All Chapters are in question and answer format from
All Chapters are in question and answer format from
exam point of view.
exam point of view.
There are total 203 questions out of which 74
There are total 203 questions out of which 74
questions are categorized in category “A”, 78
questions are categorized in category “A”, 78
questions are categorized in category “B” and 51
questions are categorized in category “B” and 51
questions are categorized in category “C”.
questions are categorized in category “C”.
Category A questions are highly important questions,
Category A questions are highly important questions,
Category B questions are moderately important and
Category B questions are moderately important and
category C questions are least important. This
category C questions are least important. This
Category A, B & C keeps on changing on each
Category A, B & C keeps on changing on each
attempt since questions asked in recent past exams
attempt since questions asked in recent past exams
are further categorized in A, B & C for next due
are further categorized in A, B & C for next due
attempt So always buy latest book.
attempt So always buy latest book.
If you read only 5 pages per day then you can
If you read only 5 pages per day then you can
complete whole book in just 19 days.
complete whole book in just 19 days.
Sl Sl No. No.
Chapters
Chapters CATEGORY CATEGORY A A CATEGORY CATEGORY B B CATEGORY CATEGORY C C TOTAL TOTAL QUESTIONSQUESTIONS
More
More Imp. Imp. Avg. Avg. Imp. Imp. Least Least Imp.Imp.
1
1 MATERIAL COSTMATERIAL COST 10 10 8 8 15 15 3333
2
2 LABOUR COSTLABOUR COST 14 14 11 11 11 11 3636
3 3 OVERHEADOVERHEAD 6 6 5 5 1 1 1212 4 4 NON- NON-INTEGRATED INTEGRATED ACCOUNTS ACCOUNTS 1 1 2 2 - - 33 5
5 JOB AND BATCHJOB AND BATCH COSTING
COSTING 3 3 1 1 - - 44
6
6 Contract CostingContract Costing 3 3 3 3 - - 66
7
7 Operating CostingOperating Costing 3 3 2 2 - - 55
8
8 Process andProcess and
Operation Costing
Operation Costing 2 2 4 4
--6 6
9
9 Joint Products &Joint Products & By-Products
By-Products 1 1 3 3 - - 44
10
10 Standard CostingStandard Costing 3 3 3 3 1 1 77
11
11 Marginal CostingMarginal Costing 4 4 2 2 - - 66
12
12 Budgets andBudgets and
Budgetory Control
Budgetory Control 2 2 1 1 2 2 55
13
13 Basic ConceptsBasic Concepts 4 4 111 1 15 15 3030
14
14 UNIT COSTINGUNIT COSTING - - - - 1 1 11
15
15 RECONCILIATIONRECONCILIATION STATEMENT
STATEMENT - - 1 1 - - 11
16
16 Uniform CostingUniform Costing and Interim and Interim Comparison
Comparison 5 5 6 6 - - 1111
17
17 Cost AuditCost Audit 4 4 5 5 - - 99
18
18 Ratio AnalysisRatio Analysis 4 4 5 5 1 1 1010
19 & 19 & 20 20
Cash and Fund Cash and Fund Flow Statements Flow Statements
3
3 2 2 2 2 77
21
21 ACTIVITY ACTIVITY BASEDBASED COSTING COSTING 2 2 3 3 2 2 77 Total Total 74 74 78 78 51 51 203203
Q.4
Q.4 Explain the treatment of various items in valuation of material receipts?Explain the treatment of various items in valuation of material receipts? AA Q.5
Q.5 Distinguish between Bill of material and material requisition note?Distinguish between Bill of material and material requisition note? AA Q.6
Q.6 Explain the duties of store-keeper of materials?Explain the duties of store-keeper of materials? CC Q.7
Q.7 Discuss in brief the methods of recording of stores?Discuss in brief the methods of recording of stores? CC Q.8
Q.8 Explain advantages and disadvantages of Bin cards and stock control cards?Explain advantages and disadvantages of Bin cards and stock control cards? CC Q.9
Q.9 Explain advantages of stores ledger?Explain advantages of stores ledger? CC Q.10
Q.10 Distinguish between bin card and stores Distinguish between bin card and stores ledger?ledger? AA Q.11
Q.11 List down the various techniques of inventory control?List down the various techniques of inventory control? BB Q.12
Q.12 Define various stock levels of Define various stock levels of inventory control technique?inventory control technique? AA Q.13
Q.13 Explain the concept of “ABC”Explain the concept of “ABC”analysis as a technique of inventory coanalysis as a technique of inventory co ntrol?ntrol? AA Q.14
Q.14 Write short note on HML, VED, FSN, GOLF, SOS as a technique of inventoryWrite short note on HML, VED, FSN, GOLF, SOS as a technique of inventory control?
control?
C C
Q.15
Q.15 Explain two bin system and Explain two bin system and establishment of system of budgets as a testablishment of system of budgets as a techniqueechnique of inventory control
of inventory control system?system?
C C
Q.16
Q.16 Explain in detail perpetual inventory control and continuous stock verificationExplain in detail perpetual inventory control and continuous stock verification along with their advantages?
along with their advantages?
A A
Q.17
Q.17 How the slow-moving and non-moving stores How the slow-moving and non-moving stores detected and what steps aredetected and what steps are necessary to reduce such stocks?
necessary to reduce such stocks?
B B
Q.18
Q.18 Explain use of control ratios as inventory control technique?Explain use of control ratios as inventory control technique? CC Q.19
Q.19 List down the various methods of valuation of material issues?List down the various methods of valuation of material issues? CC Q.20
Q.20 Explain Specific Price method of valuation of material issues along with itsExplain Specific Price method of valuation of material issues along with its advantages, disadvantages and suitability?
advantages, disadvantages and suitability?
C C
Q.21
Q.21 Explain FIFO method of valuation of material issues along with its advantages,Explain FIFO method of valuation of material issues along with its advantages, disadvantages and suitability?
disadvantages and suitability?
A A
Q.22
Q.22 Explain LIFO method of valuation of material issues along with its advantages,Explain LIFO method of valuation of material issues along with its advantages, disadvantages and suitability?
disadvantages and suitability?
A A
Q.23
Q.23 Explain base stock method along with its suitability?Explain base stock method along with its suitability? CC Q.24
Q.24 Explain simple price method of valuation of material issues along with itsExplain simple price method of valuation of material issues along with its advantages, disadvantages and suitability?
advantages, disadvantages and suitability?
C C
Q.25
Q.25 Explain weighted average price method of valuation of material issues alongExplain weighted average price method of valuation of material issues along with its advantages, disadvantages and suitability?
with its advantages, disadvantages and suitability?
C C
Q.26
Q.26 Explain periodic simple average price method of valuation of material issuesExplain periodic simple average price method of valuation of material issues along with its
along with its advantages, disadvantages and suitability?advantages, disadvantages and suitability?
C C
Q.27
Q.27 Explain periodic weighted average price method of valuation of material issuesExplain periodic weighted average price method of valuation of material issues along with its
along with its advantages and disadvantages?advantages and disadvantages?
C C
Q.28
Q.28 Explain Moving simple average price method, moving Explain Moving simple average price method, moving weighted average priceweighted average price method, replacement price method, realisable price method, Standard price method, replacement price method, realisable price method, Standard price method, inflated price method and R
method, inflated price method and Re-use price method ?e-use price method ?
