This Paper has 20 answerable questions with 0 answered.<\/p>\n
Maximum Marks : 100 Rs. 42 Rs. 45 Rs. 40 Rs. 48 Rs. Cost (i) Machine department costs should be apportioned among set\u2013up, stores receiving and inspection activities in proportion of 4 : 3 : 2. Required:<\/p>\n (i) Compute the economic order quantity. (i) Compute the normal rate of wages. Manufacturing overheads<\/p>\n Realizable value of scrap per unit Process I 10 (0) 2,50,000 P1 P2 P3 S1 S2 60 30 50 10 \u2013 P1 P2 P3 S1 S2 (i) Compute overhead absorption rate per production hour of each production department. (i) Calculate the payback period for each project. The PV factor at 10% are: (i) Calculate\u00a0percentage\u00a0change in\u00a0earnings per share, if sales increase by 5%.<\/p>\n 3 (0) 264 Average raw material in stock Materials Finished goods in stock Required:<\/p>\n Prepare a statement showing estimate of working capital needed to finance a budgeted activity level of 78,000 units of production. You may assume that production is carried on evenly throughout the year and wages and overheads accue similarly.<\/p>\n 9 (0) Assets March 31, 2007 Income Statement 12,58,950 (i) Machinery with a net book value of Rs. 9,150 was sold during the year. Prepare a Funds Flow Statement (Statement of changes in Financial position on working capital basis) for the year ended March 31, 2007.<\/p>\n 12 (0) \u2014 Plant and Machinery \u2014 8 (0)<\/p>\n","protected":false},"excerpt":{"rendered":" CA PE II Question Papers Group II Cost\u00a0Accounting\u00a0and Financial Management Nov 2007 This Paper has 20 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. If … 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\/24570"}],"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=24570"}],"version-history":[{"count":0,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts\/24570\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/media?parent=24570"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/categories?post=24570"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/tags?post=24570"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nTotal No. of Questions\u2014 9]
\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) PQR Ltd. manufactures four products, namely A, B, C and D using the same plant and process. The following\u00a0information\u00a0relates to production period October, 2007:
\nProduct A B C D
\nOutput in units
\nCost per unit:
\nDirect Materials
\nDirect Labour
\nMachine hours\u00a0per unit 1440<\/p>\n
\nRs. 10
\n4 1200<\/p>\n
\nRs. 9
\n3 960<\/p>\n
\nRs. 7
\n2 1008<\/p>\n
\nRs. 8
\n1
\nThe four products are similar and are usually produced in production runs of 48 units per batch and are sold in batches of 24 units. Currently, the production overheads are absorbed using machine hour rate. The production overheads incurred by the company for the period October, 2007 are as follows:<\/p>\n
\nMachine department costs
\n(rent, depreciation and supervision)
\nSet\u2013up Costs
\nStore receiving costs
\nInspection
\nMaterial handling\u00a0and despatch
\n1,26,000
\n40,000
\n30,000
\n20,000
\n5,184
\nDuring the period October, 2007, the following cost drivers are to be used for allocation of overheads cost:<\/p>\n
\nSet\u2013up Costs
\nStores receiving
\nInspection
\nMaterial handling\u00a0and despatch Cost driver
\nNumber of production runs (batches)
\nRequisition raised
\nNumber of production runs (batches)
\nOrders executed
\nIt is also determined that:<\/p>\n
\n(ii) The number of requisitons raised on stores are 50 for each product. The total number ofmaterial handling\u00a0and despatch orders executed during the period are 192 and each order being for a batch size of 24 units of product.
\nRequired
\n(i) Calculate the total cost of each product, if all overhead costs are absorbed on machine \u2013 hour rate basis.
\n(ii) Calculate the total cost of each product using activity based costing.
\n(iii) Comment briefly on as to how an activity based costing might benefit PQR Ltd.
\n3+6+2=11 (0)
\n(b) Distinguish between Cost control and Cost reduction. 3 (0)
\n(c) Discuss the reasons for disagreement of profits as per Cost\u00a0Accounting\u00a0and FinancialAccounting. 4 (0)
\n2. (a) A Company manufactures a special product which requires a component \u2018Alpha\u2019. The following particulars are collected for the year 2008:
\n(i)
\n(ii)
\n(iii)
\n(iv) Annual demand of Alpha
\nCost of placing an order
\nCost per unit of Alpha
\nCarrying cost % p.a. :
\n:
\n:
\n: 8,000 units
\nRs. 200 per order
\nRs. 400
\n20%
\nThe company has been offered a quantity discount of 4% on the purchase of \u2019Alpha\u2018, provided the order size is 4,000 components at a time.<\/p>\n
\n(ii) Advise whether the quantity discount offer can be accepted.
