<\/p>\n
This Paper has 21 answerable questions with 0 answered.<\/p>\n
Maximum Marks : 100 Orders processed Machine hours worked Inspection hours Material input quantity 40,000 kgs. 30,000 kgs. Rs. 20,000 Alternatively, it can be transferred to Process II for further processing and then sold as Product \u2019AX\u2018 for Rs. 2 per kg. Further materials are added in Process II, which yield two kgs. of product \u2019AX\u2018 for every kg. of Product \u2019A\u2018 of Process I.<\/p>\n Of the 1,60,000 kgs. per month of work completed in Process I, 40,000 kgs are sold as Product \u2019A\u2018 and 1,20,000 kgs. are passed through Process II for sale as Product \u2019AX\u2018. Process II has facilities to handle upto 1,60,000 kgs. of Product \u2019A\u2018 per month, if required.<\/p>\n The monthly costs incurred in Process II (other than the cost of Product \u2019A\u2018) are:<\/p>\n 1,20,000 kgs. of Product \u2019A\u2018 input 10 (0) Maximum usage : Providers of Service 12 (0) Equity Share Capital 10 Fixed Assets (Net) 25 40 Machine \u2018B\u2019 is an economy model costing only Rs. 5,00,000, but will last for only two years. It costs Rs. 3,00,000 per year to run.<\/p>\n The cash flows of Machine \u2018A\u2019 and \u2018B\u2019 are real cash flows. The costs are forecasted in rupees of constant purchasing power. Ignore taxes. The opportunity cost of capital is 9%.<\/p>\n Required:<\/p>\n Which machine the company UVW should buy?<\/p>\n The present value (PV) factors at 9% are:<\/p>\n Year t1 t2 t3 Retained earnings and profits brought forward<\/p>\n Dividends declared and paid during the year 6,00,000 7,20,000 12,00,000 13,20,000 CA PE II Question Papers Group II Cost\u00a0Accounting\u00a0and Financial Management November 2006 This Paper has 21 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\/24585"}],"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=24585"}],"version-history":[{"count":0,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts\/24585\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/media?parent=24585"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/categories?post=24585"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/tags?post=24585"}],"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\u00a0answer.
\nMarks
\n1. (a) ABC Ltd. Manufactures two types of machinery equipments Y and Z and applies\/absorbs overheads on the basis of direct-labour hours. The budgeted overheads and directlabour hours for the month of December, 2006 are Rs. 12,42,500 and 20,000 hours respectively. The information about Company\u2019s products is as follows:
\nEquipment
\nY Equipment
\nZ
\nBudgeted Production volume
\nDirect\u00a0material cost 2,500 units
\nRs. 300 per unit 3,125 units
\nRs. 450 per unit
\nDirect labour cost
\nY : 3 hours @ Rs. 150 per hour
\nX : 4 hours @ Rs. 150 per hour Rs. 450 Rs. 600
\nABC Ltd.\u2019s overheads of Rs. 12,42,500 can be identified with three major activities:
\nOrder Processing\u00a0(Rs. 2,10,000), machine processing (Rs. 8,75,000), and product inspection (Rs. 1,57,500). These activities are driven by\u00a0number\u00a0of orders processed, machine hours worked, and inspection hours, respectively. The data relevant to these activities is as follows:<\/p>\n
\nY
\nZ 350
\n250 23,000
\n27,000 4,000
\n11,000
\nTotal 600 50,000 15,000
\nRequired
\n(i) Assuming use of direct-labour hours to absorb\/apply\u00a0overheads to production, compute the unit manufacturing cost of the equipments Y and Z, if the budgeted manufacturing volume is attained.
\n(ii) Assuming use of activity-based costing, compute the unit manufacturing costs of the equipments Y and Z, if the budgeted manufacturing volume is achieved.
\n(iii) ABC Ltd.\u2019s selling\u00a0prices\u00a0are based heavily on cost. By using direct-labour hours as an application base,\u00a0calculate\u00a0the amount of cost distortion (under-costed or overcosted) for each equipment.
\n(iv) Discuss, how an activity-based costing might benefit ABC Ltd.
\n10 (0)
\n(b) Discuss the use of perpetual inventory records and continuous stock verification, and its advantages. 4 (0)
\n(c) Discuss the various reports provided by Cost\u00a0Accounting\u00a0Department. 4 (0)
\n2. A Chemical Company carries on production operation in two processes. The material first pass through Process I, where Product \u2019A\u2018 is produced.
\nFollowing data are given for the month just ended:<\/p>\n
\nOpening work\u2013in\u2013progress quantity
\n(Material 100% and conversion 50% complete)
\nWork completed quantity
\nClosing work\u2013in\u2013progress quantity
\n(Material 100% and conversion two\u2013third complete)
\nMaterial input cost
\nProcessing cost
\nOpening work\u2013in\u2013progress cost
\nMaterial cost
\nProcessing cost 2,00,000 kgs.<\/p>\n
\n1,60,000 kgs.<\/p>\n
\nRs. 75,000
\nRs. 1,02,000<\/p>\n
\nRs. 12,000
\nNormal process loss in quantity may be assumed to be 20% of material input. It has no realisable value.