C C
Q.29
Q.29 Explain the treatment of waste, Explain the treatment of waste, scrap, spoilage and defectives and provide thescrap, spoilage and defectives and provide the ways to control these?
ways to control these?
A A
Q.30
Q.30 How normal and abnormal loss of material arising during storage is treated inHow normal and abnormal loss of material arising during storage is treated in cost accounts?
cost accounts?
A A
functions? functions?
Q.3
Q.3 Explain the important factors in control of labour cost?Explain the important factors in control of labour cost? CC Q.4
Q.4 Define Time keeping along with objectives of time keeping and pre-requisites ofDefine Time keeping along with objectives of time keeping and pre-requisites of a good time keeping
a good time keeping system?system?
A A
Q.5
Q.5 Explain in details the method oExplain in details the method of time keeping?f time keeping? CC Q.6
Q.6 What is time-booking and describe oWhat is time-booking and describe objectives of time booking?bjectives of time booking? AA Q.7
Q.7 Describe payroll procedure step-by-step?Describe payroll procedure step-by-step? CC Q.8
Q.8 Define idle time. Describe causes and treatment of normal and abnormal idleDefine idle time. Describe causes and treatment of normal and abnormal idle time?
time?
A A
Q.9
Q.9 Define overtime premium. Describe causes and treatment of overtimeDefine overtime premium. Describe causes and treatment of overtime premium in cost accounting?
premium in cost accounting?
A A
Q.10
Q.10 Elaborate effect of overtime premium on productivity along with steps forElaborate effect of overtime premium on productivity along with steps for controlling overtime?
controlling overtime?
A A
Q.11
Q.11 Define labour turnover and methods to calculate labour turnover?Define labour turnover and methods to calculate labour turnover? AA Q.12
Q.12 Explain causes of labour turnover?Explain causes of labour turnover? AA Q.13
Q.13 What are the effects of labour turnover and its associated cost. SuggestWhat are the effects of labour turnover and its associated cost. Suggest remedial steps to minimise labour turnover?
remedial steps to minimise labour turnover?
A A
Q.14
Q.14 Explain the factors to be considered before introducing an incentive scheme?Explain the factors to be considered before introducing an incentive scheme? BB Q.15
Q.15 What are the principles to be considered in designing a sound wage incentiveWhat are the principles to be considered in designing a sound wage incentive system?
system?
B B
Q.16
Q.16 Explain in detail the essential characteristics of a good incentive scheme?Explain in detail the essential characteristics of a good incentive scheme? BB Q.17
Q.17 Explain meaning, merits, demerits and suitability oExplain meaning, merits, demerits and suitability o f Time Rate system?f Time Rate system? BB Q.18
Q.18 Distinction between Time wage rate system Distinction between Time wage rate system and Piece Rate wage system?and Piece Rate wage system? AA Q.19
Q.19 Explain meaning, advantages and dis-advantages of straight piece work rateExplain meaning, advantages and dis-advantages of straight piece work rate method of wage payment and incentive?
method of wage payment and incentive?
B B
Q.20
Q.20 Explain Taylor’s differential piece workExplain Taylor’s differential piece work system. Also describe its advantages and system. Also describe its advantages and dis-advantages?
dis-advantages?
C C
Q.21
Q.21 Explain Gantt Task and BExplain Gantt Task and Bonus system. Also describe its advantages andonus system. Also describe its advantages and disadvantages?
disadvantages?
C C
Q.22
Q.22 Explain Emerson’s efficiency system?Explain Emerson’s efficiency system? CC Q.23
Q.23 Explain Points scheme (Bedeaux system), Hayne’s system, Accelerated premiumExplain Points scheme (Bedeaux system), Hayne’s system, Accelerated premium system and Premium bonus methods?
system and Premium bonus methods?
C C
Q.24
Q.24 Explain Halsey and Halsey weir Explain Halsey and Halsey weir systems. Also describe its advantages andsystems. Also describe its advantages and disadvantages?
disadvantages?
C C
Q.25
Q.25 Explain Rowan System along with Explain Rowan System along with its advantages and disadvantages?its advantages and disadvantages? CC Q.26
Q.26 Explain group system of wage Explain group system of wage payment. Discuss methods used for distributingpayment. Discuss methods used for distributing wages to each worker?
wages to each worker?
C C
Q.27
Q.27 Explain group bonus and group bonus scheme. Also describe objectives andExplain group bonus and group bonus scheme. Also describe objectives and advantages of group bonus scheme?
advantages of group bonus scheme?
B B
Q.28
Q.28 Explain incentive schemes for indirect Explain incentive schemes for indirect workers?workers? CC Q.29
Q.29 Explain profit-sharing and Co-partnership schemes. Also Explain profit-sharing and Co-partnership schemes. Also describe advantagesdescribe advantages and disadvantages?
and disadvantages?
A A
outdoor work in Cost Accounts? Or write short note on casual workers and outdoor work in Cost Accounts? Or write short note on casual workers and out-workers
workers
Q.35
Q.35 Distinguish between Job Evaluation and Merit Rating?Distinguish between Job Evaluation and Merit Rating? AA Q.36
Q.36 What do you mean by time and motions study? Why is it so important toWhat do you mean by time and motions study? Why is it so important to management?
management?
B B
Chapter No. 3 :- OVERHEAD Chapter No. 3 :- OVERHEAD
Q.1
Q.1 Explain meaning of overhead and describe meaning of fixed overhead, variableExplain meaning of overhead and describe meaning of fixed overhead, variable overhead and semi-variable overhead? OR Classification of
overhead and semi-variable overhead? OR Classification of Overheads byOverheads by behaviour / Variability?
behaviour / Variability?
B B
Q.2
Q.2 Discuss classification of overheads on the basis of Function and Element ?Discuss classification of overheads on the basis of Function and Element ? BB Q.3
Q.3 Discuss in brief the advantages of classification of overheads into fixed andDiscuss in brief the advantages of classification of overheads into fixed and variable ?
variable ?
B B
Q.4
Q.4 Write short notes on Cost classification, cost allocation, Cost apportionmentWrite short notes on Cost classification, cost allocation, Cost apportionment and absorption? Distinction
and absorption? Distinction between cost allocation between cost allocation and and cost apportionment ?cost apportionment ?
A A
Q.5
Q.5 Explain departmentalisation of overhead along with its advantages ?Explain departmentalisation of overhead along with its advantages ? AA Q.6
Q.6 Explain the methods of absorbing overheads to various products or jobs ?Explain the methods of absorbing overheads to various products or jobs ? AA Q.7
Q.7 Describe types of overhead Rates?Describe types of overhead Rates? AA Q.8
Q.8 Explain the treatment of Explain the treatment of under-absorbed and over-absorbed overheads in costunder-absorbed and over-absorbed overheads in cost accounting?
accounting?
A A
Q.9
Q.9 Describe methods of treatment of administrative overheads?Describe methods of treatment of administrative overheads? BB Q.10
Q.10 Discuss Various Capacity Levels?Discuss Various Capacity Levels? BB Q.11
Q.11 Explain treatment of some specific items in Cost Accounting?Explain treatment of some specific items in Cost Accounting? AA Q.12
Q.12 Indicate the base or bases that you would recommend to apportion overheadIndicate the base or bases that you would recommend to apportion overhead costs to production department:
costs to production department: (i)
(i) Supplies Supplies (ii) (ii) RepairsRepairs (iii)
(iii) Maintenance Maintenance of of building building (iv) (iv) Executive Executive salariessalaries (v)
(v) Rent Rent (vi) (vi) Power Power and and lightlight (vii)
(vii) Fire Fire insurance insurance (viii) (viii) Indirect Indirect labour.labour.
