problem 1) Differentiate between the following:
a) Cost Control and Cost Reduction
b) Cost Allocation and Cost Absorption
c) Controllable Cost and Uncontrollable Cost.
problem 2) Describe the terms Minimum level, Maximum level and Ordering level with regard to maintenance of stock. What are the factors to be taken into account in fixing these levels. Discuss the relevance of these concept in a manufacturing organization.
problem 3) A Machine was purchased on January 01, 2000, For Rs. 5 lakhs. The total cost of all machinery inclusive of the new machine was Rs. 75 lakhs. The following future particularare available; Expected life of the machine 10 Years.
Scrape value at the end of the ten year Rs. 2,000
Repairs and maintaining for the machine during the year Rs 4,000 hours.
Insurance premium annually for all machine Rs 4,500.
Electricity consumption for the machine per hour @ 75 paise per unit 25 units.
Area occupied by the machine 100 sq.ft.
Area occupied by the other machines 1,500 sq.ft.
Rent per month of the departments Rs. 800.
Lighting charges for 20 points for the whole department, out of which three points are the machine Rs. 120 per month.
find out the machine hour rate for the new machine on the basis of the data given above.
problem 4) Paramount Engineers are engaged in construction and erection of a bridge under a long term contract. The cost incurred up to 31/03/2013 was as under:
Fabrication Rs. in lakhs
Direct Materials 280
Direct Labour 100
Over heads 60
Erection cost to date 110
The contract price is Rs. 11 crores and the cash received on account till 31/03/2013 was Rs. 6 crores. A technical estimate of the contract indicates the following degree of completion of work:
Fabrication: Direct Material-70%, Direct Labour and Overheads 60%, Erection: 40%. You are required to estimate the profit that would be taken to Profit and Loss Account against this partly completed contract as at 31/03/2013.
problem 5) Management Accounting is called "Accounting as a tool of Management". What are these tools? Also discuss briefly the functions and Scope of Management Accounting.