M.O.P.

VAISHNAV COLLEGE FOR WOMEN (AUTONOMOUS)

CHENNAI-600 034

DEPARTMENT OF COMPUTER SCIENCE AND

INFORMATION TECHNOLOGY

B.C.A.

(SEMESTER – IV)

2024 - 2025

FUNDAMENTALS OF COST AND MANAGEMENT

ACCOUNITNG

NAME : Maahi Tated

REGISTER NUMBER : 2313721033024

CLASS & YEAR : II B.C.A.

 Management Accounting:
Unit 3 – Material and Labour Costing
Reorder level
= Maximum consumption * maximum reorder period

Minimum level
= Reorder level - (Normal consumption * Normal reorder period)

Maximum stock level

= Reorder level + reorder quantity-(Minimum consumption * Minimum reorder
period)

Average level
= Minimum level + ½ of reorder quantity
(or)
=(Maximum stock level+Minimum stock level)/2

Danger level
= Average consumption * maximum reorder period for emergency purchases.

Economic order Quantity (EOQ):

EOQ= √(2AB)/CS
Where
A =Annual consumption
B= Buying cost per order
C=Cost per unit
S=Storage and carrying cost percentage per annum

Inventory Turnover Ratio:

Inventory Turnover Ratio

= Cost of materials consumed
__________________________
Cost of average stock

Average stock
= Opening stock of material + closing stock of material
_______________________________________________
2
Inventory turnover in days
= Days in the period
__________________
Inventory turnover ratio
Methods of measurement of labour turnover:
Labour turnover ratio under separation method
= Number of employees left from the organization during a period
Average number of employees during a period

Labour turnover ratio under replacement method

= Number of employees replaced during a period
_______________________________________ * 100
Average number of employees during a period

Labour turnover under flux method

= Number of employees left+ Number of employees recruited during a period
_______________________________________________________________
Average number of employees during a period

Labour turnover under addition method

= Number of additions during a period
____________________________________ *100
Average number of workers during the period

Renumeration
1.Time rate system:
· Flat time rate
· High day rate
· Measured day rate
· Graduated time rate
· Differential time rate

2.Piece rate system:

Variations of piece wages
· Straight piece rate
· Differential piece rate:
a) Taylor’s differential piece rate system
b) Merrick’s multiple piece rate system
c) Gantt’s task and bonus plan

1.Time wages
= total hours worked*rate per hour

Individual wages
= Number of days worked in the month*hours per day*wages per hour
2.Piece wages
= Number of pieces*Rate per piece

Individual piece wages

=Number of pieces produced*piece rate

Taylor’s differential piece rate system:

= Production of worker* differential piece rate

Low piece rate

= Straight piece rate*lower differential

High piece rate

= Straight piece rate*Higher differential

Merrick’s multiple piece rate system:

Level of performance
= Actual output *100
Standard output
Total wages= Units produced*normal piece rate

Gantt’s task and bonus plan:

Level of performance
= Actual output *100
High task output

Earnings of workers
= performance standard – only time wages
Performance above standards-high piece rate on whole output

Total earnings
= performance at standard-time wages+20% bonus.

Premium and Bonus plans

Premium bonus system:
Halsey premium plan
Rowan system
Emerson’s efficiency plan

Halsey premium plan:

Total earnings
=Hours worked*rate per hour +50/100(Time saved*rate per hour)
= T*R+50% (S-T) R
Rowan system:
=Hours worked*rate per hour+ (Time saved)/ Standard time * hours worked*rate per
hour = T*R+(S-T)/S *T*R

Emerson’s efficiency plan:

Efficiency %
Bonus
Below 66 2/3%
No bonus.
Only time wages are paid
66 2/3% to 100%
Bonus starting from 0.01% for 67% efficiency gradually touches 20% at 100%
efficiency.
Above 100%
Bonus of 20%of time rate+ 1%additional bonus for each additional 1% efficiency
beyond the 100%.
 UNIT 1 – COST ACCOUNTING
COST SHEET FORMAT:

