<\/p>\n
This Paper has 25 answerable questions with 0 answered.<\/p>\n
<\/p>\n Total No. of Questions\u2014 9] Maximum Marks : 100 Rs. The cost accountant identified Rs. 1,20,000 for\u00a0product A\u00a0and the\u00a0balance\u00a0of\u00a0cleaning and maintenance\u00a0wages for Product B. Product Product Direct labour hours A (i) to compute the total manufacturing cost and profits of both the products by applying direct labour basis of absorption, assuming\u00a0cleaning and maintenance\u00a0cost as indirect, (i) Production will increase due to\u00a0recruitment\u00a0of 60% more workers in the factory. 8 (0) Actual production overheads Rs. 45,000 16,000 units<\/p>\n 18,000 units (i) to determine the amount of under absorption of production overheads for the period, 10 (0) Rs. (i) Contract Account showing clearly the amount of profits transferred to Profit and Loss Account. Stocks and Debtors (i) The company will pay a free of tax dividend of 10% the rate of tax being 25%. 8 (0) (i) Calculate the NPV and IRR of each project. \u2022 Sales will go up by 100%, (i) Prepare statement showing working capital requirements for next year, and 8 (0) CA PE II Question Papers Group II Cost\u00a0Accounting\u00a0and Financial Management May 2008 This Paper has 25 answerable questions with 0 answered. Total No. of Questions\u2014 9] Time Allowed : 3 Hours Maximum Marks : 100 Answers to questions\u00a0are to be given only in\u00a0English\u00a0except in the cases of candidates who have opted for Hindi medium. … 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\/24567"}],"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=24567"}],"version-history":[{"count":0,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts\/24567\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/media?parent=24567"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/categories?post=24567"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/tags?post=24567"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nTime Allowed : 3 Hours<\/em><\/p>\n
\nAnswers to questions\u00a0are to be given only in\u00a0English\u00a0except in the cases of candidates who have opted for Hindi medium. If a candidate who has not opted for Hindi medium, answers in Hindi, his answers in Hindi will not be valued.
\nQuestion Nos.1 and 6 are compulsory.
\nAttempt three questions out of the remaining question numbers 2, 3, 4 and 5 and attempt two questions from the remaining Questions Nos. 7, 8 and 9.
\nWorking notes should form part of the answer.
\nMarks
\n1. (a) XYZ Ltd. produces and sells sophisticated glass items \u2013 \u2018A\u2019 and \u2018B\u2019. In connection with both the products the following\u00a0informations\u00a0are revealed from the cost records for the month February, 2008:
\nProduct A B
\nOutput (in units)
\nSales (Rs.) 60,000
\n37,80,000 15,000
\n20,55,000
\nCost structure:
\nDirect material (Rs. per unit)
\nDirect Wages (Rs. per unit)
\nDirect labour hours
\nNo. of quantity produced per batch
\nSetup time per batch 18.75
\n10.00
\n30,000 hours
\n240
\n2 hours 45.00
\n13.00
\n9,750 hours
\n50
\n5 hours
\nThe Indirect costs for the month are as under:<\/p>\n
\nCleaning and maintenance\u00a0wages
\nDesigning Costs
\nSet up costs
\nManufacturing operation\u2019s costs
\nShipment costs
\nDistribution costs
\nFactory administration costs 2,70,000
\n4,50,000
\n3,00,000
\n6,37,500
\n81,000
\n3,91,500
\n2,55,000
\nAt present the company adopts the policy to absorb indirect costs applying direct labour hour basis and enjoying a good position in the market with regard to Product B, but facing a stiff price competition with regard to\u00a0Product A. The cost Accountant of the company, after making a rigorous analysis of the data, decided to shift from the absorption technique based on direct labour hours to activity cost driver basis and also to treat\u00a0cleaning and maintenance\u00a0wages as direct cost.<\/p>\n
\nThe data relevant to activities and products are as follows:<\/p>\n
\nActivity
\nDesigning:
\nManufacturing operation\u2019s:
\nShipment:
\nDistribution:
\nSetup of moulding
\nmachine:
\nFactory administration: Cost driver
\nSquare feet
\nMoulding machine hours
\nNumber of Shipments
\nCubic feet
\nSetup hours<\/p>\n
\n30 sq. ft.