C C
Chapter No. 4:-
Chapter No. 4:- NON-INTEGRATED ACCOUNTSNON-INTEGRATED ACCOUNTS Q.1
Q.1 Explain meaning of integrated and non-integrated accounting system.Explain meaning of integrated and non-integrated accounting system. Advantages and essential pre-requisites of integrated accounting system? Advantages and essential pre-requisites of integrated accounting system?
B B
Q.2
Q.2 “Is reconciliation of cost accounts“Is reconciliation of cost accountsand financial accounts necessary in case ofand financial accounts necessary in case of integrated accounting system?”
integrated accounting system?”
B B
Q.3
Q.3 DISTINCTION BETWEEN NON-INTEGRAL SYSTEM AND DISTINCTION BETWEEN NON-INTEGRAL SYSTEM AND INTEGRAL SYSTEM?INTEGRAL SYSTEM? AA
Chapter No. 5
Chapter No. 5 :-JOB AND BATCH COSTING:-JOB AND BATCH COSTING
Q.1
Q.1 Explain meaning of Job Costing and its process?Explain meaning of Job Costing and its process? AA Q.2
Q.2 Define Batch Costing and Distinguish between Job Costing & Batch Costing?Define Batch Costing and Distinguish between Job Costing & Batch Costing? AA Q.3
Q.3 In Batch Costing, how is Economic Batch Quantity determined? OR Z Ltd.In Batch Costing, how is Economic Batch Quantity determined? OR Z Ltd. Produces product ZZ in batches, management of the Z Ltd. wants to know the Produces product ZZ in batches, management of the Z Ltd. wants to know the number of batches of product ZZ to be produced where the cost incurred on number of batches of product ZZ to be produced where the cost incurred on batch setup and carrying cost of production is at optimum level ?
batch setup and carrying cost of production is at optimum level ?
A A
Chapter No. 6 :- Contract Costing Chapter No. 6 :- Contract Costing
incomplete contracts. incomplete contracts.
Chapter No. 7 :- Operating Costing Chapter No. 7 :- Operating Costing
Q.1
Q.1 Explain briefly, what do you understand by Operating Costing. Discuss units ofExplain briefly, what do you understand by Operating Costing. Discuss units of cost used in operating costing?
cost used in operating costing?
B B
Q.2
Q.2 Explain Absolute and Commercial TonneExplain Absolute and Commercial Tonne – – Kms ? Kms ? BB Q.3
Q.3 What do you understand by What do you understand by Operating Costs? Describe its essential featuresOperating Costs? Describe its essential features and state where it can
and state where it can be usefully implemented?be usefully implemented?
A A
Q.4
Q.4 Distinguish between Operating Costing and Operation Costing Distinguish between Operating Costing and Operation Costing ?? AA Q.5
Q.5 State the appropriate ‘Cost Unit’ for State the appropriate ‘Cost Unit’ for the following industries?the following industries? AA
Chapter No. 8 :- Process and Operation Costing Chapter No. 8 :- Process and Operation Costing
Q.1
Q.1 Explain the meaning of process operation and its features ?Explain the meaning of process operation and its features ? BB Q.2
Q.2 Explain Operation costing? OR “Operation costing is defined as refinement ofExplain Operation costing? OR “Operation costing is defined as refinement of Process
Process costing.” costing.” Explain it?Explain it?
B B
Q.3
Q.3 Explain Treatment of Normal Process Loss, Abnormal Process Loss AndExplain Treatment of Normal Process Loss, Abnormal Process Loss And Abnormal process Gain In Cost Accounting ?
Abnormal process Gain In Cost Accounting ?
A A
Q.4
Q.4 Explain costing of equivalent production units ?Explain costing of equivalent production units ? BB Q.5
Q.5 Distinguish between job costing and process costing?Distinguish between job costing and process costing? AA Q.6
Q.6 What is inter-process profit? State its advantages and disadvantages ?What is inter-process profit? State its advantages and disadvantages ? BB
Chapter No. 9 :- Joint
Chapter No. 9 :- Joint Products & By-ProductsProducts & By-Products
Q.1
Q.1 Discuss in brief Joint products, By-products and Co-products ?Discuss in brief Joint products, By-products and Co-products ? BB Q.2
Q.2 Distinguish between Joint products and By-products? OR Distinguish betweenDistinguish between Joint products and By-products? OR Distinguish between joint product and Co-product?
joint product and Co-product?
A A
Q.3
Q.3 Discuss briefly methods of apportionment of joint-cost into joint-products ?Discuss briefly methods of apportionment of joint-cost into joint-products ? BB Q.4
Q.4 Discuss the treatment of by-product cost in Cost Accounting.Discuss the treatment of by-product cost in Cost Accounting. BB
Chapter No.
Chapter No. 10 :- 10 :- Standard CostingStandard Costing
Q.1
Q.1 Write Short Notes on Standard Cost, Standard Costing and Variance Analysis?Write Short Notes on Standard Cost, Standard Costing and Variance Analysis? AA Q.2
Q.2 Discuss the reasons for which standard costing is preferred?Discuss the reasons for which standard costing is preferred? BB Q.3
Q.3 Describe the types of variances?Describe the types of variances? BB Q.4
Q.4 Distinction between Standard costing and Budgetary Control?Distinction between Standard costing and Budgetary Control? AA Q.5
Q.5 Describe advantages of standard costing and also analyse critically ?Describe advantages of standard costing and also analyse critically ? BB Q.6
Q.6 Describe three distinct groups of variances that arise in standard costing ?Describe three distinct groups of variances that arise in standard costing ? CC Q.7
Q.7 Calculation of variances in standard costing is not an end in itself, but a meansCalculation of variances in standard costing is not an end in itself, but a means to an
to an end.” end.” Discuss ?Discuss ?
A A
Chapter No.
Chapter No. 11 :- 11 :- Marginal CostingMarginal Costing Q.1
Q.1 Short Notes on basic terms?Short Notes on basic terms? AA
Q.2
Q.2 Describe the characters of marginal costing ?Describe the characters of marginal costing ? AA
Q.3
Q.3 Difference between marginal and absorption costing?Difference between marginal and absorption costing? AA
Q.4
Q.4 Explain advantages and limitations of marginal costing ?Explain advantages and limitations of marginal costing ? BB
Q.5
Q.5 Explain the practical application of marginal costing?Explain the practical application of marginal costing? AA
Q.6
Q.6 Explain meaning of margin of safety? State the relationship between MOS ratioExplain meaning of margin of safety? State the relationship between MOS ratio and operating leverage?
and operating leverage?
B B
Chapter No. 12 :- Budgets
there arises need for preparation of flexible budget. Distinction between fixed there arises need for preparation of flexible budget. Distinction between fixed and flexible budgets?
and flexible budgets?
Chapter No. 13 :- Basic Concepts Chapter No. 13 :- Basic Concepts Q.1
Q.1
Explain the meaning of cost, costing and cost accounting?
Explain the meaning of cost, costing and cost accounting?