\nAny quantity of Product \u2019A\u2018 can be sold for Rs. 1.60 per kg.<\/p>\n
\nRs. 1,60,000 kgs. of Product \u2019A\u2018 input
\nRs.
\nMaterials Cost
\nProcessing Costs 1,32,000
\n1,20,000 1,76,000
\n1,40,000
\nRequired:
\n(i) Determine, using the weighted average cost method, the cost per kg. of Product \u2019\u2018A\u2019 in Process I and value of both work completed and closing work\u2013in\u2013progress for the month just ended.
\n(ii) Is it worthwhile processing 1,20,000 kgs. of Product \u2019A\u2019 further?
\n(iii)\u00a0Calculate\u00a0the minimum acceptable selling price per kg., if a potential buyer could be found for additional output of Product \u2019AX\u2019 that could be produced with the remaining Product \u2019A\u2019 quantity. 6+4+4=14 (0)
\n3. (a) A Manufacturing Company has an installed capacity of 1,50,000 units per annum. Its cost structure is given below:
\nRs.
\n(i) Variable cost per unit
\nMaterials
\nLabour (subject to a minimum of Rs. 1,00,000 per month)
\nOverheads
\n10
\n10
\n4
\n(ii) Fixed overheads per annum 1,92,300
\n(iii) Semi-variable overheads per annum at 75% capacity (It will
\nwill increase by Rs. 4,000 per annum for increase of every 5% of the
\ncapacity utilisation or any part thereof) 60,000
\nThe capacity utilisation for the next year is budgeted at 75% for first three months, 80% for the next six months and 90% for the remaining three months.
\nRequired:
\nIf the company is planning to have a profit of 20% on the selling price,\u00a0calculate\u00a0the selling price per unit for the next year.<\/p>\n
\n(b) Discuss briefly the principles to be followed while taking credit for profits on incomplete contracts. 4 (0)
\n4. (a) Distinguish between any two of the following: 2+2=4
\n(i) Cost control and Cost reduction. (0)
\n(ii) Controllable costs and Uncontrollable costs. (0)
\n(iii) Absolute ton\u2013kms and Commercial ton\u2013kms. (0)
\n(b) PQR Ltd., manufactures a\u00a0special product, which requires \u2018ZED\u2019. The following particulars were collected for the year 2005\u201306:<\/p>\n\n
\n:
\n:
\n:
\n:
\n:
\n:
\n: 7,500 units
\nRs. 500
\n5 to 8 weeks
\nRs. 60
\n10%
\n500 units per week
\n250 units per week
\n750 units per week
\nRequired:
\n(i)
\n(ii)
\n(iii)
\n(iv)
\n(v) Re\u2013order quantity.
\nRe\u2013order level.
\nMinimum stock level.
\nMaximum stock level.
\nAverage stock level.
\n10 (0)
\n5. (a) RST Ltd. has two production departments: Machining and Finishing. There are three service departments: Human Resource (HR), Maintenance and Design. The budgeted costs in these service departments are as follows:
\nHR
\nRs. Maintenance
\nRs. Design
\nRs.
\nVariable
\nFixed 1,00,000
\n4,00,000
\n5,00,000 1,60,000
\n3,00,000
\n4,60,000 1,00,000
\n6,00,000
\n7,00,000
\nThe usage of these Service Department\u2019s output during the year just completed is as follows:
\nProvision of Service Output (in hours of service)<\/p>\n
\nUsers of Service HR Maintenance Design
\nHR
\nMaintenance
\nDesign
\nMachining
\nFinishing Total \u2014
\n500
\n500
\n4,000
\n5,000
\n10,000 \u2014
\n\u2014
\n500
\n3,500
\n4,000
\n8,000 \u2014
\n\u2014
\n\u2014
\n4,500
\n1,500
\n6,000
\nRequired:
\n(i) Use the direct method to re\u2014apportion RST Ltd.\u2019s service department cost to its production departments.
\n(ii) Determine the proper sequence to use in re\u2013apportioning the firm\u2019s service department cost by step\u2013down method.
\n(iii) Use the step\u2013down method to reapportion the firm\u2019s service department cost.
\n7 (0)
\n(b) What are the essential pre\u2013requisites of integrated\u00a0accounting\u00a0system? Discuss. 3 (0)
\n(c) What are the advantages of inter\u2013firm comparison system? Discuss. 4 (0)
\n6. (a) A proforma cost sheet of a Company provides the following particulars:
\nAmount per unit
\n(Rs.)
