Description

Cost Accounting
April 2023 Examination
Q1. From the following details of stores receipts and issues of material in a
manufacturing unit, you are required to prepare the Stock Ledger for the month of
November 2021 using “Weighed Average” method of valuing the issues:

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).

Ans 1.
Introduction
The weighted average technique may be defined as an inventory valuation method that
considers the weighted average of stock for calculating the amount of merchandise and value
of goods sold.
The weighted average method is a lovely way to evaluate existing inventory. However, there
are extra accurate strategies for our commercial enterprise. We want to identify the other
strategies for monitoring and valuing stock before we can make nil down at the weighted
average system. We want to weigh the advantages and disadvantages of every to decide
which technique does the
It is only half solved
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Q2. HM Ltd. undertook a contract on 1st April 2021 for Rs. 10,00,000. On 31st March
2022 when the accounts were closed, the following details about the contract were
gathered:

Materials purchased Wages paid	2,00,000
General expenses	90,000
Plant purchased	20,000
Materials in hand 31.3.2022	1,00,000
Wages accrued 31.3.2022	10,000
Work certified	4,00, 000
Cash received	3,00,000
Work uncertified	30,000
Depreciation of plant	10,000

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. (10 Marks)
Ans 2.
Introduction
When a contractor has established a settlement, a separate account is initiated for each
contract, bringing together all the prices referring to a specific contract, referred to as a
contract account.
All of the expenses incurred in gratifying an agreement, consisting of wages, materials, cost
of sub-contracts, direct expenses, and indirect fees, are debited to a contract account.
Similarly, fees accrued or excellent on the agreement at the end of the financial period also

 

Q3a. Ether Corporation produces four products in a manufacturing process. The
Company produced 20,000 units of A, 40,000 units of B, 30,000 units of C and 50,000
units of D. The costs before split off point for the four products were Rs. 2,80,000. 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)
Ans 3a.

(a)
Introduction
A unit fee may be described as a complete expenditure by an organization to manufacture,
store and promote one unit of selected products or services. Unit prices or charges are
synonymous with the price of goods offered, referred to as COGS.
This accounting approach includes all of the variable and fixed costs associated with

(b).
Introduction
Joined price can be defined as the cost that adds value to extra than a single process of the
company. It is incurred while waiting for financial benefits/ value addition in more than a
single process/ product. The intake of the resources initiates producing financial benefits for

 

Q3b. Calculate equivalent production from the following details: Opening stock of
work- in-progress 8,000 units 40% complete. Units completed: 64,000
Units put into process: 60,000
Closing stock of work- in-progress 4,000 units, 60% complete. (5 Marks)
Ans 3b.
Introduction
Equivalent units can be described as whole notional devices representing completed work.
Equivalent manufacturing represents a method through which incomplete units are expressed
as finished devices.
Equivalent production usually represents the production of a method in terms of completed