<\/p>\n
This Paper has 23 answerable questions with 0 answered.<\/p>\n
Maximum Marks : 100 2 20 19,688 3 6 6 5 2 10 8,775 3 30 Corporate sales Required : The transactions for the year ended March 31, 2003 were as given below : 10 (0) 2001 2000 Loan Funds 1,121 \u2013 10,071<\/p>\n 245<\/p>\n 931 259 Investments 6,667 2,709 3,544<\/p>\n 288<\/p>\n 5,747 2,540 Profit and Loss Account 2001 2000 Expenditure : Interest<\/p>\n Profit Before Tax 419<\/p>\n 7<\/p>\n 15,179 412<\/p>\n 164 21,844 450 10,996 6 371 (a) Compute and analyse the return on capital employed (ROCE) in a Du\u2013Pont control chart framework Required :<\/p>\n (i) Compute the incremental cash flows of the replacement decision. CA PE II Question Papers Group II \u00a0Cost\u00a0Accounting\u00a0and Financial Management Nov 2003 This Paper has 23 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 English except in the cases of candidates who have opted for … 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\/24604"}],"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=24604"}],"version-history":[{"count":0,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/posts\/24604\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/media?parent=24604"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/categories?post=24604"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.kopykitab.com\/blog\/wp-json\/wp\/v2\/tags?post=24604"}],"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 English except 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 Question numbers 7, 8 and 9.
\nWorking notes should form part of\u00a0the answer.
\nMarks
\n1. (a) Discuss two types of Costs which are associated with labour turnover. 3 (0)
\n(b) Discuss the purpose of Cost Audit, and circumstances under which a Cost Audit is desirable. 3 (0)
\n(c) Alpha Limited has decided to analyse the profitability of its five new customers. It buys bottled water at Rs. 90 per case and sells to retail customers at a list price of Rs. 108 per case. The data pertaining to five customers are :
\nCustomers
\nA B C D E
\nCases sold
\nList Selling Price
\nActual Selling Price
\nNumber of Purchase orders
\nNumber of customer visits
\nNumber of Deliveries
\nKilometres traveled
\nPer delivery
\nNumber of expedited 4,680
\nRs. 108
\nRs. 108
\n15<\/p>\n
\n10<\/p>\n
\nRs. 108
\nRs. 106.20
\n25<\/p>\n
\n30<\/p>\n
\n1,36,800
\nRs.108
\nRs. 99
\n30<\/p>\n
\n60<\/p>\n
\n71,550
\nRs. 108
\nRs. 104.40
\n25<\/p>\n
\n40<\/p>\n
\nRs. 108
\nRs. 97.20<\/p>\n
\n20<\/p>\n
\ndeliveries 0 0 0 0 1
\nIts five activities and their cost drivers are :
\nActivity Cost Driver Rate
\nOrder taking
\nCustomer visits
\nDeliveries
\nProduct handling Rs. 750 per purchase order
\nRs. 600 per customer visit
\nRs. 5.75 per delivery Km traveled
\nRs. 3.75 per case sold
\nExpedited deliveries Rs. 2,250 per expedited delivery
\nRequired :
\n(i) Compute the customer\u2013level operating income of each of five retail customers now being examined (A, B, C, D and E). Comment on the results.
\n(ii) What insights are gained by reporting both the list selling price and the actual selling price for each customer?
\n(iii) What factors Alpha Limited should consider in deciding whether to drop one or more of five customers?
\n12 (0)
\n2. (a) Write short notes on any three of the following : 6
\n(i) Re\u2013order quantity (0)
\n(ii) Re\u2013order level (0)
\n(iii) Maximum stock level (0)
\n(iv) Minimum stock level. (0)
\n(b) A fire occurred in the factory premises on October 31, 2003. The\u00a0accounting\u00a0records have been destroyed. Certain\u00a0accounting\u00a0records were kept in another building. They reveal the following for the period September 1, 2003 to October 31, 2003 :
\n(i)
\n(ii)
\n(iii) Direct materials purchased
\nWork in process inventory, 1.9.2003
\nDirect materials inventory, 1.9.2003 Rs. 2,50,000
\nRs. 40,000
\nRs. 20,000
\n(iv)
\n(v)
\n(vi)
\n(vii)
\n(viii)
\n(ix)
\n(x) Finished goods inventory, 1.9.2003
\nIndirect manufacturing costs
\nSales revenues
\nDirect manufacturing labour
\nPrime costs
\nGross margin percentage based on revenues
\nCost of Goods available for sale Rs. 37,750
\n40% of conversion cost
\nRs. 7,50,000
\nRs. 2,22,250
\n3,97,750
\n30%
\nRs. 5,55,775
\nThe loss is fully covered by insurance. The insurance company wants to know the historical cost of the inventories as basis for negotiating a settlement, although the settlement is actually to e based on replacement cost, not historical cost. Required :
\n(i) Finished goods inventory, 31.10.2003
\n(ii) Work\u2013in\u2013process inventory, 31.10.2003
\n(iii) Direct materials inventory, 31.10.2003
\n8 (0)
\n3. (a) e\u2013books is an online book retailer. The Company has four departments. The two sales departments ae Corporate Sales and Consumer Sales. The two support\u2013departments are Administrative (Human resources,\u00a0Accounting), and Information systems. Each of the sales departments conducts merchandising and\u00a0marketing operations\u00a0independently.
