<\/p>\n
This\u00a0Paper\u00a0has 26 answerable questions with 0 answered.<\/p>\n
Total No. of Questions \u2014 9]
\nTime Allowed : 3 Hours<\/p>\n
Maximum Marks : 100
\nQuestion\u00a0Nos.1 and 6 are compulsory.
\nWorking\u00a0notes should form part of the answer.
\nMarks
\n1. (a) LM Company Limited manufactures three products \u2013 \u2018N\u2019, \u2018O\u2019 and \u2018P\u2019. The company furnishes the following particulars for the year ending 31st March, 2009:
\nN O P
\nOutput and Sales (units)
\nSelling\u00a0Price\u00a0per unit (Rs.)
\nDirect Material per unit (Rs.)
\nDirect Labour per unit (Rs.) (@ Rs.20 per hr)
\nNo. of purchase orders placed
\nNo. of stores deliveries
\nNo. of inspections 15,000
\n180
\n60
\n80
\n200
\n250
\n260 12,000
\n130
\n40
\n60
\n150
\n160
\n150 5,000
\n95
\n35
\n40
\n40
\n110
\n140
\nThe above three products are similar and usually produced in production runs of 50 units. The manufacturing overheads are currently absorbed by using a blanket overhead rate on the basis of direct labour hours for analyzing the whole factory. Now the company plans to use activity based costing system for the profitability of its products. The activity analysis and total overheads for the year of LM Company Ltd. are as under:<\/p>\n
Activity Area Total Overheads
\n(Rs.) Cost Driver
\nMaterial handling
\nSet\u2013up
\nQuality Control
\nMaterial purchase ordering
\nFactory Control 92,040
\n1,22,240
\n1,23,200
\n89,700
\n1,82,320 No. of stores deliveries
\nNo. of production runs
\nNo. of inspections
\nNo. of orders placed
\nDirect labour hours worked
\nYou are required to:<\/p>\n
(i) Calculate\u00a0the total cost and profit of each product by using direct labour hour rate method for absorption of manufacturing overheads.
\n(ii) Calculate\u00a0the total cost and profit of each product by using activity based costing system for absorption of manufacturing overheads.
\n12 (0)
\n(b) What are the assumptions involved in the\u00a0definition\u00a0of cost reduction? 2 (0)
\n(c) State the objectives of uniform costing. 3 (0)
\n2. (a) At the end of first year on 31st March, 2009, in the books of ABC Constructions Ltd. the Bridge Contract Account stands debited with the cost of material issued, labour, overheads expended and plant issued and its stands credited with material at site Rs.25,000; material returned Rs.15,000 and plant at site Rs.4,76,000 after charging depreciation at 15 percent. The material issued, labour, overheads and plant issued debited to the contract account, are in the ratio of5 : 4 : 2 : 4. 75 percent of the contract had been certified by the contractee\u2019s architect as completed at the end of the year and 90 percent of the certified work value had been received in cash Rs.16,20,000. The accounts department informs that 2\/3 of the profit on cash basis credit to Profit and Loss account on the contract is Rs.2,13,600.
\nYou are required to prepare:<\/p>\n
(i) The Bridge Contract Account showing the cost of work done but uncertified.
\n(ii) Work\u2013in\u2013progress Account.
\n(iii) Contractee\u2019s Account.
\n6+1+1 (0)
\n(b) State the appropriate \u2018Cost Unit\u2019 for the following industries:
\n(i) Steel
\n(ii) Bricks making
\n(iii) Sugar
\n(iv) Power
\n2 (0)
\n(c) What do you mean by abnormal loss and abnormal gain in process costing? How are these dealt with in cost\u00a0accounting? 4 (0)
\n3. (a) 2 hours allowed to a worker to produce 5 units and wages has been paid @ Rs.25 per hour. In a 48 hours week the worker produced 170 units.
\nYou are required to\u00a0calculate\u00a0the total earnings and effective hourly rate of earnings of the worker under the following incentive wage systems:<\/p>\n
(i) Halsey 50 percent system
\n(ii) Rowan system
\n(iii) Emerson\u2019s efficiency system
\n(iv) Barth system.
\n8 (0)
\n(b) State the essential factors for installing a cost\u00a0accounting\u00a0system. 4 (0)
\n(c) The following information is available:
\n1st April, 2008 to
\n30th June, 2008 1st July, 2008 to
\n31st March, 2009
\nOutput
\nTotal overheads 10,000 units
\nRs.40,000 35,000 units
\nRs.1,35,000
\nYou are required to\u00a0calculate\u00a0the amount of variable overhead per unit and amount of total fixed overheads for whole the year 2008\u201309.<\/p>\n
4 (0)
\n4. (a) SK Engineering Company Limited manufactures two types of auto bearing \u2013 type \u2018XD\u2019 and type \u2018XE\u2019. The company\u2019s records show the following particulars for those bearings for the month of May, 2009 :
\n(Rs.)
