Cost Accounting PDF

## Cost Accounting ### Write any two advantages of time wage system? - It ensures better quality of output. - It ensures a minimum wage. ### State three features of overhead: - It includes all the indirect costs. - It can’t be easily identified. - It is common to several cost units. ### What i...

## Cost Accounting ### Write any two advantages of time wage system? - It ensures better quality of output. - It ensures a minimum wage. ### State three features of overhead: - It includes all the indirect costs. - It can’t be easily identified. - It is common to several cost units. ### What is secondary distribution of overhead? - It is a process of reapportionment of overhead. - The overhead of service departments are reapportioned to production departments. - It needs to be on a suitable basis for apportionment. ### What is codification of overhead? - Codification is a process of assigning numbers, letters or symbols to each item. - A code is a short name of an overhead. - It helps to distinguish an expense. ### State three objectives of financial accounting: - To determine the operational result of a business periodically. - To show the financial position. - To determine the liability of a business. ### What is a cost sheet? - A cost sheet is a statement of cost. - It shows the break-up value of total cost. - It also shows the cost per unit as well as total cost of a given period. ### What is a purchase requisition? - It is a formal request made to the purchase manager to arrange material. - It contains the quantity and quality of material required. - It is signed by the authorized person. - It is prepared in triplicate. ### What is a bin card? - A bin card is a quantitative record of receipts, issue, and balance of material in a store. - It is maintained by the store keeper. - It helps to control the stock. - It also helps the store keeper to prepare purchase requisitions. ### What is EOQ? - It is a specific quantity ordered to purchase the material. - It minimizes the ordering cost and carrying cast. - It is also known as the economic lot size. ### Who are outworkers? - Workers who work outside of the factory premises are known as outworkers. - They are paid wages at a higher rate. - They work at their own home taking the material from the factory but using their own equipment. ### Write any two factors to be considered before introducing an incentive plan? - The incentive plan should be based on time study, motion study, and merit rating. - The plan should be simple to understand and easy to calculate. - The plan should be fair and just to employees and employers. - The plan should ensure a minimum guaranteed wage. ### Name two mechanical methods of time keeping? - Dial time recorder - Time Recording Clock - Automated attendance method (fingerprint) ### Difference between Bin card and stores ledger? - A bin card is maintained by the store keeper, whereas the store ledger is maintained by the cost accounting department. - A bin card records only quantity whereas the store ledger records both quantity and value. - A Bin card isn't an accounting record, whereas the stores ledger is a basis of accounting record. ### What is a stock turnover ratio? - It is a ratio between the cost of material consumed and the average stock of material. - If it is high, it indicates that the material is fast moving. - If it is low, it indicates that the material is slow moving. ### Discuss three natures of cost accounting: - It ascertains the cost of production. - It evaluates the relative efficiency of the staff, and it is also the cost of a suitable selling price. ### What is a Halsey premium plan? - It is a plan of remuneration. - It encourages efficient workers. - It is suitable when time saved is more. ### When was the Halsey premium plan developed? - It was developed by F.A. Halsey in 1891. ### Write down the steps of the deviation method of reapportionment of overhead: - No reciprocal benefits between two service departments. - It ignores further distribution. - It arranges service departments according to their importance. ### Direct labor cost method of overhead absorption - It is a method of overhead absorption. - Its overhead is determined by deducting factory overhead with direct wages and multiplied with 100 - It is a popular method of overhead absorption ### Give two examples of selling overhead: - Advertisements. - Showroom rent. - Salesman Salary ### Two purposes of a cost sheet - To ascertain the cost of production. - To find a suitable selling price. - To control cost. - To show the break-up value of total cost. ### What are the GR principles of purchasing? - Right price - Right place - Right quality - Right quantity - Right source - Right time ### What is the base stock method of pricing? - A method of pricing material issues. - A minimum quantity of material held all the time to carry on business. Such minimum stock is known as safety stock, base stock. - Issue of material over the base stock is valued at price as per FIFO or LIFO method. ### Name any four fringe benefits provided to workers? - Free medical facilities - Free ration - Free transport - Free rent house ### State any two merits of decentralized purchasing? - No delay in procuring material. - Easy procurement of the right quantity or right quality. - Minimization of cost. ### What is a bill of material? - A bill of material (BOM) is a list of materials required to complete a job or work. - It is prepared by the engineering or production department. - It is also known as the specification of material. ### State any four avoidable causes of labor turnover: - Death - Disability - Marriage for women employees. - Retirement ### What are the general principles of identifying an element of cost as overhead? - Principle 1: Physical identification or transcendence ability. - Principle 2: Convenience. ### State two demerits of the time rate system of wages? - It increases the cost of production. - It increases labor cost per unit. - It creates equality between efficient and inefficient workers. ### It needs close supervision. ### How do you classify material loss? - Abnormal loss - Normal loss ### What is labor turnover? - The percentage change in labor force in an organization during a given period is known as labor turnover. - There are two causes of labor turnover, such as avoidable and unavoidable. - High labor turnover rates can lead to a wastage of time and money.