KSLU Solved Question Papers
Cost Accounting
Previous Year Question Paper with Solution
B.Com. LL.B. (Five Years) · Sem 3
2023 Mar Examination
munotes.in
Mumbai
B.Com. LL.B. (Five Years) Sem 3 Cost Accounting 2023 Mar Question Paper with Solutions
First published on munotes.in on 21 October 2026.
Published by munotes.in, Mumbai.
Model answers written and edited by the munotes.in editorial desk.
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The question paper reproduced here is the paper as set by Karnataka State Law University at the 2023 Mar examination.
Contents
The questions below are the paper as Karnataka State Law University set it at the 2023 Mar examination, in the order it was set.
MarksPage
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the 2023 Mar examination, reproduced as Karnataka State Law University set them, in the order it set them. Long reading passages are shortened to their first and last lines and our summary; the original paper prints them in full. Only the answers are ours. See the original question paper.
Duration 3 hours · Total marks 80 · 20 questions answered
Instructions printed on the paper
- N.B. (1) Answer all five Units. (2) One essay type question and short note/problem is compulsory from each Unit. (3) Figures to the right indicate marks. (4) Use simple calculator only.
How to use this volume
Solve the paper first, under exam conditions and against the clock. Then read the answers here and mark your own. Reading a solution before attempting the question feels productive and teaches very little, because recognising an answer is not the same as being able to write one.
Q1
(a)What is cost ? What are the various elements of cost ?[10]
Answer
For full marks, cover: what cost is, with its meaning in costing and how it differs from expense and loss; the three elements of cost (material, labour, expenses), each split into direct and indirect with examples; overheads and their grouping (factory, administration, selling, distribution); how the elements build up into the cost sheet, with a short figure; and a conclusion.
What cost is
In ordinary speech, cost is the price paid for something. In cost accounting it means the amount of expenditure, actual or notional, incurred on or attributable to a specified thing or activity. That thing may be a product, a job, a process, a department or a service.
Three points follow from this meaning:
- Cost is always the cost of something, so it must be related to a cost unit or a cost centre.
- Cost includes not only cash spent but also notional amounts, such as depreciation.
- Cost must be distinguished from loss. Cost is incurred to produce something; a loss, such as goods destroyed by fire, produces nothing and is kept out of product cost.
The elements of cost
Total cost is analysed into three elements: material, labour and expenses. Each is either direct or indirect.
1. Material
- Direct material is material that becomes part of the product and can be traced to it. Examples are wood in furniture, cloth in garments and steel in a machine. Primary packing and materials bought for a specific job are also direct.
- Indirect material is material used in production that cannot be traced to a particular unit. Examples are lubricating oil, cotton waste, small tools and maintenance stores.
2. Labour
- Direct labour is the wages of workers who work directly on the product, such as machine operators, carpenters and assemblers. It can be measured for each job.
- Indirect labour is the wages of workers who help production without working on the product, such as supervisors, storekeepers, inspectors and cleaners.
3. Expenses
- Direct (chargeable) expenses are expenses, other than material and labour, that can be charged to a particular job or product. Examples are hire of special plant for a job, royalty per unit, and the cost of special designs.
- Indirect expenses are all other expenses, such as rent, power, insurance, depreciation and lighting.
Overheads
Overheads are the total of indirect material, indirect labour and indirect expenses. They are grouped by function:
- Factory (production) overheads: indirect costs of the factory, such as factory rent, power, depreciation of plant and the works manager's salary.
- Administration overheads: costs of running the office and general management, such as office rent, office salaries and audit fees.
- Selling overheads: costs of creating demand and getting orders, such as advertising, salesmen's salaries and commission.
- Distribution overheads: costs of delivering goods to customers, such as packing for despatch, carriage outwards and warehouse rent.
How the elements build up into cost
| Stage | Made up of | Example (Rs) |
|---|---|---|
| Direct material | 40,000 | |
| Direct labour | 25,000 | |
| Direct expenses | 5,000 | |
| Prime cost | Direct material, labour and expenses | 70,000 |
| Factory overheads | 14,000 | |
| Works cost | Prime cost plus factory overheads | 84,000 |
| Administration overheads | 8,000 | |
| Cost of production | Works cost plus administration overheads | 92,000 |
| Stage | Made up of | Example (Rs) |
|---|---|---|
| Selling and distribution overheads | 6,000 | |
| Cost of sales | Cost of production plus selling and distribution | 98,000 |
The stages follow by addition. Prime cost is 40,000 + 25,000 + 5,000 = 70,000, and works cost 70,000 + 14,000 = 84,000. Cost of production is 84,000 + 8,000 = 92,000, and cost of sales 92,000 + 6,000 = 98,000. If sales are 1,20,000 rupees, the profit is 1,20,000 - 98,000 = 22,000 rupees.
Cost, expense and loss compared
An expense is an expenditure charged against the revenue of a period, such as rent for the year. When it relates to production, it becomes part of the cost of the goods made. A loss is a value lost without any benefit, such as stock destroyed by flood or abnormal spoilage. Losses are written off to the costing profit and loss account, so that they do not inflate the cost of good units. Keeping the three apart is the first rule of a sound costing system.
Why the elements matter
Analysing cost into elements shows management where money goes. Direct costs are charged straight to products; overheads are shared out on suitable bases. Each element is controlled by its own methods: material through stores control, labour through time keeping and incentives, and overheads through budgets. The split also tells the price-setter which costs rise with every unit and which do not.
Conclusion. Cost is the expenditure incurred on or attributable to a product, job or service. Its elements are material, labour and expenses, each direct or indirect. The indirect parts together form overheads, grouped as factory, administration, selling and distribution. Built up in stages, the elements give prime cost, works cost, cost of production and cost of sales.
The rest of the answers
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