Particulars Total Cost Cost per Unit

Rs Rs
Direct Costs
Direct Material xxx
Direct Labour xxx
Direct Expenses xxx
Prime Cost xxx
Add: Works Overhead
Indirect Materials xxx
Indirect Wages xxx
Factory Rent and Rates xxx
Factory Lighting and Heating xxx
Power and Fuel xxx
Repairs and Maintenance xxx
Drawing Office Expenses xxx
Depreciation of Plant and Machinery xxx
Factory Stationery xxx
Insurance of Factory xxx
Factory/Works Manager Salary xxx
Water Consumption in Factory xxx
Total Works Overhead xxx
Works Cost / Factory Cost / xxx
Add: Office or Administration Overheads
Office Rent and Rates xxx
Office Lighting xxx
Office Stationery xxx
Office Furniture Depreciation and Repair xxx
Office Salaries xxx
Legal Charges xxx
Bank Commission xxx
Telephone and Postages xxx
Office Cleaning xxx
Total Administration Overheads xxx xxx
Cost of Production xxx xxx
Add: Selling and Distribution Overheads
Salesmen’s Salaries xxx
Salesmen’s Commission xxx
Showroom Rent xxx
Showroom Expenses xxx
Advertisement xxx
Sales Office Rent xxx
Travelling Expenses xxx
Warehouse Rent and Rates xxx
Warehouse Staff Salaries xxx
Repairs and Depreciation of Delivery Vans xxx
Carriage Outward xxx
Total Selling & Distribution Overheads xxx
Cost of Sales xxx
Profit / Loss xxx
Sales xxx

FORMULA:

1.Percentage of factory overheads to direct wages:

= (Factory Overheads / Direct Wages) × 100

2.Percentage of office overheads to works cost:

= (Office Overheads / Works Cost) × 100

3.Percentage of selling and distribution overheads to works cost:

= (Selling and Distribution Overheads / Works Cost) × 100
(or calculated on cost of production as)
= (Selling and Distribution Overheads / Cost of Production) × 100

4.Estimation of Profit for a Tender or Quotation

If profit is given as a percentage of cost:
Profit = (Cost of Sales × Percentage of Profit) / 100
If profit is given as a percentage of the selling price:
Profit = (Cost of Sales × Rate of Profit on Sales) / (100 - Rate Percentage on sales)

Format for Preparing a Tender:

The following elements are analyzed:
1. Raw Materials
2. Direct Labour
3. Chargeable Expenses
4. Works Overhead
5. Office Overhead
6. Selling Overhead
7. Estimated Profit
 UNIT 3 – MARGINAL COSTING

FORMULAS:
1. Total Marginal Cost = Prime Cost + Total Variable Overheads
2. Total Cost = Fixed Cost + Total Marginal Cost

Equations of Marginal Costing:

1. Sales - Variable Cost = Fixed Cost + Profit
2. Sales - Variable Cost = Contribution
3. Contribution = Fixed Cost + Profit/Loss

Marginal Cost Statement Format:

Sales (-) Variable Cost = Contribution (-) Fixed Cost= Profit/Loss

Break-Even Point (B.E.P):

B.E.P (in units) = Fixed Cost / Contribution per unit
B.E.P (in ₹) = Fixed Cost / P/V Ratio
B.E.P (in ₹) = B.E.P (in units) × Selling Price per unit

Profit/Volume (P/V) Ratio:

P/V Ratio = (Contribution × 100) / Sales
P/V Ratio = [(Sales - Variable Cost) × 100] / Sales

Margin of Safety (MOS):

MOS (in units) = Profit / Contribution per unit
MOS (in ₹) = Profit / P/V Ratio
MOS (in ₹) = Actual Sales - Break-Even Sales

Required Sales for Given Profit:

In units = (Required Profit + Fixed Cost) / Contribution per unit
In ₹ = (Required Profit + Fixed Cost) / P/V Ratio

Profit:
Profit = (Given Sales × P/V Ratio) - Fixed Cost