Question 5 (a) Furniture Wala Ltd., a manufacturer of dining tables, procures wood as its direct material. The dining tables are initially processe...

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Question 5 (a) Furniture Wala Ltd., a manufacturer of dining tables, procures wood as its direct material. The dining tables are initially processed in the Moulding department and subsequently transferred to the Laminating department, where a plastic layer is applied. The Moulding department began manufacturing 35,000 initial dining tables during the month of March 2025 for the first time and their cost is as follows: Direct material: 1,15,500 Moulding costs: 59,500 Total 1,75,000 A total of 28,000 dining tables were completed and transferred to the Laminating department, the rest 7,000 were still in the Moulding process at the end of the month. All of the Moulding department's direct materials were placed but on average, only 25% of the conversion costs were applied to the ending work in progress inventory. Required to calculate: (i) Equivalent units of production for each cost. (ii) The Moulding cost per Equivalent units. (iii) Cost of closing work-in-process (WIP) and finished products. (4 Marks) (b) Distinguish between "job costing and batch costing". (3 Marks) (c) A reputed engineering college in Pune has 20 sections with 60 students per section. The college plans a one day pleasure trip around the city for the students during the weekend to places such as zoo, the amusement park and the technological museum. A private transport operator has agreed to provide the required number of buses at a hire charge of 6,500 per bus per trip. The bus hire charge is inclusive of special permit fees of 500 per bus per trip paid to the city municipal corporation. Each bus has a maximum seating capacity of 54 persons excluding the driver. Four seats are reserved for the teachers who accompany each bus. The college will employ four teachers for each bus and pay 500 as daily allowance to each teacher for the trip. No other costs in respect of teachers are relevant to the trip. The following are the other cost estimates: Particulars Cost per student () Breakfast 55 Lunch 120 Evening tea with snacks 40 Entrance Fee at amusement park Fee entry Entrance Fee at the zoo 25 As regards the technological museum, the authorities charge block entrance fees for group of students depending upon the number of students in the group as enumerated below: Number of students in the group Block Entrance Fees () Upto 300 2,000 COST AND MANAGEMENT ACCOUNTING 301-900 3,000 901 and above 3,500 Cost of prizes that would be distributed to the winners in different games being arranged in the amusement park depends upon the number of students in a trip. The cost of prizes to be distributed is: Number of students in a trip Cost of prizes () Upto - 300 2,200 301- 600 2,400 601 - 900 2,400 901 and above 2,500 Assuming that the college hires the requisite number of buses depending upon the number of students in a trip, you are required to: (i) Prepare a flexible budget, estimating the total cost for a trip for the levels of 300, 600, 900 and 1,200 students showing each item of cost separately. (ii) Compute the average cost per student at each of the above levels. (7 Marks)

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Answer Solution: (a) (i) Calculation of equivalent units of production: Input Details Units Output Particulars Units Equivalent Units Material Conversion cost % Units % Units Unit Introduced 35,000 Finished output 28,000 100 28,000 100 28,000 Closing W-I-P 7,000 100 7,000 25 1,750 Total 35,000 Total 35,000 35,000 29,750 (ii) Calculation of Moulding cost per equivalent unit: Direct Material Conversion costs Total cost () 1,15,500 59,500 Equivalent units 35,000 29,750 Cost per equivalent unit () 3.30 2.00 (iii) The cost of closing work in process (WIP): Costs Equivalent units Rate () Total Cost () Direct Material 7,000 3.30 23,100 Conversion Costs 1,750 2.00 3,500 Total 26,600 The cost of finished products: Costs Equivalent units Rate () Total Cost () Direct Material 28,000 3.30 92,400 Conversion Costs 28,000 2.00 56,000 Total 1,48,400 (b) Difference between job and batch costing Sr. No Job Costing Batch Costing 1 Method of costing used for non-standard and non- repetitive products produced as per customer specifications and against specific orders. Homogeneous products produced in a continuous production flow in lots. 2 Cost determined for each Job Cost determined in aggregate for the entire Batch and then arrived at on per unit basis. 3 Jobs are different from each other and independent of each other. Each Job is unique. Products produced in a batch are homogeneous and lack of individuality COST AND MANAGEMENT ACCOUNTING (c) (i) Flexible Budget showing the total cost for a trip: Particulars No. of Students 300 600 900 1200 () () () () Variable Cost Breakfast @ 55 per student 16,500 33,000 49,500 66,000 Lunch @ 120 per student 36,000 72,000 1,08,000 1,44,000 Evening Tea with snacks @ 40 per student 12,000 24,000 36,000 48,000 Entrance Fee at amusement park (Free entry) - - - - Entrance Fee at the zoo @ 25 per student 7,500 15,000 22,500 30,000 Total Variable Costs (A) 72,000 1,44,000 2,16,000 2,88,000 Semi-Variable Cost Hire Charges @ 6,000 per bus 36,000 72,000 1,08,000 1,44,000 Special Permit Fees @ 500 per bus 3,000 6,000 9,000 12,000 DA to Teachers @ 500 x 4 teachers per bus = 2,000 per bus 12,000 24,000 36,000 48,000 Block Entrance Fees at the Technological Museum 2,000 3,000 3,000 3,500 Prizes to students 2,200 2,400 2,400 2,500 Total Semi-Variable Costs (B) 55,200 1,07,400 1,58,400 2,10,000 Total Cost for a Trip (A+B) 1,27,200 2,51,400 3,74,400 4,98,000 Working Note: Particulars No. of Students 300 600 900 1200 No. of Buses required (50 students per bus) 300/50 = 6 buses 600/50 = 12 buses 900/50 = 18 buses 1200/50 = 24 buses (ii) Average cost per student at each level: Particulars No. of Students 300 600 900 1200 Total Cost () 1,27,200 2,51,400 3,74,400 4,98,000 Average cost per student () 424 419 416 415

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