CBSE Class 12 – Cost accounting Question Paper 2022
SECTION A
(Employability Skills)
Answer any 3 questions out of the given 4 questions.
1. What is meant by ‘organisational skills’ for an entrepreneur?
Answer: Organisational skills for an entrepreneur refer to the ability to manage and coordinate resources, time, and tasks efficiently. These skills help entrepreneurs set goals, prioritize tasks, and ensure that their business operations run smoothly.
2. State one benefit of entrepreneurial competency.
Answer: One benefit of entrepreneurial competency is that it enhances decision-making skills, allowing entrepreneurs to make informed and effective decisions, which leads to better business outcomes.
3. How do green builders play a vital role for the sake of the environment?
Answer: Green builders contribute to environmental protection by using sustainable materials and energy-efficient techniques in construction. This helps reduce waste, lowers energy consumption, and minimizes the environmental impact of buildings.
4. In industries, how can greenhouse gases be reduced? Give two ways.
Answer: Greenhouse gases can be reduced in industries by using renewable energy sources, such as solar or wind power, instead of fossil fuels. Additionally, improving energy efficiency in industrial processes, such as upgrading machinery and optimizing production methods, can help reduce emissions.
Answer any 1 question out of the given 2 questions.
5. State any two characteristics of an entrepreneur.
Answer: Entrepreneurs are often risk-takers, willing to take calculated risks to achieve their goals. They are also innovative, coming up with new ideas or solutions to address market needs.
6. How are green jobs beneficial for industrial workers? Give two reasons.
Answer: Green jobs promote healthier working environments, as they focus on sustainable practices that reduce exposure to harmful substances. These jobs also provide long-term employment opportunities in growing industries that focus on sustainability and environmental protection.
SECTION B
(Subject Specific Skills)
7. Name any two industries where process costing is used.
Answer: Process costing is used in industries like chemical manufacturing and oil refining.
8. How is cost per unit calculated in a particular process under process costing?
Answer: The cost per unit in a particular process under process costing is calculated by dividing the total cost incurred in the process by the number of units produced during that period.
9. Define process costing.
Answer: Process costing is a method of costing used in industries where production is continuous and units are indistinguishable from one another. It involves accumulating costs for each process and then allocating them to the units produced.
10. What is meant by the term service costing?
Answer: Service costing refers to the method of costing used by service industries to determine the cost of providing a service. It involves calculating the direct and indirect costs involved in delivering a particular service.
11. What is meant by internal services?
Answer: Internal services refer to the support services provided within an organization to help its operations run efficiently, such as maintenance, accounting, or IT services.
12. Give two examples of purely financial incomes.
Answer: Two examples of purely financial incomes are interest income from investments and dividend income from shares.
13. Why does depreciation differ in cost records and financial records? Give reason.
Answer: Depreciation differs in cost records and financial records because, for cost records, depreciation is based on the allocation of fixed costs to production, while in financial records, depreciation is calculated based on accounting principles, such as straight-line or reducing balance method, to reflect the asset’s actual usage or value reduction over time.
Answer any 3 questions out of the given 5 questions.
14. Write the differences between process costing and job costing on the basis of cost unit and nature.
Answer:
- Cost Unit: In process costing, the cost unit is typically a single unit of product, as the production is continuous and units are indistinguishable. In job costing, the cost unit is a specific job or order, as each job is unique and has its own costs.
- Nature: Process costing is used in industries where production is continuous, and the products are homogeneous. Job costing is used in industries where production is done based on specific customer orders or jobs, and the products are customized.
15. Explain maintenance cost in brief.
Answer: Maintenance cost refers to the expenses incurred in maintaining machinery, equipment, and facilities in good working condition. This includes costs for repairs, servicing, and the replacement of parts to prevent breakdowns and ensure smooth operations.
16. Who prepares the log sheet? Why is it prepared?
Answer: The log sheet is typically prepared by the production or operations team. It is prepared to record detailed information about the work performed, the time taken, the materials used, and any issues encountered during production. This helps in tracking performance, identifying inefficiencies, and ensuring that operations are running smoothly.
17. What is the need for reconciliation of cost data and financial data? Give any two points.
Answer:
- Accuracy: Reconciliation ensures that the cost data matches the financial records, helping to identify any discrepancies and ensuring accuracy in financial reporting.
- Transparency: It helps provide a clear picture of the business’s financial health by aligning the cost records with the overall financial data, allowing for better decision-making and financial planning.
18. Mention two items which are shown in appropriation of profits.
Answer:
- Dividend to shareholders: This is the portion of the profit distributed to shareholders as a return on their investment.
- Retained earnings: This is the portion of profits kept within the company to fund future growth, pay off debt, or cover other financial needs.
Answer any 2 questions out of the given 4 questions.
19. Explain the process costing procedure in brief.
Answer:
The process costing procedure involves several steps:
- Cost Accumulation: All costs incurred in each process (such as raw materials, labor, and overheads) are accumulated.
- Cost Allocation: These accumulated costs are then allocated to the units produced in each process.
- Cost Per Unit Calculation: The total costs incurred are divided by the number of units produced to determine the cost per unit.
- Transfer of Costs: The final output from one process is transferred to the next process or to finished goods, depending on the production cycle.