\n9,000 hrs.
\n100
\n45,000 cu. ft. B
\n70 sq. ft.
\n3,750 hrs.
\n100
\n22,500 cu. ft.
\nYou are required:<\/p>\n
\n(ii) to compute the total manufacturing cost and profits of both the products by applying activity based costing, assuming\u00a0cleaning and maintenance\u00a0cost as indirect
\n(iii) to compare the results obtained from (i) and (ii) and give your opinion on the decision of cost accountant.
\n10 (0)
\n(b) State \u2018Essentials of good cost\u00a0accounting\u00a0system\u2019. 3 (0)
\n(c) Explain the limitations of Uniform costing. 3 (0)
\n(d) Calculate\u00a0the total wages earned by a workman for a working day of 8 hours under Halsey and Rowan Plans:
\n\u2022
\n\u2022
\n\u2022 Standard production per hour
\nActual production of the day
\nWages rate per hour 20 units
\n200 units
\nRs. 30
\n2 (0)
\n2. (a) A factory incurred the following expenditure during the year 2007:
\nRs.
\nDirect material consumed
\nManufacturing Wages 12,00,000
\n7,00,000
\nManufacturing overhead:
\nFixed
\nVariable 3,60,000
\n2,50,000
\n6,10,000
\n25,10,000
\nIn the year 2008, following changes are expected in production and cost of production.<\/p>\n
\n(ii) Overall efficiency will decline by 10% on account of\u00a0recruitment\u00a0of new workers.
\n(iii) There will be an increase of 20% in Fixed overhead and 60% in Variable overhead.
\n(iv) The cost of direct material will be decreased by 6%.
\n(v) The company desire to earn a profit of 10% on selling price.
\nAscertain the cost of production and selling price.<\/p>\n
\n(b) Explain the term cost audit and discuss the purpose served by it. 4 (0)
\n(c) Explain implicit costs and explicit costs. 2 (0)
\n3. (a) PQR manufacturers \u2013 a small scale enterprise produces a single product and has adopted a policy to recover the production overheads of the factory by adopting a single blanket rate based on machine hours. The budgeted production overheads of the factory are Rs. 10,08,000 and budgeted machine hours are 96,000.
\nFor a period of first six months of the financial year 2007\u20132008, following\u00a0information\u00a0were extracted from the books:<\/p>\n
\nAmount included in the production overheads:
\nPaid as per court\u2019s order
\nExpenses of previous year booked in current year
\nPaid to workers for strike period under an award
\nObsolete stores written off Rs. 6,79,000<\/p>\n
\nRs. 10,000
\nRs. 42,000
\nRs. 18,000
\nProduction and sales data of the concern for the first six months are as under:
\nProduction:
\nFinished goods
\nWorks\u2013in\u2013progress
\n(50% complete in every respect)
\nSale:
\nFinished goods 22,000 units<\/p>\n
\nThe actual machine hours worked during the period were 48,000 hours. It is revealed from the analysis of\u00a0information\u00a0that \u00bc of the under\u2013absorption was due to defective production policies and the\u00a0balance\u00a0was attributable to increase in costs.
\nYou are required:<\/p>\n
\n(ii) to show the\u00a0accounting\u00a0treatment of under\u2013absorption of production overheads, and
\n(iii) to apportion the unabsorbed overheads over the items.
\n10 (0)
\n(b) Discuss the A.B.C. analysis of material control. 4 (0)
\n4. (a) The following figures have been extracted from the cost records of a manufacturing company:
\nStores Rs.
