DCM2103 COST ACCOUNTING MARCH 2025

Description

SESSION	MARCH 2025
PROGRAM	BACHELOR OF COMMERCE (B.COM)
SEMESTER	III
COURSE CODE & NAME	DCM2103 COST ACCOUNTING

 

 

Set – 1

 

 

Q1. a). Write down five differences between Financial Accounting and Cost Accounting.

b). Briefly explain the following:

1. Job Costing
2. Contract Costing

III. Operating Costing

1. Process Costing
2. Unit or Single Output Costing

Ans 1.

Q1 (a). Five Differences Between Financial Accounting and Cost Accounting

Basis of Difference	Financial Accounting	Cost Accounting
Objective	To record and report overall financial performance to external parties	To determine, control, and analyze costs for internal decision-making
Users	Mainly external users like shareholders, tax authorities, regulators	Mainly internal users like management and cost controllers
Reporting Format	Governed by statutory rules and standards like GAAP/IFRS	No specific format; depends on organizational needs
Time Orientation	Historical in nature – reports are prepared after the transactions	Focuses on present and future cost planning and control

 

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Q2. Prepare the store ledger using the  information below by following the first-in-first-out (FIFO) method. Show the issue price of each material.

Date	Receipts		Issues
	Quantity (Kg.)	Rate (Rs.)	Date	Quantity (Kg.)
3.2.2025	1,000	1.00	4.2.2025	500
5.2.2025	4,000	1.40	7.2.2025	3,000
10.2.2025	3,000	1.50	15.2.2025	2,000
20.2.2025	2,000	1.80	25.2.2025	3,000

 

Ans 2.

FIFO Method in Cost Accounting

The First-In-First-Out (FIFO) method is a widely used inventory valuation technique in cost accounting. Under this method, it is assumed that the oldest inventory items are issued or sold first, and the remaining inventory consists of the most recently purchased goods. This approach reflects the natural flow of inventory in many businesses, especially those dealing with perishable or time-sensitive items.

FIFO is particularly effective when inventory prices are rising. It ensures that cost of goods

 

Q3. Find the wages of workers under the Halsey Plan and the Rowen Plan with the information given below:

Standard output in 10 hours: 120 units

Actual output in 10 hours: 132 units

Wage Rate: Rs. 15 per hour

Ans 3.

Incentive plans like the Halsey and Rowen systems are used to reward workers for completing tasks in less time than the standard time. These plans offer a base wage plus a bonus for time saved, encouraging higher productivity.

1. Halsey Premium Plan

Formula:

2. Rowen Premium Plan

Formula:

 

Set – 2

 

Q4. Define the term ‘Overhead’. Give the classification of overhead and explain fixed, variable, and semi-variable overhead in detail.

Ans 4.

Definition of Overhead

In cost accounting, overhead refers to the indirect costs incurred during the production of goods or services that cannot be directly traced to a specific product, job, or department. These costs are necessary for overall business operations but are not directly involved in the production process.

Examples include rent, salaries of administrative staff, electricity, depreciation, and maintenance

 

 

Q5. Abhay Bros. accepted a contract for the construction of a building for Rs. 10,00,000.

The Contractee agreed to pay 90% of the work certified; as certified by the architect. During the first year, the amount spent was as follows:

Particulars                     Rs.                            Particulars              Rs.

Material                 1,20,000                      Plant at site            20,000

Labour                   1,50,000                     Material at site        5,000

Plant issued              30,000                     Work certified       4,00,000

Other expenses        90,000                     Work uncertified      15,000

 

Prepare contract account in the books of Abhay Bros.

Also, show the amount of profit that can be transferred reasonably to the P&L A/c.

Ans 5.

Theory: Contract Costing

Contract costing is used when a large job (like building construction) takes significant time and cost. The profit is not recognized all at once but is transferred partially to the Profit & Loss Account depending on the stage of completion of the contract.

Given:

• Contract Price = ₹10,00,000
• Work Certified = ₹4,00,000
• Work Uncertified = ₹15,000

 

 

Q6. A chemical product passes through three distinct processes to completion. During the month ended August 2019. 500 units were produced. The cost accounts show the following information:

Process	A	B	C
Material (600 units)	3,000	1,500	1,000
Labour ( Rs)	2,500	2,000	2,500
Direct Expenses ( In Rs)	50	100	900
Cost of Packing (in Rs)	–	2,060	–
Output (units)	550	530	500

 

The indirect expenses for the period were Rs 1,400. The by-product of process B was sold for Rs. 185, and the residue of process C was sold for Rs. 75.

Prepare the process account showing total cost and cost per bottle of finished stock.

Ans 6.

Process costing is used when a product passes through multiple stages (processes) and is mass-produced. Costs are accumulated for each process, and the cost per unit is calculated by dividing total cost by output units. Any by-product or scrap/residue sale is deducted from total cost.

Given

Particulars	Process A	Process B	Process C
Material (600 units)	₹3,000	₹1,500	₹1,000
Labour	₹2,500	₹2,000	₹2,500
Direct Expenses	₹50	₹100	₹900