CCQ.2
Q.2 Define Cost Units and provide Define Cost Units and provide some examples?some examples? CC
Q.3
Q.3 Define Cost Centres and describe its types?Define Cost Centres and describe its types? CC
Q.4
Q.4 Write Short note on Cost Objects?Write Short note on Cost Objects? CC
Q.5
Q.5 Describe objectives of Cost Accounting?Describe objectives of Cost Accounting? BB
Q.6
Q.6 State difference between Cost Control and State difference between Cost Control and Cost Reduction?Cost Reduction? AA
Q.7
Q.7 State difference between Financial Accounting and Cost AccountingState difference between Financial Accounting and Cost Accounting AA
Q.8
Q.8 State difference between Cost Accounting and State difference between Cost Accounting and Management Accounting?Management Accounting? AA
Q.9
Q.9 Describe advantages of Cost Accounting System?Describe advantages of Cost Accounting System? BB
Q.10
Q.10 Describe Limitations of Cost Accounting?Describe Limitations of Cost Accounting? CC
Q.11
Q.11 Describe importance of Cost Accounting?Describe importance of Cost Accounting? CC
Q.12
Q.12 Describe the factors to be considered before installation of Costing system?Describe the factors to be considered before installation of Costing system? BB
Q.13
Q.13 Explain Essential requirements of a Good Explain Essential requirements of a Good costing System?costing System? BB
Q.14
Q.14 Classify Costs on the basis of nature or element?Classify Costs on the basis of nature or element? CC
Q.15
Q.15 Classify Costs on the basis of Functions?Classify Costs on the basis of Functions? CC
Q.16
Q.16 Classify Costs on the basis of Variability or Behaviour?Classify Costs on the basis of Variability or Behaviour? CC
Q.17
Q.17 Classify Costs on the basis of Controllability?Classify Costs on the basis of Controllability? CC
Q.18
Q.18 Classify Costs on the basis of Normality?Classify Costs on the basis of Normality? CC
Q.19
Q.19 Classify Costs on the basis of Classify Costs on the basis of Management Decision Making?Management Decision Making? BB
Q.20
Q.20 Describe various methods of Costing?Describe various methods of Costing? BB
Q.21
Q.21 Describe various techniques of Costing?Describe various techniques of Costing? BB
Q.22
Q.22 Explain: Pre-production Costs, Research and Development Costs, Training Explain: Pre-production Costs, Research and Development Costs, Training CostsCosts and Conversion Costs?
and Conversion Costs?
B B
Q.23
Q.23 You have been asked to install a costing system in a manufacturing company.You have been asked to install a costing system in a manufacturing company. What practical difficulties will you expect and how will you propose to
What practical difficulties will you expect and how will you propose to overcome the same?
overcome the same?
B B
Q.24
Q.24 Define Explicit costs. How is it different from Define Explicit costs. How is it different from implicit costs?implicit costs? BB
Q.25
Q.25 Distinguish between Marginal Costing and DifDistinguish between Marginal Costing and Dif ferential Costing?ferential Costing? AA
Q.26
Q.26 Explain Profit centres and Explain Profit centres and investment centres?investment centres? BB
Q.27
Q.27 Discuss briefly the relevant costs Discuss briefly the relevant costs with examples?with examples? CC
Q.28
Q.28 State the method of costing and the suggestive unit of cost for the foState the method of costing and the suggestive unit of cost for the fo llowingllowing industries?
industries?
C C
Q.29
Q.29 State the types of cost in the following cases?State the types of cost in the following cases? CC
Q.30
Q.30 Identify the methods of costing for the following?Identify the methods of costing for the following? CC
CHAPTER NO. 14:- UNIT COSTING CHAPTER NO. 14:- UNIT COSTING Q.1
Q.1 Define unit costing, cost Define unit costing, cost sheet, production statement and distinction betweensheet, production statement and distinction between cost sheet and production statement?
cost sheet and production statement?
C C
CHAPTER NO. 15:-
CHAPTER NO. 15:- RECONCILIATIORECONCILIATION STATEMENTN STATEMENT Q.1
Q.4
Q.4 List the points on which uniformity is essential before introducing uniformList the points on which uniformity is essential before introducing uniform costing
costing
B B
Q.5
Q.5 List the major advantages of uniform costingList the major advantages of uniform costing BB
Q.6
Q.6 What are the limitations of uniform costing?What are the limitations of uniform costing? AA
Q.7
Q.7 Write short notes on Uniform Cost ManualWrite short notes on Uniform Cost Manual BB
Q.8
Q.8 What is meant by InterWhat is meant by Inter – –firm Comparisonfirm Comparison AA
Q.9
Q.9 What are pre-requisite of InterWhat are pre-requisite of Inter – –firm Comparison?firm Comparison? AA
Q.10
Q.10 What are the advantages of Inter-firm comparison?What are the advantages of Inter-firm comparison? BB
Q.11
Q.11 What are the disadvantage / shortcomings / limitations of Inter-firmWhat are the disadvantage / shortcomings / limitations of Inter-firm comparison?
comparison?
B B
CHAPTER NO.
17:-CHAPTER NO. 17:- Cost AuditCost Audit Q.1
Q.1 Define Cost Audit? Indicate the circumstances under which a cost audit isDefine Cost Audit? Indicate the circumstances under which a cost audit is ordered?
ordered?
A A
Q.2
Q.2 How Cost Audit is useful to management society, shareholders andHow Cost Audit is useful to management society, shareholders and Governments?
Governments?
A A
Q.3
Q.3 What are the purposes of Cost Audit?What are the purposes of Cost Audit? BB
Q.4
Q.4 Distinguish between efficiency and propriety auditDistinguish between efficiency and propriety audit AA
Q.5
Q.5 Write brief notes Cost Accounting records rulesWrite brief notes Cost Accounting records rules BB
Q.6
Q.6 What are the broad procedural aspects of Cost Audit?What are the broad procedural aspects of Cost Audit? BB
Q.7
Q.7 What are the principle functions of the Cost Auditor in the area of work inWhat are the principle functions of the Cost Auditor in the area of work in progress?
progress?
B B
Q.8
Q.8 As a cost auditor what will you verify on the area of “Overheads and IndirectAs a cost auditor what will you verify on the area of “Overheads and Indirect Expenditure”?
Expenditure”?
B B
Q.9
Q.9 What are the functions of cost audit?What are the functions of cost audit? AA
CHAPTER NO.
18:-CHAPTER NO. 18:- Ratio AnalysisRatio Analysis Q.1
Q.1 Which Entities are interested in Financial Statement Analysis?Which Entities are interested in Financial Statement Analysis? AA
Q.2
Q.2 What is Importance of Ratio Analysis ?What is Importance of Ratio Analysis ? AA
Q.3
Q.3 What are Limitations of Ratio Analysis?What are Limitations of Ratio Analysis? AA
Q.4
Q.4 What is Use of Ratios in Cash Flow Statements?What is Use of Ratios in Cash Flow Statements? CC
Q.5
Q.5 What are LIQUIDITY RATIOS ?What are LIQUIDITY RATIOS ? BB
Q.6
Q.6 What are capital structure ratios?What are capital structure ratios? BB
Q.7
Q.7 What are profitability ratios based on sales ?What are profitability ratios based on sales ? BB
Q.8
Q.8 What are coverage ratios?What are coverage ratios? BB
Q.9
Q.9 What are Turnover / Activity / Performance Ratios ?What are Turnover / Activity / Performance Ratios ? BB
Q.10
Q.10 What are return ratios from Owners’ point of view ?What are return ratios from Owners’ point of view ? AA
CHAPTER NO. 19 &
20:-CHAPTER NO. 19 & 20:- Cash and Fund Flow StatementsCash and Fund Flow Statements Q.1
Q.1 What are advantages & What are advantages & disadvantages of Fund Flow Statements?disadvantages of Fund Flow Statements? AA
Q.2
Q.2 What are advantages and disadvantages of What are advantages and disadvantages of Cash Flow Statements?Cash Flow Statements? AA
Q.3
Q.3 What are Distinctions between Cash fWhat are Distinctions between Cash flow and Fund flow low and Fund flow Statements?Statements? AA
Q.4
Q.4 What are distinctions between Fund flow statement and Profit & loss accountWhat are distinctions between Fund flow statement and Profit & loss account (Income & expenditure account) ?
