CWA ICWA Exam Papers Inter Cost and Management Accounting Dec 10
This Paper has 33 answerable questions with 0 answered.
Time Allowed : 3 Hours Full Marks : 100
The figures in the margin on the right side indicate full marks.
Answer Question No. 1 which is compulsory and any five from the rest.
1. (a) Match the statement in Column 1 with the appropriate statement in Column II:
Column 1 Column 2
Angle of Incidence
Value Analysis (A)
(E) Technique of cost reduction
Value of benefit lost by choosing alternative course of action
Indicator of profit earning capacity
Analyzing the role of every part at the design stage.
(b) State whether the following statements are True or False : 1×5
(i) Cost Accounting is a branch of Financial Accounting. (0)
(ii) Bincard shows the quantity and value of stores. (0)
(iii) The relationship of value, function and cost can be represented as Cost = Value/Function. (0)
(iv) Integral accounts merge financial and cost accounts in one set of accounts. (0)
(v) Obsolete stocks can be determined by the frequency of issues. (0)
(c) Fill up the blanks suitably: 1×5
(i) For designing a labour incentive scheme, the study of__________ and _________is essential. (0)
(ii) Economic batch quantity depends on ___________and _________ costs. (0)
(iii) Variable costs go on changing with the ________ level. (0)
(iv) __________ is a must for meaningful inter–firm comparison. (0)
(v) Normal idle time cost should be charged to ___________. (0)
(d) In the following cases one out of four answers is correct. You are required to indicate the correct answer (1 mark) and give your reason for answer (1 mark) : 2×5
(i) If the minimum stock level and average stock level of a particular raw material are 4,000 and 9,000 units respectively, find out its reorder level.
(1) 9,000 units
(2) 10,000 units
(3) 4,000 units
(4) 5,000 units
(ii) Depreciation charged in costing books is Rs.12,500 and in financial books is Rs.11,200. What will be the financial profit when costing profit is Rs.5,000?
(4) None of the above
(iii) A bus carries 25 passengers daily for 25 days and its mileage per month is 2000 kms. Its passenger kms. per month are
(iv) A chemical is manufactured by combining two standard items of input A (standard price Rs.60/kg.) and B (standard price Rs.45/kg.) in the ratio 60% : 40%. During processing there is a loss of 10% of input. If during a month 1,200 kg. of the chemical is produced incurring a total cost of Rs.69,600, the total material cost variance will be
(v) A company has fixed costs of Rs.6,00,000 per annum. It manufactures a single product which it sells for Rs.200 per unit. Its contribution to sales ratio is 40%. Its break–even in units is
2. (a) A firm manufactures three joint products A, B, C and a by–product X by processing acommon stock of material, which cost Rs.8 per kg. The details of output, market price and the initial processing cost for an input of 10,000 kg. of raw material is as follows:
Product Output/kg. Current Market
Price/kg.–Rs. Initial Processing Cost
4 Direct labour 1,000 hours @ Rs.20
Variable overheads: 80% of direct labour
Fixed overheads: Rs.21,000
The company apportions common cost among joint products on physical units basis.
All the by–products can be further processed and sold at a higher market price, with some sales promotion efforts. The estimated processing cost, marketing cost and the final selling price are given below:
Product Further Processing
Cost per kg. – Rs. Further Marketing
Cost per kg. – Rs. Final price
You are required to compute
(i) Cost of joint products at the point of separation after initial processing.
(ii) Profit or loss if the products are sold without further processing.
(iii) Which of the products have to be processed further for maximizing profits? Show working.
(b) Explain ‘Cost Centre’ and ‘Cost Unit’. 5 (0)
3. (a) From the following forecast of income and expenditure prepare a Cash Budget for the three months ending on June, 2008:
(i) Sales: 20% realised in the month of sales, discount allowed 2%, balance realised equally in two subsequent months.
(ii) Purchases: These are paid in the month following the month of supply,
(iii) Wages: 25% paid in arrears following month,
(iv) Misc. Expenses: Paid a month in arrears.
(v) Rent: Rs.1,000 per month paid quarterly in advance due in April.
(vi) Income Tax: First instalment of advance tax Rs.25,000 due on or before 15th June to be paid within the month.
(vii) Income from Investment: Rs.5,000 received quarterly in April, July etc.
(viii) Cash in Hand: Rs.5,000 in April 1, 2008.
(b) What is Zero Base Budgeting? State briefly its benefits. 5 (0)
4. (a) What are the avoidable and unavoidable causes of Labour Turn–over? 5 (0)
(b) A company manufactures a standard component. The details of current operations of the company are as follows:
Number of workers employed
Weekly working hours
Average number of hours lost due to idle time per employee per week
Standard time required per unit
Hourly wage rate
Current level of efficiency 100
For every unit sold the company is getting a cash profit of Rs.120 before charging labour cost.
In view of the increased demand for the product, the company has come to an agreement with the labour union to raise the wage rate by Rs.3 per hour in return for the workers reducing the idle time by 4 hours and raising the operational efficiency to 90%.
(i) Net Profit at current operations;
(ii) Net Profit after the agreement; and
(iii) Increase/decrease in Net Profit.
5. (a) What are the equivalent units of production? State two principal methods of calculating equivalent units. 3+2 (0)
(b) The budgeted working conditions for a cost centre are as follows:
Normal working per week
Number of machines
Normal weekly loss of hours on maintenance
Number of weeks works per year
Estimated annual overheads
Actual result in respect of a 4 week period are:
Machine hours produced . .
. . 42 hours
5 hours per machine
On the basis of the above information you are required to calculate:
(i) The machine hour rate.
(ii) The amount of under– or over–absorption of overhead.
6. (a) Black & White Co. Ltd. manufactures 10,000 units of a product at a cost of Rs.4 per unit, which is sold in the domestic market at a sale price of Rs.4.25 per unit. In the next year (2008), there is a fall in the domestic market which can consume the whole products (10,000) if the sale price is reduced to Rs.3.72 per unit.
The cost particulars are given below:
Fixed cost 1.50 per Unit
1.10 per unit
0.60 per unit
Marketing Manager has explored the foreign market and it is found that one foreign importer is ready to purchase 20,000 units of the product at a price of Rs.3.55 per unit. There is a capacity to produce 20,000 units in the factory. However, Rs.1,600 additional amount will be required towards fixed cost.
You are advised to offer your views whether it is worthwhile to capture the foreign market?
(b) What are the differences between Labour Rate Variance and Labour Efficiency Variance? 5 (0)
7. (a) What do you understand by Batch Costing? This type of costing is used in producing what type of goods. 3+2 (0)
(b) A company has two plants at locations I and II, operating at 100% and 75% of their capacities respectively. The company is considering a proposal to merge the two plants at one location to optimise available capacity. The following details are available in respect of the two plants:
Particulars Location I Location II
Sales (Rs.in lakhs)
Variable Costs (Rs. in lakhs)
Fixed Costs (Rs. in lakhs) 200
For decision-making purposes you are required to work out the following information:
(i) The capacity at which the merged plant will break even.
(ii) The profit of the merged plant working at 90% capacity.
8. Write short notes on any three from the following: 5×3=15
(a) Treatment of scrap in cost accounts; (0)
(b) Labour turnover; (0)
(c) Split–off point in joint-products and by products; (0)
(d) VED Analysis; (0)
(e) Supply–chain Analysis. (0)