TEST – MATERIAL, LABOUR AND PROCESS COSTING
TEST – MATERIAL, LABOUR AND PROCESS COSTING
Total Marks: 50 Time: 1.5 Hour
Q.1 Multiple choice questions: [1 x 10 = 10 Marks]
1. Under net realisable value method of apportioning joint costs to joint products, the
selling & distribution cost is_________.
a) Ignored
b) Added to joint cost
c) Deducted from sales value
d) Deducted from further processing cost
2. ______ is a prime entry record of the quantity of stocks, kept on/in/out/ balance
held in designed storage areas.
a) Bin Card
b) Stores Ledger
c) Storage Minimum Level
d) Good Received Note
3. Idle time is:
a) Time spent by workers in office
b) Time spent by workers in factory
c) Time spent by workers off their work
d) Time spent by workers on their job
4. ______ is the level where nominal issue of materials is stopped, and only
emergency materials are issued.
a) Harm Level
b) Danger Level
c) High Danger Level
d) None of these
5. For reducing the labour cost per unit, which of the following factors is the most
important?
a) Low wage rates
b) Longer hours of work
c) Higher input-output ratio
d) Strict control and supervision
6. ______ is said to be occurred when an inventory item could not be supplied due to
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TEST – MATERIAL, LABOUR AND PROCESS COSTING
insufficient stock in the store.
a) Stock- out
b) Stock-in
c) Stock-on
d) Stock level
7. A chemical process has a normal yield of 90%. In a period, 5000 kgs of material
were introduced and there was an abnormal loss of 150 kgs. The quantity of good
production is
a) 4850 kgs
b) 4500 kgs
c) 4650 kgs
d) 4350 kgs
8. In process, conversion cost means:
a) Cost of direct materials, direct labour, direct expenses
b) Direct labour, direct expenses, indirect material, indirect labour, indirect
expenses
c) Prime cost-plus factory overhead
d) All costs up to the product reaching the consumer, less direct material costs
9. Time and motion study is conducted by the:
a) Time-keeping department
b) Payroll department
c) Personnel department
d) Engineering department
10. Which of the following is an example of by-product?
a) Curd and butter in a dairy
b) Mustard seeds and mustard oil
c) Edible oils and oil cakes
d) Diesel and petrol in an oil refinery
Q.2. Fill in the blanks. [1 x 5 = 5 Marks]
1. Idle time arises only when workers are paid on ___________ basis.
2. If the actual loss in a process is less than the normal loss, the difference is known
as____________.
3. Example of after sales service are___________ and ___________.
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4. In Halsey plan, a worker gets bonus equal to ___________ of the time saved.
5. A direct expense related to a__________ form part of Prime Cost.
Q.3 State True or False. [1 x 5 = 5 Marks]
1. Perpetual inventory system enables management to ascertain stock at any time
without physical inventory being taken.
2. Material returned note is prepared to keep a record of return of surplus materials to
stores.
3. Store Ledger is maintained inside the stores of store keeper.
4. Overtime premium is directly assigned to cost object.
5. Job costing is applied only in small concerns.
Answer the following:
Q.1. a) The following particulars apply to a particular job:
Standard production per hour 6 units
Normal rate per hour Rs. 1.20
Ajay produced 32 units
Vijay produced 42 units
Sujoy produced 50 units
Calculate the wages of these workers under Merrick Differential Piece Rate system
[Assume a day has 8 working hours] [7]
b) The extracts from the payroll of M/s. Bahubali Bros. are as follows:
Number of employees at the beginning of 2021 150
Number of employees at the end of 2021 200
Number of employees resigned 20
Number of employees discharged 5
Number of employees replaced due to resignation and discharges 20
Calculate the Labour Turnover rate for the factory by different methods. [3]
Q.2. From the following information prepare Process Account.
Opening Stock Degree of Completion
800 units @ ₹ 6 per unit ₹ 4,800 Material I – 100%
Material II – 60%
Labour and Overheads – 40%
Transfer from Process – I
12,000 units costing ₹ 16,350
Transfer to next Process 9,700 units
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TEST – MATERIAL, LABOUR AND PROCESS COSTING
Normal Process Loss 10%
Closing stock 1,800 units
Degree of completion: For units scrapped: Material - 100%, Labour and Overheads
– 50%.
For closing stock: Material I – 100%, Material II - 60%, Labour and Overheads –
50% Scrap realized ₹ 1.00 per unit.
Other information: Material ₹ 10,500, Labour ₹ 20,760, Overheads ₹ 16,670.
[10]
Q.3. Material Price Variance = 1,210 – 1,456 = Rs. 246 (A) will be charged
to Profit and Loss A/c. Receipts and issues of an item of stores are made as
follows: There was no balance before 9th January.
Date Receipts Quantity Price (Rs.) Issues Quantity
January 9th 10 17.00
19th 25 10.00
20th 10
29th 20
30th 15 8.00
February 13th 20 12.00
27th 10 16.90
28th 40
March 30th 20 20.00
31st 20
i. What is the simple average of February receipts?
ii. What is the moving monthly simple average price for January – February
and February – March? [4]
b) From the following data for the year ended 31st December, 2021, calculate
the inventory turnover ratio of the two items, and put forward your
comments on them.
Material A Material B
Amount (Rs.) Amount (Rs.)
Opening stock on 1-1-2021 10,000 9,000
Purchase during the year 2021 52,000 27,000
Closing stock on 31-12-2021 6,000 11,000
[6]
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TEST – MATERIAL, LABOUR AND PROCESS COSTING
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