(Income & expenditure account) ?
B B
Q.5 Q.5
Q.4 Q.4 Q.5
Q.5 What What are are different different types types of of activities activities involved involved in in ABC? ABC? CC
Q.6
Q.6 What What are are the the importance importance of of ABC? ABC? CC
Q.7
Material
Material
Question 1 Meaning of material and importance of
Question 1 Meaning of material and importance of proper recording (Booking) and control
proper recording (Booking) and control
(Avoid extra purchase) of material?
(Avoid extra purchase) of material?
Answer:-Answer:-
Material means Material means all commodities/ physical objectsall commodities/ physical objects which are which are used by an used by an organisation for organisation for finishedfinished goods. Material may begoods. Material may be direct material or indirect materialdirect material or indirect material..
Direct material means materials which can be easily identified with and can be directly allocated with product e.g. Direct material means materials which can be easily identified with and can be directly allocated with product e.g. Milk in ice-cream.
Milk in ice-cream.
Indirect material means material which cannot be easily identified with and cannot directly allocated with product Indirect material means material which cannot be easily identified with and cannot directly allocated with product thread used in cloths.
thread used in cloths. Importance
Importance of proper recording & control of proper recording & control of material:-of material:-1.
1. Quality of FGQuality of FG depends upon quality of depends upon quality of raw material.raw material. 2.
2. CostCost of production of production of FGof FG depends purchase cost of raw material. depends purchase cost of raw material. 3.
3. ProductionProduction may get may get stoppedstopped if right kind of material in right quantity is not available. if right kind of material in right quantity is not available. 4.
4. Over stocking of raw material increasesOver stocking of raw material increases holding costholding cost of material thereby increase cos of material thereby increase cost of FG.t of FG. 5.
5. If more materialIf more material wastedwasted in warehouse & in production process then losses may happen. in warehouse & in production process then losses may happen. 6.
6. Production depttProduction deptt. Should always have right information about available quantity of material.. Should always have right information about available quantity of material.
Question 2 Describe objectives, requirements and elements of
Question 2 Describe objectives, requirements and elements of material control system?
material control system?
Answer:-Answer:-
Material control is a systematic control over the procurement, storage and usage of material so as toMaterial control is a systematic control over the procurement, storage and usage of material so as to maintain an even flow of material to right department at right time and in right quantity.maintain an even flow of material to right department at right time and in right quantity.
Objectives of system of
Objectives of system of material control:
material control:
1.
1. To minimise interruption in production process due to shortage of materials & stores.To minimise interruption in production process due to shortage of materials & stores. 2.
2. To minimum raw material cost and maximise raw material quality.To minimum raw material cost and maximise raw material quality. To avoid “Out of stock” & “overTo avoid “Out of stock” & “over stocking” situation.
stocking” situation. 3.
3. To reduce wastages in manufacturing process.To reduce wastages in manufacturing process. 4.
4. To inform stock of raw material available & initiate material purchase alarm.To inform stock of raw material available & initiate material purchase alarm. 5.
5. To ensure completion ofTo ensure completion of customers’customers’ order on time.order on time.
Requirements of material control:
Requirements of material control:
1.
1. Proper Proper Co-ordination Co-ordination among all departments among all departments e.g.e.g. purchase dept., inspection dept., storage dept., purchase dept., inspection dept., storage dept., accounting dept. payment dept., is required.
accounting dept. payment dept., is required. 2.
2. ProperlyProperly defined purchase procedure defined purchase procedure, ensuring most favourable price & most favourable terms &, ensuring most favourable price & most favourable terms & conditions, is required.
conditions, is required. 3.
3. Proper Proper standard forms standard forms ensuring proper way, of placing the order & of noting receipt of materials, is ensuring proper way, of placing the order & of noting receipt of materials, is required.
required. 4.
4. Proper Proper material budgets material budgets ensuring, least Cost in purchasing material, is required. ensuring, least Cost in purchasing material, is required. 5.
5. Proper Proper check over check over transactionstransactions, involving materials purchase & equipment purchase, is required., involving materials purchase & equipment purchase, is required. 6.
6. Proper Proper storage of materials storage of materials with adequate safety is required. with adequate safety is required. 7.
7. PerpetualPerpetual inventory system inventory system && continuous stock taking system is required.continuous stock taking system is required. 8.
8. Proper Proper system system to store material and issue to right department, at right time and in right quantity is required. to store material and issue to right department, at right time and in right quantity is required. 9.
9. Proper Proper accounts accounts showingshowing material costs at the stage of material receipt and consumption is required.material costs at the stage of material receipt and consumption is required. 10.
10. Proper Proper material stock account, material stock account, showing materials purchased, issue from stock, inventory balances,showing materials purchased, issue from stock, inventory balances, obsolete stock, goods returned to vendors, and spoiled or defective units, is required.
Elements of Material Control:
Elements of Material Control:
1.
1. PurchasingPurchasing of materials of materials 2.
2. ReceivingReceiving of materials of materials 3.
3. InspectionInspection of materials of materials 4.
4. StorageStorage of materials of materials 5.
5. IssuingIssuing materials materials 6.
6. Maintenance ofMaintenance of inventoryinventory recordsrecords 7.
7. Stock auditStock audit..
Question 3 Discuss the
Question 3 Discuss the material procurement procedure?
material procurement procedure?
Answer:-Answer:-
Main steps involved in purchase procedure are as follows:- Main steps involved in purchase procedure are asfollows:-
1-1- Bill of Materials (BOM)
Bill of Materials (BOM):-
:-
It is prepared by planning dept & sent to stores dept., cost accounting dept., and productionIt is prepared by planning dept & sent to stores dept., cost accounting dept., and production control department.
control department.
it shows description of all material required for a job along with required quantities.it shows description of all material required for a job along with required quantities.
It is also known as materials specification list(MSL) or simply material list (SML).It is also known as materials specification list(MSL) or simply material list (SML).
A
Advantages of using “
dvantages of using “BOM
BOM””
Stores Department:
Stores Department:
1.
1. BOM helps in preparingBOM helps in preparing material purchase requisitionmaterial purchase requisition ( Material to be purchased).( Material to be purchased). 2.
2. BOM is authorisation document forBOM is authorisation document for issuing the materialissuing the material.. 3.
3. Stores clerk issues material to production dept. if the details of material asked are shown in BOMStores clerk issues material to production dept. if the details of material asked are shown in BOM also.
also.
Cost Accounting
Cost Accounting Department:
Department:
1.
1. BOM helps in preparingBOM helps in preparing material budgetmaterial budget for a job.for a job. 2.
2. BOM avoid excess use of material hence avoidingBOM avoid excess use of material hence avoiding material cost variances.material cost variances.