\nDirect Materials
\nDirect labour
\nProduction overheads
\nOffice Overheads 38,10,000
\n20,10,000
\n6,03,000
\n6,42,300
\nThere was no work\u2013in\u2013progress at the beginning or at the end of the month. It was ascertained that:<\/p>\n
(i) Direct\u00a0material cost\u00a0per bearing for type \u2018XD\u2019 was 160 percent of those for type \u2018XE\u2019.
\n(ii) Direct labour cost per bearing for type \u2018XE\u2019 was 40 percent of those for type \u2018XD\u2019.
\n(iii) Production overheads were absorbed on the basis of direct labour cost.
\n(iv) Office overheads were absorbed on the basis of factory cost.
\n(v) Selling and distribution overheads were Rs.2 per bearing sold for each type.
\n(vi) Stock of finished bearing on 1st May, 2009 was 15,000 bearings @ Rs.15 of type \u2018XD\u2019 and 20,000 bearings @ Rs.8 of type \u2018XE\u2019.
\n(vii) Production during the month of May, 2009 was 2,70,000 bearings of type \u2018XD\u2019 and 3,30,000 bearings of type \u2018XE\u2019 and out of May\u2019s output 25,000 bearings of type \u2018XD\u2019 and 40,000 bearings of type \u2018XE\u2019 would be remains in\u00a0stock on\u00a031st May, 2009 which valued at cost of production.
\nYou are required to:<\/p>\n
(i) Prepare a statement showing cost of production each type of bearings.
\n(ii) Prepare a statement showing the selling\u00a0price\u00a0at which the bearings would be marketed, if the company desires @ 20 percent profit on selling\u00a0price.
\n9 (0)
\n(b) ML Manufacturing Ltd. is required 1,000 units of material \u2018EX\u2019 on an average for a week which is purchased at a\u00a0price\u00a0of Rs.30 per unit. The ordering cost is Rs.150 per purchase order and inventory carrying cost per unit amounted to Rs.0.06 per week. The re\u2013order period is 1 to 3 weeks and the weekly usage of material \u2018EX\u2019 varies from 750 to 1,250 units.
\nYou are required to compute:<\/p>\n
(i) The Economic order Quantity. [2]
\n(ii) Re\u2013order Stock Level, Minimum Stock Level and Maximum Stock Level. [3]
\n2+3=5 (0)
\n5. (a) The following information is available in the\u00a0financial accounts\u00a0of a manufacturing company for the year ending 31st March, 2009:
\nRs.
\nDirect Material consumption
\nDirect wages
\nManufacturing expenses
\nOffice and administrative expenses
\nSelling and distribution expenses
\nDonation and charity
\nInterest on debentures
\nPreliminary expenses (written off)
\nProvision for income\u2013tax
\nInterest received on deposits
\nSales : 1,80,000 units
\nClosing stock of finished goods : 30,000 units 3,55,000
\n3,60,000
\n2,4,5000
\n2,40,000
\n2,00,000
\n20,000
\n48,000
\n20,000
\n75,000
\n25,000
\n16,20,000
\n1,50,000
\nThe Cost accounts reveals:<\/p>\n
(i) Manufacturing overheads recovered at 80 percent on direct wages.
\n(ii) Office and administrative overheads recovered at 25 percent on factory cost.
\n(iii) Selling and distribution overheads at Re. 1.00 per unit sold.
\n(iv) Closing stock of finished goods valued at cost of production.
\nYou are required to:
\n(i) Prepare profit and loss account showing net profit in\u00a0financial accounts.
\n(ii) Prepare a statement showing profit in the cost accounts.
\n(iii) Prepare a statement reconciling the profits disclosed as per above (i) and (ii).
\n2+3+5 (0)
\n(b) Explain the followings: 2+2=4
\n(i) Two Bin System. (0)
\n(ii) Multiple Costing< (0)
\n6. (a) MN Limited gives you the following information related for the year ending 31st March, 2009:<\/p>\n
60,000 Equity Shares of
\n20,000, 9% Preference Shares of
\nOpening Stock 2.5 : 1
\n1 : 1.5
\n15%
\n2
\n20%
\n7
\nRs.16
\nRs. 4,50,000
\nRs. 10,00,000
\nRs. 10 each
\nRs. 10 each
\nRs. 3,80,000
\nYou are required to calculate:
\n(i)
\n(ii)
\n(iii)
\n(iv)
\n(v) Quick Ratio
\nFixed Assets Turnover Ratio
\nProprietary Ratio
\nEarnings per Share
\nPrice\u2013Earning Ratio.
\n10 (0)
\n(b) What do you understand by desirability factor\/profitability index? 2 (0)
\n(c) Explain with example the formula used for determining optimum cash balance according to Baumal\u2019s cash management model. 2 (0)
\n(d) State the main features of deep discount bonds. 2 (0)
\n7. (a) Following information is forecasted by the CS Limited for the year ending 31st March, 2010:
\nBalance as at
\n1st April, 2009
\nRs. Balance as at
\n31st March, 2010
\nRs.