\n2+3=5 (0)
\n(b) Two workers \u2019A\u2019 and \u2019B\u2019 produce the same product using the same material. Their normal wage rate is also the same. \u2019A\u2019 is paid bonus according to Rowan scheme while \u2019B\u2019 is paid bonus according to Halsey scheme. The time allowed to make the product is 50 hours. \u2019A\u2019 takes 30 hours while \u2019B\u2019 takes 40 hours to complete the product. The factory overhead rate is Rs. 5 per person\u2013hour actually worked. The factory cost of product manufactured by \u2019A\u2019 is Rs. 3,490 and for product manufactured by \u2019B\u2019 is Rs. 3,600.
\nRequired:<\/p>\n
\n(ii) Compute the\u00a0material cost.
\n(iii) Prepare a statement comparing the factory cost of the product as made by two workers.
\n3+1+2=6 (0)
\n3. (a) RST Limited processes product Z through two distinct process \u2014 Process I and Process II. On completion, it is transferred to finished stock. From the following\u00a0informationfor the year 2006\u201307, prepare Process I, Process II and Finished Stock A\/c:
\nParticulars
\nRaw materials used
\nRaw materials cost per unit
\nTransfer to next process\/finished stock
\nNormal loss (on inputs)
\nDirect wages
\nDirect expenses<\/p>\n
\n7,500 units
\nRs. 60
\n7,050 units
\n5%
\nRs. 1,35,750
\n60% of
\ndirect wages
\n20% of
\ndirect wages
\nRs. 12.50 Process II
\n\u2014
\n\u2014
\n6,525 units
\n10%
\nRs. 1,29,250
\n65% of
\ndirect wages
\n15% of
\ndirect wages
\nRs. 37.50
\n6,000 units of finished goods were sold at a profit of 15% on cost. Assume that there was no opening or closing stock of work\u2013in\u2013progress.<\/p>\n
\n(b) Discuss the three methods of calculating labour turnover. 4 (0)
\n4. (a) Discuss the treatment of spoilage and defectives in Cost\u00a0Accounting. 4 (0)
\n(b) Compute a conservative estimate of profit on a contract (which has been 90% complete) from the following particulars:
\nRs.
\nTotal expenditure to date
\nEstimated further expenditure to complete
\nthe contract (including contingencies)
\nContract Price
\nWork certified
\nWork uncertified
\nCash received 22,50,000<\/p>\n
\n32,50,000
\n27,50,000
\n1,75,000
\n21,25,000
\n6 (0)
\n(c) Discuss the various reports provided by Cost\u00a0Accounting\u00a0department. 4 (0)
\n5. (a) ABC Ltd. has three production departments P1, P2 and two service departments S1 and S2. The following data are extracted from the records of the Company for the month of October, 2007:
\nRs.
\nRent and rates
\nGeneral lighting
\nIndirect Wages
\nPower
\nDepreciation on machinery
\nInsurance\u00a0of machinery 62,500
\n7,500
\n18,750
\n25,000
\n50,000
\n20,000
\nOther\u00a0Information:<\/p>\n
\nDirect wages (Rs.)
\nHorse Power of
\nMachines used
\nCost of machinery (Rs.)
\nFloor space (Sq. ft)
\nNumber of light points
\nProduction hours worked 37,500<\/p>\n
\n3,00,000
\n2,000
\n10
\n2,225 25,000<\/p>\n
\n4,00,000
\n2,500
\n15
\n4,050 37,500<\/p>\n
\n5,00,000
\n3,000
\n20
\n4,100 18,750<\/p>\n
\n25,000
\n2,000
\n10
\n\u2013 6,250<\/p>\n
\n25,000
\n500
\n5
\n\u2013
\nExpenses of the service departments S1 and S2 are reapportioned as below:<\/p>\n
\nS1 20% 30% 40% \u2014 10%
\nS2 40% 20% 30% 10% \u2014
\nRequired:<\/p>\n
\n(ii) Determine the total cost of product X which is processed for manufacture in department P1, P2 and P3 for 5 hours, 3 hours and 4 hours respectively, given that its direct\u00a0material cost\u00a0is Rs. 625 and direct labour cost is Rs. 375.
\n8+2=10 (0)
\n(b) Discuss the essential requisites for the installation of Uniform Costing system. 4 (0)
\n6. (a) Consider the following mutually exclusive projects:
\nCash flows (Rs.)
\nProjects C0 C1 C2 C3 C4
\nA
\nB
\nC
\nD \u201310,000
\n\u2013 10,000
\n\u2013 3,500
\n\u2013 3,000 6,000
\n2,500
\n1,500
\n0 2,000
\n2,500
\n2,500
\n0 2,000
\n5,000
\n500
\n3,000 12,000
\n7,500
\n5,000
\n6,000
\nRequired:<\/p>\n
\n(ii) If the standard payback period is 2 years, which project will you select? Will your answer differ, if standard payback period is 3 years?
\n(iii) If the cost of capital is 10%, compute the discounted payback period for each project. Which projects will you recommend, if standard discounted payback period is (i) 2 years; (ii) 3 years?