Production Control Department:
Production Control Department:
1.
1. BOM helps inBOM helps in controlling usagecontrolling usage of materials. of materials. 2.
2. BOM eliminate making of separate material requisition.BOM eliminate making of separate material requisition.
2-2-
Material Requisition Note:
Material Requisition Note:
It is prepared when a single It is prepared when a single or few items (NOT or few items (NOT ALL ITEMS) ALL ITEMS) of materials are required.of materials are required.
It is prepared by theIt is prepared by the production departmentproduction department..
It is also known as material requisition slip.It is also known as material requisition slip.
3-3-
Purchase Requisition (PR):-
Purchase Requisition
(PR):-
It is a form used for making a written request to theIt is a form used for making a written request to the purchasing departmentpurchasing department to purchase to purchase materials.
materials.
This form is filled up by theThis form is filled up by the store keeper store keeper for for regular materialsregular materials and by the departmental head in and by the departmental head in case special materials is required.
case special materials is required.
Techniques of maximum, minimum, Techniques of maximum, minimum, reorder level and EOQ are used.reorder level and EOQ are used.
4-4-
Inviting Tender/ Requesting for proposal (RFP):
Inviting Tender/ Requesting for proposal (RFP):
it is responsibility of purchase dept. Materialsit is responsibility of purchase dept. Materials purchase department face following questions:purchase department face following questions: (i)
(i) What to purchase?What to purchase? (ii)
(iii)
(iii) How much to purchase?How much to purchase? (iv)
(iv) From where to purchase.From where to purchase. (v)
(v) At what price to purchase. At what price to purchase.
Tender Invitation / Notification:- Material purchase department gathers information about rate, quantity and Tender Invitation / Notification:- Material purchase department gathers information about rate, quantity and quality of required material from selected vendors by inviting quotations.
quality of required material from selected vendors by inviting quotations.
5-5-
Selection of Quotation/ Proposal:
Selection of Quotation/ Proposal:
After invitation of tender from the vendors, interested After invitation of tender from the vendors, interested vendors, fulfilling all the criteria mentioned invendors, fulfilling all the criteria mentioned in the tender notice, send their price quotations to the purchase department.
the tender notice, send their price quotations to the purchase department.
Thereafter a comparative statement is prepared.Thereafter a comparative statement is prepared.
Price; quantity; quality offered; time of delivery; mode of transportation; terms of payment;Price; quantity; quality offered; time of delivery; mode of transportation; terms of payment; reputation of supplier; are the factors considered in selecting a proposal.
reputation of supplier; are the factors considered in selecting a proposal.
6-6- Preparation and execution of Purchase O
Preparation and execution of Purchase Orders:
rders:
After deciding on the best After deciding on the best quotation, Purchase manager issues the formal purchase order.quotation, Purchase manager issues the formal purchase order.
Purchase order is a written request to supplier to supply materials at specified rates & within aPurchase order is a written request to supplier to supply materials at specified rates & within a specified period.
specified period.
7-7-
Receipt and inspection of
Receipt and inspection of materials:
materials:
After giving purchase order, material is received & inspected. After giving purchase order, material is received & inspected.
After After satisfactory satisfactory inspection, inspection, materials materials are are received received and and Goods Goods Received Received Note Note (Goods (Goods inwardinward note) is issued.
note) is issued.
But if materials are not found in good condition then goods are returned back to the vendor alongBut if materials are not found in good condition then goods are returned back to the vendor along with a Material Returned Note (Material outward return note).
with a Material Returned Note (Material outward return note).
88
Checking and passing of bills for payment:
Checking and passing of bills for payment:
Invoice received from the supplier Invoice received from the supplier is sent to the accounting section to check quantity & price withis sent to the accounting section to check quantity & price with goods received note & purchase order respectively.
goods received note & purchase order respectively.
The accounting section after checking its accuracy finally passes the invoice for payment.The accounting section after checking its accuracy finally passes the invoice for payment.
Question 4 Explain the treatment of various items in
Question 4 Explain the treatment of various items in valuation of material receipts?
valuation of material receipts?
Answer
:-Answer :-
Valuation of material receipts means ascertaining cost of material purchased. Valuation of material receipts means ascertaining cost of material purchased. Treatment of items related to purchase of materials is shown asTreatment of items related to purchase of materials is shown as below:-Sl
Sl No. No. Items Items Treatment Treatment (Add (Add to to / / Deduct Deduct from from cost cost of of purchase)purchase) Discount & Subsidy
Discount & Subsidy 1.
1. Trade Trade Discount Discount Deduct from Deduct from purchase purchase price.price. 2.
2. Quantity Quantity Discount Discount Deduct Deduct from from purchase purchase price.price. 3.
3. Cash Cash Discount Discount Not deduct Not deduct from from purchase purchase price price (Interest (Interest & & Finance Finance Charges)Charges) 4.
4. Subsidy Subsidy / / Grant Grant / / Incentives Incentives Deduct Deduct from from purchase purchase priceprice Duties & Taxes
Duties & Taxes 5.
5. Road Road Tax Tax / / Toll Toll Tax Tax Add Add to to Purchase Purchase costcost 6.
6. Octroi Octroi / / Entry Entry Tax Tax Add Add to to Purchase Purchase cost cost (If (If borne borne by by buyer)buyer) 7.
7. CST CST Add Add to to Purchase Purchase cost cost (If (If not not getting getting credit)credit) 8.
8. VAT VAT Not Not added added to to purchase purchase cost cost (Credit (Credit available)available) 9.
9. Excise Excise Duty Duty Not Not added added to to purchase purchase cost cost (Credit (Credit available)available) 10.
10. Custom Custom Duty Duty Add Add to to Purchase Purchase costcost 11.
11. Purchase Purchase Tax Tax Not Not added added to to purchase purchase cost cost (Credit (Credit available)available) Penalty & Charges
12.
12. Demurrage Demurrage Not Not Add Add to to purchase purchase cost cost (Since (Since Penalty)Penalty) 13.
13. Detention Detention charges charges / / Fine Fine Not Not Add Add to to purchase purchase cost cost (Since (Since Penalty)Penalty) 14.
14. Penalty Penalty Not Not Add Add to to purchase purchase cost cost (Since (Since Penalty)Penalty) Other Expenditures
Other Expenditures 15.
15. Insurance Insurance charges charges Add Add to to Purchase Purchase costcost 16.
16. Commission Commission / / Brokerage Brokerage Paid Paid Add Add to to Purchase Purchase costcost 17.
17. Freight Freight Inwards Inwards Add Add to to Purchase Purchase costcost 18.
18. Cost Cost of of containers containers Add Add to to Purchase Purchase cost cost (If (If non-returnable)non-returnable) Not add to purchase cost (If returnable) Not add to purchase cost (If returnable) 19.
19. Shortage Shortage Cost Cost of of shortage shortage due due to to normal normal reasons reasons is is absorbed absorbed by by goodgood units while cost due to abnormal reasons is charged as loss units while cost due to abnormal reasons is charged as loss in P&L A/c.
in P&L A/c.
Question 5
Question 5 Distinguish between Bil
Distinguish between Bill of material and materia
l of material and material requisition note?
l requisition note?
