Cost and Management Accounting - May 2024

(a) Tesco cycles Ltd. used about 3,60,000 cycle locks per annum and the usage is fairly constant at 30,000 per month. The cycle lock costs ` 240 each at wholesale rate and carrying cost is estimated to be 10% of the annual average inventory value. The cost to place an order is ` 1200. It takes 45 days to receive delivery from the date of order. In order to avoid any kind of disruption in assembly line, safety stock of…

Designer Pvt. Ltd. is a manufacturing company, which manufactures readymade designer shirts. It has four customers: two wholesale category customers and two retail category customers. It has developed the following Activity- Based Costing system: Activity Cost Driver Rate ( `) Order Processing 1,260 per purchase order Customer Visits 1,500 per customer visit 6 COST AND MANAGEMENT ACCOUNTING Regular Delivery 30 per delivery Km. travelled Expedited Delivery 4,490 per expedited delivery List selling price per shirt is ` 1,000 and average…

(a) A factory is currently working at 60% capacity and produces 12,000 units of a product. Management is thinking to increase the working capacity either to 70% or 90% level. It is estimated that at both the levels, it will be able to sell all the produced units. The other details are as under: At 70% capacity, the cost of raw materials increases by 4% and the selling price falls by 3%. At 90% capacity, the cost of raw materials…

Meta Company Ltd. is engaged in the production of product ‘Trio' which passes through two different processes Process P and Process Q. Other information obtained from books of account for the year is as follows: Particulars Process P Process Q 10,000 ` 80 Direct wages ` 52,000 ` 78,000 Direct Expenses ` 8,600 ` 11,100 ` 130 ` 190 Raw material used Raw material cost per unit Selling price per unit of output Production overheads of ` 3,00,000 are recovered…

(a) Super Ltd, a manufacturing company is facing the problem of high labour turnover in the factory. Before analysing the causes and taking remedial steps, the management of the company wants to ascertain the profit lost for the year 2022-23 on account of labour turnover. For this purpose, it has given you the following information: (i) Sales for the last year 2022-23 was ` 2,16,80,000 and P/V ratio was 15%. (ii) The total number of actual hours worked by the…

(a) Distinguish between cost control and cost reduction. (b) Distinguish between Waste and Scrap. Discuss the treatment of normal and abnormal scrap in Cost Accounts. 24 COST AND MANAGEMENT ACCOUNTING (c) Describe Unit Costing and Batch Costing. Give three examples of industries for each method where these are used. (d) Describe briefly idle time and explain the treatment of idle time in cost accounts in following situations: (i) The setting up time for the machine in case of Direct Worker…