ECO - 10

Bachelors Degree Programme

(BDP)

ASSIGNMENT
2016-17

Elective Course in Commerce

ECO 10: ELEMENTS OF COSTING

For July 2016 and January 2017 admission cycle

School of Management Studies

Indira Gandhi National Open University
Maidan Garhi, New Delhi -110068
 Elective Course in Commerce
ECO 10: Elements of Costing

ASSIGNMENT- 2016-17

Dear Students,

As explained in the Programme Guide, you have to do one Tutor Marked Assignment in
this Course.

Assignment is given 30% weightage in the final assessment. To be eligible to appear in

the Term-end examination, it is compulsory for you to submit the assignment as per the
schedule. Before attempting the assignments, you should carefully read the instructions
given in the Programme Guide.

This assignment is valid for two admission cycles (July 2016 and January 2017). The
validity is given below:

1. Those who are enrolled in July 2016, it is valid up to June 2017.

2. Those who are enrolled in January 2017, it is valid up to December 2017.

You have to submit the assignment of all the courses to The Coordinator of your Study
Centre. For appearing in June Term-End Examination, you must submit assignment to the
Coordinator of your study centre latest by 15th March. Similarly for appearing in
December Term-End Examination, you must submit assignments to the Coordinator of
your study centre latest by 15th September.
 TUTOR MARKED ASSIGNMENT
Course Code : ECO - 10
Course Title : Elements of Costing
Assignment Code : ECO 10/TMA/2016-17
Coverage : All Blocks

Maximum Marks: 100

Attempt all the questions.
1. Money spent on installing a Cost Accounting System is not an expense but an
investment. Explain this statement.
(20)
2. (a) Explain the main requirements of an efficient System of material control.
(b) What is Economic Order Quantity? How is it calculated? Explain with an
example.
(10+10)
3. (a) Discuss various principles of apportionment of overheads. Give few examples of
the bases used for apportionment.

(b) State briefly the causes of difference between profit shown by financial
Accounting and Cost Accounting.
(10+10)
4. A product passes through three processes X, Y and Z. The normal wastage of each
process is Process X 3%, Process Y 5% and Process Z 8%. Wastage of process
X was sold at Rs. 2.50 per unit, that of process Y at Rs. 5.00 per unit and that of
process Z at Rs. 8.50 per unit. 10,000 units were introduced to process X on 1st
July, 2015 at a cost of Rs. 100 per unit. The other expenses are as follow:

Process X Process Y Process Z

Material Rs. 10000 Rs. 15000 Rs. 5000
Labour Rs. 50000 Rs. 80000 Rs. 65000
Direct Expenses Rs. 10450 Rs. 15895 Rs. 20000

The actual output was: Process X 9500 units, Process Y 9100 units and Process Z
8100 units. Prepare process accounts, normal and abnormal accounts with
examples of each.
(20)
5. (a) Explain the Accounting procedure of ascertaining profit with example of each
when:
(i) Contract is not completed and
(ii) Contract is near completion

(b) Differentiate between LIFO and FIFO methods of pricing the issue of materials.
Under condition of rising prices, which of these two methods would you
recommend and why?
(10+10)