\nOpening\u00a0Balance
\nPurchases
\nTransfer from Work\u2013in\u2013progress
\nIssues to Work\u2013in\u2013progress
\nIssues to Repairs and Maintenance
\nDeficiencies found in Stock taking 63,000
\n3,36,000
\n1,68,000
\n3,36,000
\n42,000
\n12,600
\nWork\u2013in\u2013progress:
\nOpening\u00a0Balance
\nDirect Wages applied
\nOverhead Applied
\nClosing\u00a0Balance 1,26,000
\n1,26,000
\n5,04,000
\n84,000
\nFinished Products:
\nEntire output is sold at a Profit of 10% on actual cost from work\u2013in\u2013progress.
\nOthers: Wages incurred Rs. 1,47,000; Overhead incurred Rs. 5,25,000.
\nIncome from investment\u00a0Rs. 21,000; Loss on sale of Fixed Assets Rs. 42,000.
\nDraw the stores control account, work\u2013in\u2013progress control account, costing profit and loss account, profit and loss account and reconciliation statement.<\/p>\n
\n(b) Explain ‘Controllable and Uncontrollable Costs’. 4 (0)
\n5. (a) Modern Construction Ltd. obtained a contract No. B\u201337 for Rs. 40 lakhs. The following balances and\u00a0information\u00a0relate to the contract for the year ended 31st March, 2008:
\n1.4.2007
\nRs. 31.3.2008
\nRs.
\n\u2022
\n\u2022
\n\u2022
\n\u2022
\n\u2022 Work\u2013in\u2013progress:
\nWork certified
\nWork uncertified
\nMaterials at site
\nAccrued wages
\n9,40,000
\n11,200
\n8,000
\n5,000
\n30,00,000
\n32,000
\n20,000
\n3,000
\nAdditional\u00a0information\u00a0relating to the year 2007\u20132008 are:<\/p>\n
\n\u2022
\n\u2022
\n\u2022
\n\u2022
\n\u2022
\n\u2022
\n\u2022
\n\u2022
\n\u2022
\n\u2022 Materials issued from store
\nMaterials directly purchased
\nWages paid
\nArchitect\u2019s fees
\nPlant hire charges
\nIndirect expenses
\nShare of general overheads for B\u201337
\nMaterials returned to store
\nMaterials returned to supplier
\nFines and penalties paid 4,00,000
\n1,50,000
\n6,00,000
\n51,000
\n50,000
\n10,000
\n18,000
\n25,000
\n15,000
\n12,000
\nThe contractee pays 80% of work certified in cash. You are required to prepare:<\/p>\n
\n(ii) Contractee\u2019s Account.
\n(iii) Balance\u00a0Sheet.
\n8 (0)
\n(b) Explain any two of the following: 6
\n(i) Efficiency audit and Propriety audit (0)
\n(ii) Differential cost and Opportunity cost (0)
\n(iii) Cost centre and Cost unit. (0)
\n6. (a) A new project is under consideration in Zip Ltd., which requires a capital investment of Rs. 4.50 crore. Interest on term loan is 12% and Corporate Tax rate is 50%. If the Debt Equity ratio insisted by the financing agencies is 2 : 1,\u00a0calculate\u00a0the point of indifference for the project. 4 (0)
\n(b) X Ltd. has the following balances as on 1st April 2007:
\nRs.
\nFixed Assets
\nLess; Depreciation<\/p>\n
\nBank Balance
\nCreditors
\nBills payable
\nCapital (Shares of Rs. 100 each) 11,40,000
\n3,99,000
\n7,41,000
\n4,75,000
\n66,500
\n1,14,000
\n76,000
\n5,70,000
\nThe Company made the following estimates for financial year 2007\u201308:<\/p>\n
\n(ii) The company will acquire fixed assets costing Rs.1,90,000 after selling one machine for Rs. 38,000 costing Rs. 95,000 and on which depreciation provided amounted to Rs. 66,500.