\nThe following data are available for October, 2003 :
\nDepartments Revenues Number of
\nEmployees Processing
\nTime used
\n(in minutes)
\nCorporate Sales
\nConsumer Sales
\nAdministrative
\nInformation systems Rs. 16,67,750
\nRs. 8,33,875
\n\u2014
\n\u2014 42
\n28
\n14
\n21 2,400
\n2,000
\n400
\n1,400
\nCost incurred in each of four departments for October, 2003 are as follows :<\/p>\n
\nConsumers sales
\nAdministrative
\nInformation systems Rs.
\nRs.
\nRs.
\nRs. 12,97,751
\n6,36,818
\n94,510
\n3,04,720
\nThe company uses number of employees as a basis to allocate Administrative costs and processing time as a basis to allocate Information systems costs.<\/p>\n
\n(i) Allocate the support department costs to the sales departments using the direct method.
\n(ii) Rank\u00a0the support departments based on percentage of their services rendered to other support departments. Use this ranking to allocate support costs based on the step\u2013down allocation method.
\n(iii) How could you have ranked the support departments differently?
\n(iv) Allocate the support department costs to two sales departments using the reciprocal allocation method.
\n10 (0)
\n(b) Dsicuss the\u00a0accounting\u00a0treatment of spoilage and defectives in Cost\u00a0Accounting. 4 (0)
\n4. (a) Discuss the process of estimating profit\/loss on incomplete contracts. 4 (0)
\n(b) BPR Limited keeps books on integrated\u00a0accounting\u00a0system. The following balances appear in the books as on April 1, 2002 :
\nDr. (Rs.) Cr. (Rs.)
\nStores Control A\/c
\nWork-in-progress A\/c
\nFinished Goods A\/c
\nBank\u00a0A\/c
\nCreditors A\/c 40,950
\n38,675
\n52,325
\n\u2014
\n\u2014 \u2014
\n\u2014
\n\u2014
\n22,750
\n18,200
\nDr. (Rs.) Cr. (Rs.)
\nFixed Assets A\/c
\nDebtors A\/c
\nShare Capital A\/c
\nProvision for Depreciation A\/c
\nProvision for Doubtful Debts A\/c
\nFactory Overheads Outstanding A\/c
\nPre-paid Administration overheads A\/c
\nProfit and Loss A\/c 1,47,875
\n27,300
\n\u2014
\n\u2014
\n\u2014
\n\u2014
\n9,975
\n\u2014 \u2014
\n\u2014
\n1,82,000
\n11,375
\n3,725
\n6,250
\n\u2014
\n72,800
\n3,17,100 3,17,100<\/p>\n
\nRs. Rs.
\nDirect Wages
\nIndirect Wages 1,97,925
\n11,375 \u2014
\n2,09,300
\nPurchase of materials (on credit)
\nMaterials issued to production
\nMaterials issued for repairs
\nGoods finished during the year (at cost)
\nCredit Sales
\nCost of Goods sold
\nProduction overheads absorbed
\nProduction overheads paid during the year
\nAdministration overheads paid during the year
\nSelling overheads incurred
\nPayment to Creditors
\nPayment received from Debtors
\nDepreciation of Machinery
\nAdministration overheads outstanding at the end of year
\nProvision for doubtful debts at the end of the year 2,27,500
\n2,50,250
\n4,550
\n4,89,125
\n6,82,500
\n5,00,500
\n1,09,200
\n91,000
\n7,775
\n27,300
\n31,850
\n2,29,775
\n6,59,750
\n14,789
\n2,225
\nRequired :
\nWrite up accounts in the integrated ledger of BPR Limited and prepare a Trial\u00a0Balance.<\/p>\n
\n5. (a) From the following information for the month of October 2003, prepare Process III Cost accounts :
\nOpening WIP in Process III
\nTransfer from process II
\nTransferred to Warehouse
\nClosing WIP of process III
\nUnits scrapped
\nDirect material added in process III
\nDirect wages
\nProduction overheads : 1,800 units at Rs. 27,000
\n: 47,700 units at Rs. 5,36,625
\n: 43,200 units
\n: 4,500 units
\n: 1,800 units
\n: Rs. 1,77,840
\n: Rs. 87,840
\n: Rs. 43,920
\nDegree\u00a0of completion :
\nOpening Stock closing Stock Scrap
\nMaterial
\nLabour
\nOverheads 80%
\n60%
\n60% 70%
\n50%
\n50% 100%
\n70%
\n70%
\nThe normal loss in the process was 5% of the production and scrap was sold @ Rs. 6.75 per unit. 10 (0)
\n(b) Discuss the different stages in the Activity\u2013based Costing. 4 (0)
\n6. The\u00a0Financial statements\u00a0of Excel AMP Graphics Limited are as under the sheet :
\nBalance\u00a0SheetAs at 31 December, 2001<\/p>\n
\n(Rs. in crores)
\nSources of Funds :
\nshareholder\u2019s Funds
\nShare Capital
\nReserves & Surplus<\/p>\n
\nSecured Loans
\nFinance lease obligations