\nRaw Material
\nWork\u2013in\u2013progress
\nFinished goods
\nDebtors
\nCreditors
\nAnnual purchases of raw material (all credit)
\nAnnual cost of production
\nAnnual cost of goods sold
\nAnnual operating cost
\nAnnual sales (all credit) 45,000
\n35,000
\n60,181
\n1,12,123
\n50,079 65,356
\n51,300
\n70,175
\n1,35,000
\n70,469
\n4,00,000
\n7,50,000
\n9,15,000
\n9,50,000
\n11,00,000
\nYou may take one year as equal to 365 days.<\/p>\n
You are required to calculate:<\/p>\n
(i) Net operating cycle period.
\n(ii) Number of operating cycles in the year.
\n(iii) Amount of working capital requirement.
\n8 (0)
\n(b) Write short notes on the following: 4
\n(i) Cut \u2013 off Rate (0)
\n(ii) Floating Rate Bonds. (0)
\n8. (a) PR Engineering Ltd. is considering the purchase of a new machine which will carry out some operations which are at present performed by manual labour. The following information related to the two alternative models \u2013 \u2018MX\u2019 and \u2018MY\u2019 are available:
\nMachine \u2018MX\u2019 Machine \u2018MY\u2019
\nCost of Machine
\nExpected Life
\nScrap Value Rs. 8,00,000
\n6 years
\nRs. 20,000 Rs. 10,20,000
\n6 years
\nRs. 30,000
\nEstimated net income before depreciation and tax:
\nYear Rs. Rs.
\n1
\n2
\n3
\n4
\n5
\n6 2,50,000
\n2,30,000
\n1,80,000
\n2,00,000
\n1,80,000
\n1,60,000 2,70,000
\n3,60,000
\n3,80,000
\n2,80,000
\n2,60,000
\n1,85,000
\nCorporate tax rate for this company is 30 percent and company\u2019s required rate of return on investment proposals is 10 percent. Depreciation will be charged on straight line basis.<\/p>\n
You are required to:<\/p>\n
(i) Calculate the pay\u2013back period of each proposal.
\n(ii) Calculate the net present value of each proposal, if the P.V. factor at 10% is \u2013 0.909, 0.826, 0.751, 0.683, 0.621 and 0.564.
\n(iii) Which proposal you would recommend and why?
\n9 (0)
\n(b) The capital structure of a company consists of equity shares of Rs. 50 lakhs; 10 percent preference shares of Rs. 10 lakhs and 12 percent debentures of Rs. 30 lakhs. The cost of equity capital for the company is 14.7 percent and income-tax rate for this company is 30 percent.
\nYou are required to calculate the Weighted Average Cost of Capital (WACC)<\/p>\n
3 (0)
\n9. (a) Z Limited is considering the installation of a new project costing Rs. 80,00,000. Expected annual sales revenue from the project is Rs. 90,00,000 and its variable costs are 60 percent of sales. Expected annual fixed cost other than interest is Rs. 10,00,000. Corporate tax rate is 30 percent. The company wants to arrange the funds through issuing 4,00,000 equity shares of Rs. 10 each and 12 percent debentures of Rs. 40,00,000.
\nYou are required to:<\/p>\n
(i) Calculate the operating, financial and combined leverages and Earnings per Share (EPS).
\n(ii) Determine the likely level of EBIT, if EPS is (1) Rs. 4, (2) Rs. 2, (3) Rs. 0.
\n7 (0)
\n(b) Describe the three principles relating to selection of marketable securities. 3 (0)
\n(c) A doctor is planning to buy an X-Ray machine for his hospital. He has two options. He can either purchase it by making a cash payment of Rs. 5 lakhs or Rs. 6,15,000 are to be paid in six equal annual installments. Which option do you suggest to the doctor assuming the rate of return is 12 percent? Present value of annuity of Re. 1 at 12 percent rate of discount for six years is 4.111. 2 (0)<\/p>\n","protected":false},"excerpt":{"rendered":"
CA PE II Question Papers Group II Cost\u00a0Accounting\u00a0and Financial Management Nov 2009 This\u00a0Paper\u00a0has 26 answerable questions with 0 answered. Total No. of Questions \u2014 9] Time Allowed : 3 Hours Maximum Marks : 100 Question\u00a0Nos.1 and 6 are compulsory. Working\u00a0notes should form part of the answer. Marks 1. (a) LM Company Limited manufactures three … Read more<\/a><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":""},"categories":[4731,120,4930],"tags":[],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts\/24548"}],"collection":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/comments?post=24548"}],"version-history":[{"count":0,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts\/24548\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/media?parent=24548"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/categories?post=24548"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/tags?post=24548"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}