Answer:-Bills of Material (BOM)
Bills of Material (BOM) Material Requisition Note (MRN)Material Requisition Note (MRN)
Prepared by
Prepared by planningplanning dept. dept. Prepared by the production dept.Prepared by the production dept. It shows description of all material required for a
It shows description of all material required for a job along with required quantities.
job along with required quantities.
It is prepared when a single or few items It is prepared when a single or few items (NOT ALL
(NOT ALL ITEMS) ITEMS) of materials are of materials are required.required. it can replace
it can replace MRN MRN.. It cannot replaceIt cannot replace BOMBOM.. It can be used for the purpose of inviting
It can be used for the purpose of inviting quotation.
quotation.
It can be used in calculating
It can be used in calculating historical costhistorical cost only.
only. It shows quantity of material
It shows quantity of material to be drawn fromto be drawn from stores.(Quantitative Control)
stores.(Quantitative Control)
It shows material actually drawn from stores. It shows material actually drawn from stores.
Question 6
Question 6 Explain the d
Explain the duties of store-keepe
uties of store-keeper of materials.
r of materials.
Answer:-Answer:- Properly
Properly
storing material after purchase in stores is more importantstoring material after purchase in stores is more importantDuties of store keeper:
Duties of store keeper:
1.
1. General control over storeGeneral control over store:- Store keeper should verify the physical quantities of material with Goods:- Store keeper should verify the physical quantities of material with Goods received note & ensure proper storage at right place.
received note & ensure proper storage at right place. 2.
2. Safe custody of materials:Safe custody of materials: Store keeper should ensureStore keeper should ensure quality of materialquality of material remain intact. remain intact. 3.
3. Maintaining records:Maintaining records: Store keeper should maintain proper record of quantity received,Store keeper should maintain proper record of quantity received, issued & balance inissued & balance in hand.
hand. 4.
4. Initiate purchase requisition:Initiate purchase requisition: Store keeper should initiate purchase requisitions for regular material whenStore keeper should initiate purchase requisitions for regular material when its stock level reaches re-order level fixed.
its stock level reaches re-order level fixed. 5.
5. Maintaining adequate level of stock:Maintaining adequate level of stock: Store keeper should maintain adequate stock level at all time toStore keeper should maintain adequate stock level at all time to avoid interruption of production process.
avoid interruption of production process. 6.
6. Issue of materials:Issue of materials: Store keeper should issue materials only against the MRN approved by the appropriateStore keeper should issue materials only against the MRN approved by the appropriate authority and also refer BOM.
authority and also refer BOM. 7.
7. Stock verification and reconciliation:Stock verification and reconciliation: Store keeper should verify the book balancesStore keeper should verify the book balances with the actualwith the actual physical stock to check pilferage, deviation if any.
physical stock to check pilferage, deviation if any.
Question 7
Question 7 Discuss in brief the meth
Discuss in brief the methods of recording of sto
ods of recording of stores?
res?
1.
1. Bin Cards: It consists of two terms ‘Bin’ and ‘card’.Bin Cards: It consists of two terms ‘Bin’ and ‘card’.
BinBin refers to a refers to a Almirah / box / container / spaceAlmirah / box / container / space where material is kept. where material is kept.
A A Card Card is is tied tied outside outside each each bin bin to to record record thethe quantities of material received, issued,quantities of material received, issued, returned and in hand in the bin.
returned and in hand in the bin.
This card also contains information like maximum level, minimum level, reorder level, code ofThis card also contains information like maximum level, minimum level, reorder level, code of material etc.
material etc.
A A separate separate bin bin is is maintained maintained for for each each item item of of material material and and is is given given separate separate identificationidentification number.
number.
It also called stock card.It also called stock card. 2.
2. Stock Control Cards:Stock Control Cards:
This card is maintained by stores department for This card is maintained by stores department for every item of materialevery item of material..
It records receipt, issue, return, in hand and material on orders given.It records receipt, issue, return, in hand and material on orders given.
It recordsIt records quantity of materialquantity of material only. only.
These cards are placedThese cards are placed at one placeat one place in cabinets or trays or loose binders. in cabinets or trays or loose binders. Distinction between Bin Card and Stock
Distinction between Bin Card and Stock Control CardControl Card
Bin
Bin Card
Card
Stock
Stock Control
Control Card
Card
It
It does
does not
not show
show materials
materials on
on order
order
It
It shows
shows materials
materials on
on order
order
It
It is
is kept
kept outside
outside each
each bin
bin
It
It is
is kept
kept at
at one
one place
place in
in cabinets
cabinets or
or trays
trays or
or
loose binders
loose binders
It
It is
is written
written by
by person
person handling
handling material
material
It
It is
is written
written by
by person
person solely
solely engaged
engaged in
in
clerical work
clerical work
It is likely to be smeared with dirt and
It is likely to be smeared with dirt and
grease.
grease.
It is kept in neat and clean way.
It is kept in neat and clean way.
It facilitates easy physical identification of
It facilitates easy physical identification of
an item of material
an item of material
It does not facilitate an easy physical
It does not facilitate an easy physical
identificatio
identification of an
n of an item of materials.
item of materials.
3.
3. Stores Ledger:Stores Ledger: Stores Ledger is a subsidiary ledger in which a separate account is opened for each itemStores Ledger is a subsidiary ledger in which a separate account is opened for each item of materials in the store to records both the quantity and cost of the materials received, issued, returned of materials in the store to records both the quantity and cost of the materials received, issued, returned and in hand.
and in hand. (Use computer)(Use computer)
Question 8 Explain advantages and disadvantage
Question 8 Explain advantages and disadvantages of Bin
s of Bin cards and stock control cards?
cards and stock control cards?
Answer:- Advantages of Bin
Answer:- Advantages of Bin
Card:-1.
1.
Entries in Bin Card are made at the same time when goods are received or issued.Entries in Bin Card are made at the same time when goods are received or issued.2.
2.
Comparison of actual quantity in hand with book balance is possible at any time.Comparison of actual quantity in hand with book balance is possible at any time.3.
3.
A separate container is made for each item of material. A separate container is made for each item of material.Disadvantages of Bin
Disadvantages of Bin
Card:-1.
1. Records of materials are spread over a wide area.Records of materials are spread over a wide area. 2.
2. Bin cards get smeared with dirt and grease.Bin cards get smeared with dirt and grease. 3.
3. Making bin card is clerical work but performed by person involved in handling of material.Making bin card is clerical work but performed by person involved in handling of material. Advantages of Stock Control
Advantages of Stock Control Card:-1.
1. These cards are placed at one place in cabinets.These cards are placed at one place in cabinets. 2.
2. Records are kept in a neat and clean manner by people specially engaged in clerical work.Records are kept in a neat and clean manner by people specially engaged in clerical work. 3.
Disadvantages of Stock Control Disadvantages of Stock Control Cards:-1.
1. On the spot comparison of physical stock with book balance is not possible.On the spot comparison of physical stock with book balance is not possible. 2.
2. Physical identification of materials in stock is not easy since SCC are placed in cabinets.Physical identification of materials in stock is not easy since SCC are placed in cabinets.
Question 9
Question 9 Explain advan
Explain advantages of store
tages of stores ledger?
s ledger?
Answer:-1.
1. Distribution of work:Distribution of work: among a number of clerks hence receipts and issues are posted quickly andamong a number of clerks hence receipts and issues are posted quickly and regularly.
regularly. 2.
2. Centralised record:Centralised record: If organisationIf organisation having a number of depots.having a number of depots. 3.