\n(iv) Compute NPV of each project. Which project will you recommend on the NPV criterion? The cost of capital is 10%. What will be appropriate choice criteria in this case.?<\/p>\n
\nYear
\nPV factor at 10%(PV\/F 0.10t) 1
\n0.9091 2
\n0.8264 3
\n7513 4
\n0.6830
\n1+1+4+4=10 (0)
\n(b) Consider the following\u00a0information\u00a0for Omega Ltd:
\nRs. in Lakhs
\nEBIT (Earnings before Interest and Tax)
\nEarnings before Tax (EBT):
\nFixed Operating costs: 15,750
\n7,000
\n1,575
\nRequired:<\/p>\n
\n(c) Discuss Miller\u2013Orr Cash Management Model. 3 (0)
\n7. (a) A proforma cost sheet of a Company provides the following data:
\nRs.
\nRaw material cost per unit
\nDirect Labour cost per unit
\nFactory overheads cost per unit
\n(includes depreciation of Rs. 18 per unit at
\nbudgeted level of activity)
\nTotal cost per unit
\nProfit
\nSelling price per unit 117
\n49
\n98<\/p>\n
\n36
\n300
\nFollowing additional information is available:<\/p>\n
\nAverage work\u2013in\u2013process stock :
\n: 4 weeks
\n2 weeks
\n(% completion with respect to<\/p>\n
\nLabour and Overheads :
\n: 80%
\n60%
\nFinished goods in stock<\/p>\n
\nCredit period allowed to debtors
\nCredit period availed from suppliers
\nTime lag in payment of wages
\nTime lag in payment of overheads :
\n:
\n:
\n:
\n: 3 weeks
\n6 weeks
\n8 weeks
\n1 week
\n2 weeks
\nThe company sells one\u2013fifth of the output against cash and maintains cash and maintains cash balance of Rs. 2,50,000.<\/p>\n
\n(b) Discuss the major considerations in Capital structure planning. 3 (0)
\n8. Following are the financial statements of Zed Ltd:
\nBalance Sheet as on
\nMarch 31, 2007
\nRs. March 31, 2006
\nRs.
\nCapital and Liabilities:
\nShare Capital, Rs. 10 par value
\nShare premium
\nReserves and Surplus
\nDebentures
\nLong\u2013term loans
\nCreditors
\nBank Overdraft
\nAccrued expenses
\nIncome\u2013tax payable
\n1,67,500
\n3,35,000
\n1,74,300
\n2,40,000
\n40,000
\n28,800
\n7,500
\n4,350
\n48,250
\n10,45,700
\n1,50,000
\n2,37,500
\n1,23,250
\n\u2014
\n50,000
\n27,100
\n6,250
\n4,600
\n16,850
\n6,15,550<\/p>\n
\nRs. March 31, 2006
\nRs.
\nLand
\nBuilding, net of depreciation
\nMachinery, net of depreciation
\nInvestment in \u2018A\u2019 Ltd.
\nStock
\nPrepaid expenses
\nDebtors
\nTrade Investments
\nCash 3,600
\n6,01,800
\n1,10,850
\n75,000
\n58,800
\n1,900
\n76,350
\n40,000
\n77,400
\n10,45,700 3,600
\n1,78,400
\n1,07,050
\n\u2014
\n46,150
\n2,300
\n77,150
\n1,05,000
\n95,900
\n6,15,550<\/p>\n
\nFor the year ended March 31, 2007
\nRs.
\nNet Sales
\nLess : Cost of goods sold and operating
\nExpenses (including depreciation on buildings of
\nRs. 6,600 and depreciation on machinery of Rs. 11,400)
\nNet Operating profit
\nGain on sale of trade investments
\nGain on sale of machinery
\nProfits before tax
\nIncome\u2013tax
\nProfits after tax
\nAdditional information: 13,50,000<\/p>\n
\n91,050
\n6,400
\n1,850
\n99,300
\n48,250
\n51,050
\nAdditional information:<\/p>\n
\n(ii) The shares of \u2018A\u2019 Ltd. were acquired by issue of debentures.
\nRequired:<\/p>\n
\n9. (a) Discuss the conflicts in Profit versus Wealth maximisation principle of the firm. 4 (0)
\n(b) Using the conflicts in Profit versus Wealth maximisation principle of the firm.
\n(i)
\n(ii)
\n(iii)
\n(iv) Total debt to net worth
\nTotal assets turnover
\nGross profit on sales
\nAverage collection period
\n(Assume 360 days in a year) :
\n:
\n:
\n: 1 : 2
\n2
\n30%
\n40 days
\n(v) Inventory turnover ratio based on cost of
\ngoods sold and year \u2013 end inventory
\n:
\n3
\n(vi) Acid test ratio : 0.75
\nBalance Sheet as on
\nMarch 31, 2007
\nLiabilities Rs. Assets Rs.
\nEquity Shares Capital
\nReserves and Surplus
\nTotal Debt
\nCurrent Liabilities 4,00,000
\n6,00,000<\/p>\n
\nand other Fixed Assets
\nCurrent Assets:
\nInventory
\nDebtors
\nCash
\n\u2014<\/p>\n
\n\u2014
\n\u2014<\/p>\n