\nUnsecured loans<\/p>\n
\n8,950<\/p>\n
\n74
\n171<\/p>\n
\n7,999
\n8,930<\/p>\n
\n\u2013
\n115
\n374
\n10,316 9,304
\nApplications of Funds :
\nFixed Assets
\nGross Block
\nLess : Depreciation
\nNet Block
\nCapital Work\u2013in\u2013progress<\/p>\n
\nCurrent Assets, Loans & Advances :
\nInventories
\nSundry debtors
\nCash &\u00a0Bank\u00a0Balances
\nLoans & Advances<\/p>\n
\n3,150
\n3,517
\n27<\/p>\n
\n9,468
\n3,206
\n2,043<\/p>\n
\n2,561
\n3,186
\n28
\n3,214
\n222<\/p>\n
\n9,428
\n662
\n1,712
\n17,426 14,342
\n2001 2000
\n(Rs. in crores)
\nLess : current liabilities & Provisions
\nCurrent liabilities
\nProvisions
\n10,109
\n513
\n7,902
\n572
\n10,622 8,474
\nNet Current Assets
\nNet Deferred Tax Liability 6,804
\n(320) 5,868
\n\u2013
\n10,316 9,304<\/p>\n
\nFor the year ended 31 December, 2001<\/p>\n
\n(Rs. in crores)
\nIncome :
\nSales & Services
\nOther Income<\/p>\n
\nCost of Materials
\nPersonnel Expenses
\nOther Expenses
\nDepreciation
\nLess : Transfer from
\nrevaluation reserve<\/p>\n
\nProvision for Tax
\nCurrent Tax
\nDeferred Tax<\/p>\n
\n2,543
\n3,546<\/p>\n
\n23,436
\n320
\n23,756<\/p>\n
\n1,192<\/p>\n
\n(6)
\n17,849
\n306
\n18,155<\/p>\n
\n2,293
\n2,815
\n383<\/p>\n
\n377
\n88
\n16,569
\n1,586<\/p>\n
\n\u2013
\nProfit after Tax 1,468 1,215
\nRequired :<\/p>\n
\n(b) Compute and analyse the average inventory holding period and average collection period.
\n(c) Compute and analyse the return on equity (ROE) by bringing out clearly the impact of financial leverage.
\n16 (0)
\n7.
\nBeta Company Limited is considering replacement of its existing machine by anew machine, which is expected to cost Rs. 2,64,000. The new machine will have a life of years and will yield annual cash revenues of Rs. 5,68,750 and incur annual cash expenses of Rs. 2,95,750. The estimated salvage value of the new machine is Rs. 18,200. The existing machine has a book value of Rs. 91,000 and can be sold for Rs. 45,500 today.
\nThe existing machine has a remaining useful life of five years. The cash revenues will be Rs. 4,55,000 and associated cash expenses will be 3,18,500. the existing machine will have a salvage value of Rs. 4,550, at the end of five years.
\nThe Beta Company is in 35% tax\u2013bracket, and write off depreciation at 25% on written\u2013down value method.
\nThe Beta Company has a target debt to value ratio of 15%. The Company in the past has raised debt at 11% and it can raise fresh debt at 10.5%.
\nBeta Company plans to follow dividend discount model to estimate the cost of equity capital. The Company plans to pay a dividend of Rs. 2 per share in the next year. The current market price of Company\u2019s equity share is Rs. 20 per equity share. The dividend per equity share of the Company is expected to grow at 8% p.a.<\/p>\n
\n(ii) Compute the weighted average cost of Capital of the Company.
\n(iii) Find out the net present value of the replacement decision.
\n(iv) Estimate the discounted payback period of the replacement decision.
\n(v) Should the Company replace the existing machine? Advise.
\n12 (0)
\n8. (a) A firm has a current sales of Rs. 2,56,48,750. The firm has unutilized capacity. In order to boost its sales, it is considering the relaxation in its credit policy. The proposed terms of credit will be 60 days credit against the present policy of 45 days. As a result, the bad debts will increase from 1.5% to 2% of sales. The firm\u2019s sales are expected to increase by 10%. The variable operating costs are 72% of the sales. The firm\u2019s Corporate tax rate is 35%, and it requires an after\u2013tax return of 15% on its investment. Should the firm change its credit period? 6 (0)
\n(b) Discuss the \u2018Profit maximisation\u2019 and \u2018Wealth maximisation\u2019 objective of a firm. 6 (0)
\n9. (a) Write short notes on any two of the following : (0)
\n(i) Factoring (0)
\n(ii) Commercial paper (0)
\n(iii) Recent changes in Maximum permissible Bank Finance (MPBF). (0)
\n(b) Discuss the major consideration in Capital structure planning. 6 (0)<\/p>\n","protected":false},"excerpt":{"rendered":"