on traceability in an economically feasible

(iv) FIFO methods are followed for evaluation of equivalent production when prices are fluctuating.

(v) A budget manual is the summary of all functional budgets.

(d) Fill in the blanks: [5×1=5]

(i) In a company there were 1200 employee on the rolls at the beginning of a year and 1180 at the
end. During the year 120 persons left services and 96 replacements were made. The labour turnover
to flux method is __________ %.

(ii) _______________ nominee from the regulate like CAG, RBI to the CASB Board.

(iii) In Reconciliations Statements, Incomes shown only in financial accounts are

(iv) The method of costing used in undertaking like gas companies, cinema houses, hospitals etc is
known as ___________________.

(v) Cash budget is a part of _________________ budget.

2.a.ABC Ltd. manufactures a special product, which requires ‘ZED’. The following particulars were
collected for the year 2018-19: (i) Monthly demand of Zed: 6,500 units (ii) Cost of placing an order: Rs.
500 (iii) Re-order period: 5 to 8 weeks (iv) Cost per unit: Rs. 50 (v) Carrying cost % p.a. : 10% (vi) Normal
usage : 500 units per week (vii) Minimum usage : 250 units per week (viii) Maximum usage : 750 units
per week Required: (i) Re-order quantity (ii) Re-order level (iii) Minimum stock level (iv) Maximum
stock level (v) Average stock level

b.

(8+7=15 Marks)
8. Write short notes on any three of the following: [5x3=15]

(a) Difference in Profit under Marginal Costing & Absorption Costing

(b) Replacement Cost

(c) Cost Accounting Standard on Cost-of-Service Cost Centre

(d) Difference between Merit Rating and Job Evaluation.