University of Mumbai 2006 B.A Economics Auditing

You are given with the subsequent information:– Particulars 2003-04
Rs. 2004-05
Rs. 2005-06
Rs.
Materials Purchased 27,50,000 86,25,000 19,75,000
Direct Labour 78,52,500 90,36,500 1,03,00,000
Architect Fees 2,50,000 4,50,000 5,00,000
Supervision Charges 1,22,000 1,85,000 2,76,000
Overhead Charges 67,75,500 41,66,500 87,11,000
Materials on Site at the end of the year 50,000 1,25,000 75,000
Uncertified Work at the end of the year 2,00,000 4,00,000
Money Received from the Contractee during the year 1,80,00,000 3,60,00,000 2,60,00,000

As per the policy of the company, no profit is to be considered unless the certified work completed exceeds 20% of the total contract price. Thereafter, profit is to be taken credit for in the identical proportion as the cumulative amount received bears to the contract price.

Prepare:
(i) Contract Account for all 3 years and
(ii) Show the relevant extracts on the Assets side of Balance Sheet as on 31st March of every year.

Q.7 M/s. XYZ and Company manufacture a chemical which passes through 3 processes. The subsequent particulars gathered for the month of January, 2006.:- 15
Particulars Process I Process II Process III
Material (litre) 400 208 168
Materials Cost Rs. 38,400 Rs. 18,800 Rs. 6,000
Wages Rs. 7,680 Rs. 7,600 Rs. 2,200
Normal Loss (% of input) 4% 5% 5%
Scrap Sale Value — Rs. three per litre
Output Transferred to next Process 50% 40%
Output Transferred to Warehouse 50% 60% 100%

Overheads are charged @ 50% of Direct Wages.
You are needed to prepare Process Accounts.
Q.8 The Management of a manufacturing concern has approached the Costing Department to obtain out the cost of 6,000 units. The cost analysis of 4000 units provide the subsequent outcomes :- 15

(i) Materials Rs. 90,000.
(ii)Labour Rs. 50,000.
(iii) Direct Expenses Rs. 1,000.
(iv)Factory Overheads Rs. 2,000.
(v)Administrative Overheads Rs. 1,600.
(vi)Selling and Distribution Overheads Rs. 800.
The further details in this connection are as follows:-
(a) An increase of 10% is expected in the cost of raw material and 5% in the cost of labour.
(b) 70% of the factory overheads are fixed and 30% are variable.
(c) The ratio of fixed and variable part of administration overheads is 60:40.
(d) 50% of the Selling and Distribution overheads are fixed.
The management desires to charge 25% profit on sale price.
Prepare cost statement with maximum break up of cost and ascertain selling price for the production of 6000 units. Q.9 (a) A company produces and sells 1500 units of a commodity at Rs. 20 every. The variable cost of production isRs. 12 per unit and fixed cost Rs. 8,000 per annum.:- 15
Calculate:
(i) PN ratio.
(ii) Sales at break-even point and
(iii) Additional sales needed to earn the identical amount of profit if selling price is decreased by 10 percent. (b) compute Material and Labour variances from the subsequent data:

Standard (Per Unit)
Material six kg @ Rs. four per kg.
Labour four hours @ Rs. four per hour
true Production for the month 12500 units
true Material Price per kg. Rs. 4.50
Material used during the month 78000 kg.
Direct Labour hours worked 48000 hours
true Wages rate per hour Rs. 3.50
Q.10 Write short notes on any 3 : 15

(a) Purpose of Reconciliation of Cost and Financial Accounting.
(b) Operating Costing.

(c) ABC Analysis of Inventory.

(d) Labour Idle Time.

Earning:   Approval pending.