Cost Accounting Systems

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COST ACCOUNTING
SYSTEMS
CA Saurav Jindal
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COST YOUTUBE QUESTIONS 1
COST ACCOUNTING SYSTEM
Question‐ 1
The following transactions took place during the month of January 2002, in Will & Co.
Enter the transactions in financial and cost books
1.Material Purchased: ₹
a) Credit purchases 6,000
b) Cash Purchases 2,000
c) Credit purchases for a special job 1,000
2.Returns to suppliers 500
3.Direct material issued to jobs 4,000
4.Indirect materials issued to jobs 1,000
5. Material returned from job to store 400
Question‐ 2
In the course of physical verification of stores as on 31st March 2009, the following
differences are reveled in case of AB Ltd:
Material Unit Rate per Balances Remarks

unit ₹ Physical units Ledger units
A No. 1 600 680 Wrong counting
B Liter 12 1,100 1,155 Normal evaporation loss
C No. 6 350 400 Material issues not accounted for
D Kg. 22 900 930 Shortage due to pilferage and theft
E No. 15 1,475 1,325 150 Nos. received but not entered in ledger
F Meter 10 291 291 Obsolete materials, Realized Sale value ₹
1,650, awaiting dispatch
Prepare Journal Entries in the cost ledger to give effect to the above adjustments as called
for.
Question‐ 3
Enter the following transactions relating to Kanu & Co. for the month of March, 2002 in
the financial and cost books: ‐
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₹ ₹
Wages & Salaries 20,000
Less deductions:
Employees Provident Fund 1,600
State Insurance Premium 800
Income Tax 200 2,600
Net wages paid 17,400
Employer’s contribution is as follows:
Provident Fund 1,600
State Insurance 400 2,000
From the wage analysis book, following details of total wages are ₹ ₹
available:
Direct Labour 12,000
Indirect factory labour 5,800
Salaries to administration staff 2,600
Salaries to selling and distribution staff 1,600 22,000
Question‐ 4
A manufacturing business has a single production department. It absorbs production
overheads into costs on a direct labour hour basis.
The production overhead budget for the year ending 31st March 2004 was ₹ 8,00,000, and
budgeted direct labour hour were 1,00,000. During the year to 31st March 2004, the
following costs were incurred:
Particulars ₹
Direct materials 4,20,000
Indirect materials 40,000
Direct labour 7,50,000
Indirect labour 3,15,000
Indirect expenses 5,05,000
Opening stock of work‐in‐progress was ₹ 90,000 and closing work‐in‐progress was ₹
70,000. The number of labour hours worked was 1,10,000 hours.
You are required to

(a) Prepare the production overhead account
(b) Prepare the work‐in progress account
(c) Prepare the under‐over‐absorbed overheads account (Overheads Adjustment A/c)
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Question‐ 5
As of 31st March, the following balances existed in a Firm’s Cost Ledger, which is
maintained separately on a double entry basis –
Account Head Debit ₹ Credit ₹

Store Ledger Control A/c 3,00,000 ‐‐
Work‐in‐Progress Control A/c 1,50,000 ‐‐
Finished Goods Control A/c 2,50,000 ‐‐
Manufacturing Overhead Control A/c ‐‐ 15,000
Cost Ledger Control a/c ‐‐ 6,85,000
Total 7,00,000 7,00,000
During the next quarter, the following items arose –

Transaction ₹ Transaction ₹
Finished Product (at Cost) 2,25,000 Cost of Sales 1,75,000
Manufacturing OH incurred 85,000 Materials issued to Production 1,35000
Raw Material Purchased 1,25,000 Sales Returned (at Cost) 9,000
Factory Wages 40,000 Materials returned to Suppliers 13,000
Indirect Labour 20,000 Manufacturing OH Charged to 85,000
Production
You are required to prepare the following –

 Cost Ledger Control A/c  Manufacturing Overhead Control a/c
 Stores Ledger Control A/c  Wages Control A/c
 Work‐in‐Progress Control A/c  Cost of Sales A/c, and
 Finished Stock Ledger Control A/c  Trial Balance at the end of the quarter.
Question‐ 6
You are given the following information of the cost department of a Manufacturing
Company:
Stores: ₹ Work‐in‐Progress ₹
Opening Balance 12,60,000 Opening Balance 25,20,000
Purchases 67,20,000 Direct Wages applied 25,20,000
Transfer from Work‐in‐Progress 33,60,000 Overhead applied 90,08,000
Issue to Work‐in‐Progress 67,20,000 Closing Balance 15,20,000
Issues to Repairs and Maintenance 8,40,000
Shortage found in stock taking 2,52,000
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Finished Products: Entire output is sold at a profit of 12% on actual cost from Work‐
in‐Progress.
Other information: Wages incurred ₹ 29,40,000, Overhead Incurred ₹ 95,50,000.
Income from Investments ‐ ₹ 4,00,000, Loss on sale of Fixed
Assets ₹ 8,40,000.
Shortage of Stock Taking is treated as Normal Loss.
Prepare – (1) Stores Ledger Control Account, (2) Work‐in‐Progress Control Account, (3)
Costing P & L account, (4) Profit & Loss Account, and (5) Reconciliation Statement.
Question‐ 7
A fire destroyed some accounting records of Unfortunate Ltd. You have been able to
collect the following from the spoilt papers/ records and as a result of consiltation with
accounting staff in respect of January.
1. Incomplete Ledger Entries:

Raw – Materials A/c
Beginning Inventory ₹ 32,000
Work‐in‐Progress A/c
Beginning Inventory ₹ 9,200 Finished Stock ₹ 1,51,000
Creditors A/c
Opening Balance ₹ 16,400
Closing Balance ₹ 19,200
Manufacturing Overheads A/c
Amount Spent ₹ 29,600
Finished Good a/c
Opening Inventory ₹ 24,000 Closing Inventory ₹ 30,000
2. Additional Information:
(a) The cash book showed that ₹ 89,200 have been paid to creditors for Raw Material.
(b) Ending inventory of Work‐in‐Progress included Material ₹ 5,000 on which 300 Direct
Labour Hours have been booked against Wages and Overheads.
(c) The Job Card showed that workers have worked for 7,000 hours. The wage Rate is ₹
10 per labour Hour.
(d) Overhead Recovery Rate was ₹ 4 per Direct Labour Hour.
You are required to complete the above accounts in the Cost Ledger of the Company.
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COSTING LIVE

KSJ Teaching Handbooks Website

ICAI SM Series Lectures Mobile App

Costing All Rounder Course Mobile App

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Concept Question Concept Question

These Handbooks are your go to partner

For iOS Download ICAI SM

COST ACCOUNTING SYSTEM

Material Unit Rate per Balances Remarks

You are required to

Account Head Debit ₹ Credit ₹

During the next quarter, the following items arose –

You are required to prepare the following –

1. Incomplete Ledger Entries:

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