Tribhuvan University 2070
B.B.S/ I Year/ MGMT Full Marks: 100
Cost & Management Accounting (MGT 212) Time: 3 hrs.
Candidates are required to give their answers in their own words as far as practicable.
The figures in the margin indicate full marks.
Attempt ALL the questions.
- Write in short what you know about Cost Accounting. Give any two advantages of Cost Accounting. [3+2]
Enumerate any five advantages of Management Accounting. 
- “ABC system of stock control is also known as control by importance and exception.” Comment briefly in about 5 to 7 effective sentences. 
- Define Fixed and Variable Cost giving two examples of each. [2.5+2.5]
- Write short notes on Use. Value Esteem Value and Cost Value in Value Analysis. 
- What do you mean by Non-Integrated Accounting? Mention its any two advantages. [3+2]
The annual consumption of raw material of a factory is 50,000 kg. The cost price per kg is Rs.5. The estimated expenses for each purchase is Rs. 125. The overall storage cost estimated is 10 percent of unit inventory cost.
The supplier of the raw material has made a special offer of 0.2 percent price off on 10,000 kg lot purchased.
Required: Suggestion for the purchase of raw material by showing comparative total cost including cost of raw material for optimal purchase and a special offer. [2+2+1=5]
- Assume the following data concerning the earning of a worker under Halsey Premium Plan.
Guaranteed wage rate per hour
Standard pre-fixed for the job
Required; (i) Time taken by the worker for the job (2) Bonus earned by the worker [3+2=5]
- The annual expenses of a public health centre are as under:
Expenses for food provisions & others
Repair and maintenance
General administration charges
Cost of oxygen
Expenses for x-rays and others
Rent and rates
Salaries to staffs – paid on the basis on the basis of number of patient attended and time spent by them.
|@ Rs.20,000 per month
@ Rs.4,000 per month
@ Rs.2,000 per month
The expected margin is fixed at 20% on bill amount. The health centre has 50 beds and bed occupancy position is as follows:
|30 beds for 300 days
20 beds for 250 days
Required: (i) Operating cost statement by showing cost per bed per day (2) The rate to be charged per bed per day
- The relevant information of three products made by a company for a period is given below:
Output in units
Direct labour hour per unit
Number of orders executed
Number of set-ups
|Product X||Product Y||Product Z|
The overhead costs and cost drivers are:
|Cost items||Cost drivers||Amount (Rs.)|
Material handling and dispatch
Direct labour hours
Required: Calculate total overhead costs for each product by using (1) Direct labour hours (2) Activity – based costing [3+5=8]
The table given below contains the position of processing divisions:
Space used (sq.mt)
Machines’ cost (Rs.)
Number of employees
H.P. of machines
The overheads incurred during last month are as follows:
Lighting & heating expenses
Rent & rates
The rate of depreciation applied on all the machine in 12% p.a.
Overhead per DLH of each processing division [2+2+2+2=8]
- The income statement of a book printing and distributing house selling 4,000 sets of book in the last year printed at a capacity output is as follows:
(4,000 sets of book at Rs.250 per set)
Less: Variable cost:
Selling & distribution overheads
Less: Budgeted fixed costs manufacturing overheads
The book printing and distributing house has made projection of selling 4,300 sets of book for the current year. There is no beginning stock of book but expected ending stock of book but expected ending stock of 200 sets of book for the current year by the printing and distributing house.
The unit cost and selling price will remain unaltered for the current year.
Required: Income statement by using Absorption Costing 
- The relevant information regarding manufacturing overhead cost needed for preparing a flexible budget have been provided as under:
|Activities in units
Indirect materials and labour costs
Supervision and repairs costs
Rent, depreciation and other
Required: Flexible budget for 16,000 units volume and 24,000 units volume by using flexible budgeting formula [2.5×2=5]
- The normal use in standard output and the actual consumption of a confectionary industry have been given below:
|Sugar||10 kgs||Rs.40||Rs.400||Sugar||12 kgs||Rs.40||Rs.480|
|Flour||60 kgs||Rs.20||Rs.1,200||Flour||70 kgs||Rs.20.5||Rs.1,435|
|Milk||30 lts||Rs.20||Rs.600||Milk||18 lts||Rs.19||Rs.342|
|Less: Standard loss||20||Production 88 kgs of Biscuits|
|Outpur||80 kgs of Biscuits|
Direct materials, yield, mix, use price and cost variances [1×5=5]
- A manufacturing company is considering to produce New Toy for Play Group. It has estimated that the each Toy would cost Rs.7 for material and Rs.5.50 for labour and mark-up would be 100% on these cost. The total fixed cost for the product would be Rs.125,000.