3. Testing of accuracy:Testing of accuracy: can be mechanically tested morecan be mechanically tested more conveniently.conveniently. 4.
4. Cost effective:Cost effective: Recurring cost of Recurring cost of maintaining records is less than if kept manually.maintaining records is less than if kept manually. 5.
5. Control over stock:Control over stock: If up-to-date records are available, saving in both the amount of investment in stockIf up-to-date records are available, saving in both the amount of investment in stock and their cost is possible.
and their cost is possible.
Question 10 Distinguish between bin card and stores ledger?
Question 10 Distinguish between bin card and stores ledger?
Answer:-Answer:-
Difference between Bin Card & Stores LedgerDifference between Bin Card & Stores Ledger BinBin Card Card Stores Stores LedgerLedger Maintained
Maintained by by store store keeper keeper in in store. store. Maintained Maintained by by costing costing dept.dept. Contains only quantity of material received,
Contains only quantity of material received, issued & returned.
issued & returned.
Contains both quantity and cost of material. Contains both quantity and cost of material. Bin cards are updated instantly with each
Bin cards are updated instantly with each receipt & issue.
receipt & issue.
Posting in stores ledger is done at periodic Posting in stores ledger is done at periodic intervals
intervals Each
Each transaction transaction is is posted posted quickly. quickly. Transactions are Transactions are summarized summarized & & posted posted atat intervals.
intervals. Inter-
Inter- dept. dept. transfer transfer not not recorded. recorded. Inter- Inter- dept. dept. transfer transfer recorded.recorded.
Question 11 List down the
Question 11 List down the various techniques of inventory control?
various techniques of inventory control?
Answer:-Answer:-
The main objective of inventory control is to maximum efficiency in production with minimumThe main objective of inventory control is to maximum efficiency in production with minimum investment in stock of raw materials, stores & consumables.investment in stock of raw materials, stores & consumables. Techniques of Inventory control:
Techniques of Inventory control: 1.
1. Setting of various stock levels.Setting of various stock levels. 2.
2. ABC analysis. ABC analysis. 3.
3. Two bin system.Two bin system. 4.
4. Establishment of system of budgets.Establishment of system of budgets. 5.
5. Use of perpetual inventory records and continuous stock verification.Use of perpetual inventory records and continuous stock verification. 6.
6. Determination of economic order quantity.Determination of economic order quantity. 7.
7. Review of slow and non-moving items.Review of slow and non-moving items. 8.
8. Use of control ratios.Use of control ratios.
Question 12 Define various stock levels of inventory control technique?
Question 12 Define various stock levels of inventory control technique?
Answer:-
Answer:- Setting of
Setting of Various Stoc
Various Stock Levels:
k Levels:
1.
1.
Re-Order Quantity: Re-order quantity is the quantity of materials for which purchaseRe-Order Quantity: Re-order quantity is the quantity of materials for which purchase order is placed. It isorder is placed. It is known as EOQ.Economic Order Quantity (EOQ) Economic Order Quantity (EOQ)
Meaning:-Meaning:- The size of the order at The size of the order at which both ordering and carrying cost which both ordering and carrying cost are minimum is known as are minimum is known as EOQ.EOQ.
Ordering cost: It includes cost of placing an order, cost of inspecting goods, cost of receiving goodsOrdering cost: It includes cost of placing an order, cost of inspecting goods, cost of receiving goods and cost of placing an order.
and cost of placing an order. Ordering cost shall be less when numbers of orders made annuallyOrdering cost shall be less when numbers of orders made annually are less and vice-versa.
are less and vice-versa.
Carrying Cost:-
Carrying Cost:-
The cost for holding the inventories, It includes the cost of capital invested inThe cost for holding the inventories, It includes the cost of capital invested in inventories, cost of storage space, insurance cost, etc.inventories, cost of storage space, insurance cost, etc.
Annual consumption of inventory
Annual consumption of inventory:-
:-
it means annual requirement of material.it means annual requirement of material.Formula:-Formula:-
EOQ=
EOQ=
√ √
2AO
2AO
CC
A= Annual usage of units,
A= Annual usage of units, O= Ordering cost per order, O= Ordering cost per order, C= Annual carrying cost per unit p.a.C= Annual carrying cost per unit p.a. Assumptions underlying E.O.Q.:
Assumptions underlying E.O.Q.: (i)
(i)Ordering costOrdering cost per order and per order and carrying cost per unit per annumcarrying cost per unit per annum are are fixedfixed.. (ii)
(ii) Annual usage of inventory is Annual usage of inventory is known.known. (iii)
(iii) Cost per unitCost per unit of the material is of the material is constantconstant and is known as well. and is known as well. (iv)
(iv) The quantity of material orderedThe quantity of materialordered is is received immediatelyreceived immediatelyi.e.i.e. the the lead time is zero.lead time is zero.
2.
2. Re-order level:-Re-order level:-
Meaning:-Meaning:- It is the level of material at which a fresh purchase order of material should be placed. Order isIt is the level of material at which a fresh purchase order of material should be placed. Order is placed in such a way that fresh supplies are received just before the minimum level is reached.
placed in such a way that fresh supplies are received just before the minimum level is reached.
Formula:-Formula:- Re-order level = Maximum Usage X Re-order level = Maximum Usage X Maximum Lead TimeMaximum Lead Time
(or)
(or)
= Minimum level + (Average Usage X Average lead time) = Minimum level + (Average Usage X Average lead time) Re-order period or lead time
Re-order period or lead time:: Time gap between placing an order and receiving the stock.Time gap between placing an order and receiving the stock. 3.
3. Minimum levelMinimum level:- It is the level of stock below which stock in hand should not be allowed to fall (lowest:- It is the level of stock below which stock in hand should not be allowed to fall (lowest inventory balance which must be maintained in hand at all times).
inventory balance which must be maintained in hand at all times). Formula:- Minimum level of inventory = re-order level
Formula:- Minimum level of inventory = re-order level – – (Normal Usage X Normal Lead Time) (Normal Usage X Normal Lead Time) 4.
4. Maximum levelMaximum level:- It is the level of stock above which stock in hand should not be allowed to exceed:- It is the level of stock above which stock in hand should not be allowed to exceed (maximum inventory quantity held in stock at any time).
(maximum inventory quantity held in stock at any time).
Formula:- Maximum level of inventory = re-order level + re-order quantity
Formula:- Maximum level of inventory = re-order level + re-order quantity – – (Minimum Usage X Minimum (Minimum Usage X Minimum Lead Time)
Lead Time) 5.
5. Average Stock LevelAverage Stock Level:- It is the average stock held by an organisation.:- It is the average stock held by an organisation. Formula:- ASL = Minimum Level +
Formula:- ASL = Minimum Level +
−
−
22
OROR
+
+
22
6.
6. Danger LevelDanger Level:- It is the level :- It is the level at which normal issues of raw material at which normal issues of raw material inventory are stopped andinventory are stopped and emergency issues are made on special approval by competent authority.
emergency issues are made on special approval by competent authority. Formula:- DL = Normal Usage X maximum lead time for emergency purchases Formula:- DL = Normal Usage X maximum lead time for emergency purchases 7.
7. Buffer StockBuffer Stock: Some quantity of stock kept as contingency to be used in case of sudden big order. Such: Some quantity of stock kept as contingency to be used in case of sudden big order. Such stock is known as buffer stock.
stock is known as buffer stock.
