Cost
and Management Accounting
Q1. N Limited undertook a contract for Rs. 5,00,000 on 1st April
2020. On 31st March 2021 when the accounts were closed, the following details
about the contract were gathered:
Materials
purchased
1, 00,000
Wages
paid
45,000
General
expenses
10,000
Plant
purchased
50,000
Materials in hand
31.3.2021
25,000
Wages accrued
31.3.2021
5,000
Work
certified
2, 00,000
Cash
received
1, 50,000
Work
uncertified
15,000
Depreciation of
plant
5,000
The contract contained an escalation clause which read as “In
the event of increase(s) of prices of materials and rates of wages by more than
5%, the contract price would be increased accordingly by 25% of the rise of the
cost of materials and wages beyond 5% in each case”. It was found that since
the date of signing the agreement, the prices of materials and wage rates
increased by 25%. The value of the work certified does not consider the effect
of the above clause.
Prepare the contact account.
Q2. Prepare the Stock Ledger using “Weighed Average” method of
valuing the issues from the following details of stores receipts and issues of
material in a manufacturing unit:
TABLE BELOW
Nov. 1 Opening Stock 2,000 units @ Rs. 5 each
Nov. 3 Issued 1,500 units to Production.
Nov. 4 Received 4,500 units @ Rs. 6.00 each.
Nov. 8 Issued 1,600 units to Production
Nov. 9 Returned to stores 100 units by Production Department
(from the issues
of November 3)
Nov. 16 Received 2,400 units @ Rs. 6.50 each.
Nov. 19 Returned to the supplier 200 unit out of the quantity
received on
November, 4
Nov. 20 Received 1,000 units @ Rs. 7.00 each.
Nov. 24 Issued to Production 2,100 units.
Nov. 27 Received 1,200 units @ Rs. 7.50 each
Nov. 29 Issued to Production 2,800 units (use rates upto two
decimal places).
Q.3 (a) Opening stock of work- in-progress 4,000 units 40%
complete.
Units completed: 32,000
Units put into process: 30,000
Closing stock of work- in-progress 2,000 units, 60% complete.
Calculate equivalent production. (5 Marks)
3.b. JK Ltd. produces four products in a manufacturing process.
The Company produced 10,000 units of A, 20,000 units of B, 15,000 units of C
and 25,000 units of D. The costs before split off point for the four products
were Rs. 1, 40,000. Using the average unit cost method
(a) Calculate the unit cost, and
(b) How, the joint cost would be apportioned amount the
products. (5 Marks)
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