Required: (1) BEP value of the product (2) Sales units to earn 20% profit on sales value (3) If the company desires an after net income, from the product of Rs.42,000 with tax rate of 40%, how many units must be sold? (4) BEP units assuming variable costs increases by 20 percent. [2+2+2+2=8]
- Financial account of a manufacturing company reported a loss of Rs.43,700 for year ending Ashad of current year. The other information relating to income and expenses are as follows:
|Office expenses including depreciation recorded in excess in cost account
Income from interest, rent, sales of scrap etc not shown in cost
Provision for income tax and doubtful debts provided in financial account only
Production overhead shown in excess in financial account
Required: Reconciliation statement showing the profit or loss by cost account 
- A manufacturing company provides you the following information:
Revenue from sales goods
Materials purchases & used
Paid for the other services used for production of goods
Opening stock of finished goods, work-in-progress and raw materials
Closing finished goods, WIP and raw materials
Productive & non-productive wages to the workers
Salaries to the staff of the functional departments
Depreciation of productive assets
Depreciation on office equipments
Required: Value added statement showing value added generated and applied for 
- Following are the particulars to process second for the month of Ashad
|Transfer from process First a/c
Transfer to Finish Stock a/c
Normal loss: 10% of inputs
Sales of scrap @ Rs.12 per unit
Opening WIP and closing WIP were to be valued at cost transferred from previous process.
Required: (1) Process second a/c (2) Abnormal loss a/c [5+2=7]
- Kathmandu Construction Company Ltd. under took a contract of Rs.5,000,000 to construct a bridge. Company started its work on Shrawan 1, 2061.
|Material purchased and issued
Plant and tools issued
Company disposed off certain materials costing Rs.15,000 for Rs.20,000. A portion of plant issued was disposed off for Rs.10,000 at Book Value. The following items were in stock on year end Ashad 2062
Cash received Rs.3,600,000 being 90% of work certified. Cost of work done but not certified yet was Rs.20,000.
It is established that the contract work would complete at end of Bhadra 2062. The company estimated the following additional expenditures till the end of Bhadra.
b. Materials in addition to stock in hadn
c. General expenses
d. Plant and tools in addition to that in stock
e. Estimated residual value of plant
f. Contingencies reserve
Required: (1) Contract account showing the amount of profit to be credited to Profit and Loss Account [9+6=16]
The sales budget, production budget and other related information of M/S Yantrasala have been provided below:
|Schedule I Sales Budget
Sales revenue (Rs.)
|Production Budget Schedule II
20% of sales will be in cash and 80% will be on credit. 50% of credit sales will be realized in the month of credit sales and 25% will be realized in the next month and remaining 25% in the next following month of sales. Each unit of output will need 2 units of materials and material and indirect labour per unit will be Rs.2 and Re.1 repectively. Besides, indirect materials and indirect labour the other manufacturing cost will be as under
Repairs and maintenance
Rent and others
|Rs.12,000 per month
Rs.10,000 per month
Rs.3,000 per month
Rs.12,000 per month
Administrative, selling and distribution overhead will be 10% of goods sales. All they expenses other than purchases will be paid in the month when they become due. The purchase will be paid in the following month of purchase. The company will be having inventory of raw materials and finished goods sufficient to meet the next months production need and sales need repectively. The inventory of deifferent items and other balances on January 1st this year have been presented as under.
Rs.20,000 (minimum balance)
The company will buy a new grinding machine at a cost of Rs.150,000 on January this year and will receive a rent income of Rs.50,000 on February.
M/S Yantrasala has reached into an agreement with Nepal Commercial Bank for a short term loan to overcome cash deficiency. According to the agreement the borrowing will be in a multiple of Rs.5,000 and repayment will be in Rs.1,000. The bank will charge 12% p.a., interest on the balance of loan due.
Required: (1) Material Purchase Budget for 1st quarter (2) Manufacturing Overhead Budget for 1st quarter (3) Cash collection and disbursement Budget for 1st quarter [4+3+8=15]