\nRaw materials cost
\nDirect labour cost
\nOverheads cost
\nTotal cost
\nProfit
\nSelling Price 100
\n37.50
\n75
\n212.50
\n37.50
\n250
\nThe Company keeps raw material in stock, on an average for one month; work\u2013in progress, on an average for one week; and finished goods in stock, on an average for two weeks.
\nThe credit allowed by suppliers is three weeks and company allows four weeks credit to its debtors. The lag in payment of wages is one week and lag in payment of overhead expenses is two weeks.
\nThe Company sells one\u2013fifth of the output against cash and maintains cash\u2013in\u2013hand and at bank put together at Rs.37,500. Required:
\nPrepare a statement showing estimate of Working Capital needed to finance an activity level of 1,30,000 units of production. Assume that production is carried on evenly throughout the year, and wages and overheads accrue similarly. Work\u2013in\u2013progress stock is 80% complete in all respects.<\/p>\n
\n(b) Discuss the conflicts in Profit versus Wealth maximization principle of the Firm. 4 (0)
\n7. (a) A Company had the following Balance Sheet as on March 31, 2006:
\nLiabilities and Equity<\/p>\n
\n(one crore shares of Rs. 10 each)
\nReserves and Surplus
\n15% Debentures
\nCurrent Liabilities Rs. (in crores)<\/p>\n
\n2
\n20
\n8
\n40 Assets<\/p>\n
\nCurrent Assets Rs. (in crores)<\/p>\n
\n15<\/p>\n
\nThe additional information given is as under:
\nFixed Costs per annum (excluding interest)
\nVariable operating costs ratio
\nTotal Assets turnover ratio
\nIncome-tax rate
\nRs. 8 crores
\n65%
\n2.5
\n40%
\n40
\nRequired:
\nCalculate the following and comment:
\n(i)
\n(ii)
\n(iii)
\n(iv) Earnings per share
\nOperating Leverage
\nFinancial Leverage
\nCombined Leverage.
\n8 (0)
\n(b) Discuss the need for social cost benefit analysis. 4 (0)
\n8. (a) Discuss the financial ratios for evaluating company performance on operating efficiency and liquidity position aspects. 4 (0)
\n(b) Company UVW has to make a choice between two identical machines, in terms of Capacity, \u2018A\u2019 and \u2018B\u2019. They have been designed differently, but do exactly the same job.
\nMachine \u2018A\u2019 costs Rs. 7,50,000 and will last for three years. It costs Rs. 2,00,000 per year to run.<\/p>\n
\nPVIF0.09.t 0.9174 0.8417 0.7722
\n8 (0)
\n9. (a) Discuss the dividend\u2013price approach, and earnings price approach to estimate cost of equity capital. 2 (0)
\n(b) From the information contained in Income Statement and Balance Sheet of \u2018A\u2019 Ltd., prepare Cash Flow Statement:
\nIncome Statement for the year ended March 31, 2006
\nRs.
\nNet Sales (A) 2,52,00,000
\nLess:
\nCash Cost of Sales
\nDepreciation
\nSalaries and Wages
\nOperating Expenses
\nProvision for Taxation
\n1,98,00,000
\n6,00,000
\n24,00,000
\n8,00,000
\n8,80,000
\n(B) 2,44,80,000
\nNet Operating Profit (A \u2013 B)
\nNon\u2013recurring Income \u2013 Profits on sale of equipment<\/p>\n
\nProfit and Loss Account balance as on March 31, 2006 7,20,000
\n1,20,000
\n8,40,000
\n15,18,000
\n23,58,000
\n7,20,000
\n16,38,000
\nBalance Sheet as on
\nAssets March 31, 2005
\n(Rs.) March 31, 2006
\n(Rs.)
\nFixed Assets:
\nLand
\nBuildings and Equipment
\nCurrent Assets:
\nCash
\nDebtors
\nStock
\nAdvances
\n4,80,000
\n36,00,000<\/p>\n
\n16,80,000
\n26,40,000
\n78,000
\n90,78,000
\n9,60,000
\n57,60,000<\/p>\n
\n18,60,000
\n9,60,000
\n90,000
\n1,03,50,000
\nBalance Sheet as on
\nLiabilities March 31, 2005
\n(Rs.) March 31, 2006
\n(Rs.)
\nShare Capital
\nSurplus in Profit and Loss Account
\nSundry Creditors
\nOutstanding Expenses
\nIncome\u2013tax payable
\nAccumulated Depreciation
\non Buildings and Equipment 36,00,000
\n15,18,000
\n24,00,000
\n2,40,000
\n1,20,000<\/p>\n
\n90,78,000 44,40,000
\n16,38,000
\n23,40,000
\n4,80,000
\n1,32,000<\/p>\n
\n1,03,50,000
\nThe original cost of equipment sold during the year 2005\u201306 was Rs. 7,20,000.
\n10 (0)<\/p>\n","protected":false},"excerpt":{"rendered":"