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COST ACCOUNTING MANAGEMENT
CASE STUDY : 1
Materials X and Y are used
as follows :
Minimum usage — 50 units
each per week
Minimum usage — 150 units
each per week
Normal usage — 100 units
each per week
Ordering quantities x = 600
units
Y = 1000 units
Delivery period x = 4 to 6
weeks
Y = 2 to 4 weeks
Calculate for each material
a) Minimum level
b) Maximum level
c) Order level
d) Explain importance of
inventory controls?
CASE STUDY : 2
A company presently sells
an equipment for Rs 35,000. Increase in prices of labour and
material cost are
anticipated to the extent of 15% and 10% respectively, in the coming
year. Material cost
represents 40% of cost of sales and labour cost 30% of cost sales.
The remaining relate to
overheads. If the existing selling price is retained despite the
increase in labour and
material prices. The company would face a 20% decrease in the
existing amount of profit
on the equipment.
Question :
1) You are required to
arrive at a selling price so as to give the same percentage of
profit on increased cost of
sales, as before.
2) Prepare a statement of
profit / loss per unit, showing the new selling price and cost
per unit in support of your
answer.
3) What is the anticipated
amount of increased material and labour cost.
4) What policy changes
should the company make for maintaining the profits.
CASE STUDY : 3
A product passes through
two processes. The output of process, I becomes the input of
process II and the output
of process II is transferred to wearhouse. The quantity of raw
materials introduced into
process I is 20000 Kg at Rs 10 per kg. The cost and output
data for the month under
review are as under.
Process I Process II
Direct Materials (Rs)
60,000 40,000
Direct Labour (Rs) 40,000
30,000
Production overheads (Rs)
39,000 40,250
Normal loss 8 5
Output 18000 17400
Loss realization of Re/unit
2.00 3.00
The company’s policy is to
fix the selling price of end product is such a way as to
yield a profit of 20% on
selling price.
Required :
1) Prepare the process
account
2) Determine the selling
price per unit of the end product.
3) What are the advantages
for preparation of an process account?
4) What is the output of
Process I and Process II?
CASE STUDY : 4
A factory manufactures a
chemical product with three ingredient chemicals A, B
and C as per standard data
given below.
Chemical Percentage of
total input Standard Cost per Kg
A 50% 40
B 30 60
C 20 95
There is a process loss of
5% during the course of manufacture.
The management gives the
following details for a certain week.
Chemical consumed Quantity
Purchased Actual Cost
& issued (Rs)
A 5200 Kg 2,34,000
B 3600 Kg 2,19,600
C 1700 Kg 1,58,100
Output of finished product
: 10200 Kg
Calculate all the relevant
variances
a) Total material cost
variances
b) Material price variance
c) Material mix variance
d) Yield variance
e) Usage variance &
give the chart Standard cost of a Chemical product
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