\n(iii) Stocks and Debtors, Creditors and Bills payables at the end of financial year are expected to be Rs. 5,60,500, Rs. 1,48,200 and Rs. 98,800 respectively.
\n(iv) The profit would be Rs. 1,04,500 after depreciation of Rs. 1,14,000.
\nPrepare the projected cash flow statement and ascertain the bank balance of X Ltd. at the end of Financial year 2007\u201308<\/p>\n
\n(c) Explain Baumol\u2019s Model of Cash Management. 4 (0)
\n7. (a) A firm can make investment in either of the following two projects. The firm anticipates its cost of capital to be 10% and the net (after tax) cash flows of the projects for five years are as follows:
\n(Figures in Rs. \u2019000)
\nYear
\nProject\u2013A
\nProject\u2013B 0
\n(500)
\n(500) 1
\n85
\n480 2
\n200
\n100 3
\n240
\n70 4
\n220
\n30 5
\n70
\n20
\nThe discount factors are as under:
\nYear
\nPVF (10%)
\nPVF (20%) 0
\n1
\n1 1
\n0.91
\n0.83 2
\n0.83
\n0.69 3
\n0.75
\n0.58 4
\n0.68
\n0.48 5
\n0.62
\n0.41
\nRequired:<\/p>\n
\n(ii) State with reasons which project you would recommend.
\n(iii) Explain the inconsistency in ranking of two projects.
\n8 (0)
\n(b) Write short notes on: 4
\n(i) Finance function (0)
\n(ii) Factoring. (0)
\n8. (a) MNO Ltd. has furnished the following cost data relating to the year ending of 31st March, 2008.
\nRs. (in Lakhs)
\nSales
\nMaterial consumed
\nDirect wages
\nFactory overheads (100% variable)
\nOffice and Administrative overheads (100% variable)
\nSelling overheads 450
\n150
\n30
\n60
\n60
\n50
\nThe company wants to make a forecast of working capital needed for the next year and anticipates that:<\/p>\n
\n\u2022 Selling expenses will be Rs. 150 lakhs,
\n\u2022 Stock holdings for the next year will be\u2013Raw material for two and half months, Workin\u2013progress for one month, Finished goods for half month and Book debts for one and half months,
\n\u2022 Lags in payment will be of 3 months for creditors, 1 month for wages and half month for Factory, Office and Administrative and Selling overheads.
\nYou are required to:<\/p>\n
\n(ii) Calculate maximum permissible bank finance as per Tandon Committee guidelines assuming that core current assets of the firm are estimated to be Rs. 30 lakhs.
\n8 (0)
\n(b) Explain \u2018Global Depository Receipts\u2019 and \u2018American Depository Receipts\u2019. 4 (0)
\n9. (a) Delta Ltd. currently has an equity share capital of Rs. 10,00,000 consisting of 1,00,000 Equity share of Rs. 10 each. The company is going through a major expansion plan requiring to raise funds to the tune of Rs. 6,00,000. To finance the expansion the management has following plans:
\nPlan\u2013I : Issue 60,000 Equity shares of Rs. 10 each.
\nPlan\u2013II : Issue 40,000 Equity shares of Rs. 10 each and the balance through long term borrowing at 12% interest p.a.
\nPlan\u2013III : Issue 30,000 Equity shares of Rs.10 each and 3,000 Rs.100, 9% Debentures.
\nPlan\u2013IV : Issue 30,000 Equity shares of Rs. 10 each and the balance through 6% preference shares.
\nThe EBIT of the company is expected to be Rs. 4,00,000 p.a. assume corporate tax rate of 40%.
\nRequired:
\n(i) Calculate EPS in each of the above plans.
\n(ii) Ascertain the degree of financial leverage in each plan.<\/p>\n
\n(b) Discuss the meaning and features of \u2018Commercial paper\u2019. 4 (0)<\/p>\n","protected":false},"excerpt":{"rendered":"