- Wastage or Loss Accounting: If there is any wastage or loss in the process, it is accounted for separately and the costs are adjusted accordingly.
20. Prepare Process ‘X’ Account if 5000 units of raw material were introduced in this process at 4 per unit. The other expenses are as under:
- Direct wages: 15,000
- Direct expenses: 9,000
- Indirect expenses: 11,000
- There is no wastage and the final output is transferred to Process ‘Y’.
Answer:
Here’s how we can prepare the Process ‘X’ Account:
Process ‘X’ Account
| Particulars | Debit (₹) | Credit (₹) |
|---|---|---|
| To Raw Material (5000 units @ ₹4) | 20,000 | |
| To Direct Wages | 15,000 | |
| To Direct Expenses | 9,000 | |
| To Indirect Expenses | 11,000 | |
| To Process ‘Y’ (Output transferred) | 55,000 | |
| Total | 55,000 | 55,000 |
Explanation:
- Raw Material: 5000 units of raw material at ₹4 each = ₹20,000.
- Direct Wages, Direct Expenses, and Indirect Expenses are added to the cost of production in Process ‘X’ totaling ₹15,000, ₹9,000, and ₹11,000, respectively.
- The total cost incurred in Process ‘X’ is ₹55,000, which is transferred to Process ‘Y’ as the output.
21. Define Service. Name the kind of costing used by hotels and hospitals, by giving suitable reason.
Answer:
A service is an intangible offering provided by a business or organization to meet the needs of its customers. Unlike products, services cannot be touched or owned, and they are often consumed at the point of delivery.
-
Costing used by hotels: Hotels typically use service costing to determine the costs associated with providing accommodation, meals, and other services. Since hotels offer intangible services like customer satisfaction, the costing method helps in allocating the costs of labor, amenities, and operational expenses.
-
Costing used by hospitals: Hospitals also use service costing to assess the costs of medical care, surgeries, and other healthcare services. Service costing allows them to track the resources used in providing healthcare, such as medical staff, equipment, and hospital facilities, enabling better financial management and cost control.
22. Define Reconciliation Statement. Name the different methods of reconciliation of cost and financial accounts.
Answer:
A Reconciliation Statement is a document that compares and adjusts the differences between cost accounts and financial accounts to ensure that both sets of records align. It helps in identifying discrepancies and provides a clear understanding of the differences between the two accounting methods.
- Different methods of reconciliation:
- Total Cost Method: This method reconciles the total cost as recorded in the cost accounts with the profit or loss as recorded in the financial accounts.
- Profit and Loss Method: This method involves comparing the profit calculated in cost accounts with the profit calculated in financial accounts, and adjusting for differences such as overheads, depreciation, or inventory variations.
- Adjustment Method: In this method, specific adjustments are made to reconcile particular items, such as direct costs, overheads, or indirect expenses, between cost and financial records.
SECTION C
(Competency-Based Questions)
Answer any 2 questions out of the given 3 questions.
23. Explain in brief any two general principles of process costing.
Answer:
-
Continuous Production: Process costing is applicable in industries where production is continuous and involves the manufacturing of homogeneous products. Each unit produced is identical, and the costs are accumulated for each process or stage of production.
-
Accumulation of Costs by Process: In process costing, all the costs (materials, labor, and overhead) are accumulated for each process separately. At the end of each period, the total cost incurred is divided by the number of units produced to calculate the cost per unit.
24. Explain the following:
(a) Absolute Composite Units
Answer: Absolute composite units refer to the combination of different types of products or services produced in a process, measured in a uniform unit for cost comparison. It is a standard unit used to represent different items produced, allowing for the measurement of the cost of each item based on a standardized unit of measure.
(b) Commercial Composite Units
Answer: Commercial composite units are a type of composite unit used for costing purposes in commercial production environments. These units combine various products or items produced in a process, but unlike absolute composite units, they are based on real-world commercial terms, like packaging or specific commercial measurements.
25. From the following information, prepare a Reconciliation Statement and compute profit as per financial records:
Particulars
| Particulars | Financial Accounts (₹) | Cost Accounts (₹) |
|---|---|---|
| Net profit | 1,70,000 | |
| Promotion overheads | 6,000 | 9,000 |
| Rent received | 5,000 | |
| Depreciation charged | 12,000 | 18,000 |
| Office overheads | 6,000 | 11,000 |
Answer:
To prepare a Reconciliation Statement and compute the profit as per financial records, we need to adjust the figures based on the differences between the financial and cost accounts.
Reconciliation Statement:
| Particulars | Amount (₹) |
|---|---|
| Net Profit as per Financial Accounts | 1,70,000 |
| Add: Rent received | 5,000 |
| Less: Promotion overheads (Financial account is less) | (3,000) |
| Less: Depreciation (Financial account is less) | (6,000) |
| Less: Office overheads (Financial account is less) | (5,000) |
| Profit as per Cost Accounts | 1,61,000 |
Explanation:
- Rent received is an income in financial records and needs to be added as it doesn’t appear in the cost accounts.
- Promotion overheads are higher in cost accounts, so we subtract the difference from the financial profit.
- Depreciation is higher in cost accounts, so we subtract the difference.
- Office overheads are higher in cost accounts, so we subtract the difference.
Thus, the profit as per the cost accounts is ₹1,61,000.