Inter CA May 2024 (24 Test) Cost & Management Accounting PDF

QUESTION PAPER (Central Line) BATCH – INTER CA MAY 24 (24 Test) MARKS- 50 SUBJECT – COST & MANAGEMENT ACCOUNTING...

QUESTION PAPER (Central Line) BATCH – INTER CA MAY 24 (24 Test) MARKS- 50 SUBJECT – COST & MANAGEMENT ACCOUNTING UNIT TEST 1 Q.1 is Compulsory Attempt any 4 Questions from Q.2 to Q.6 Q.1 (a) Cool-Wind Ltd. manufactures fans, which are sold at Rs. 400 per piece. The cost of sale is composed of 40% direct material, 30% wages and 30% Factory overhead. An increase in material price by 25% and in wage rate by 10% is expected in the forthcoming year; as a result of which the profit at current selling price may dwindle by 39% of present profit. With the above information, You are required to (a) prepare a statement showing current and future cost and profit at present selling price, and (b) determine the future selling price, if the present rate of profit is to be maintained. (5 Marks) Q.1 (b) In a factory, a machine is considered to work for 208 hours in a month. It includes maintenance time of 8 hours and set up time of 20 hours. The expense data relating to the machine are as under: - Cost of the machine is Rs. 5,00,000. Life 10 years. Estimated scrap value at the end of life is Rs. 20,000 - Repairs and maintenance per annum Rs. 60,480 - Consumable stores per annum Rs. 47,520 - Rent of building per annum (The machine under reference occupies 1/6 of the area) Rs. 72,000 - Supervisor’s salary per month (Common To three machines) Rs. 6,000 - Wages of operator per month per machine Rs. 2,500 - General lighting charges per month allocated to the machine Rs. 1,000 - Power 25 units per hour at Rs. 2 per unit Power is required for productive purposes only. Set up time, though productive, does not require power. The Supervisor and Operator are permanent. Repairs and maintenance and consumable stores vary with the running of the Machine. Required: Calculate a two-tier machine hour rate for (a) set up time, and (b) running time. (5 Marks) Q.2 A company is making a study of the relative profitability of the two products - A and B. In addition to direct costs, indirect selling and distribution costs to be allocated between the two products are as under: Particulars Amount in (Rs.) Insurance Charges for Inventory (Finished) 78,000 Storage Costs 1,40,000 Packing and Forwarding Charges 7,20,000 Salesmen Salaries 8,50,000 Invoicing Costs 4,50,000 Other details are: Particulars Product A Product B Selling Price per unit ( Rs. ) 500 1,000 Cost per unit (Exclusive of indirect Selling and Distribution Costs) ( 300 600 Rs. ) 10,000 8,000 Annual Sales in units 1,000 800 Average Inventory (units) 2,500 2,000 Number of Invoices One unit of product A requires a storage space twice as much as product B. The cost to pack and forward one unit is the same for both the products. Salesmen are paid salary plus commission @ 5% on sales and equal amount of efforts are put worth on the sales of each of the products. Required: (i) Set up a schedule showing the apportionment of the indirect selling and distribution costs between the two products. (ii) Prepare the statement showing the relative profitability of the two products. (10 Marks) Q.3 Bank of Surat operated for years under the assumption that profitability can be increased by increasing Rupee volume. But that has not been the case. Cost analysis has revealed the following: Activity Activity Cost (Rs. ) Activity Driver Activity Capacity Providing ATM Service 1,00,000 No. of Transactions 2,00,000 Computer Processing 10,00,000 No. of Transactions 25,00,000 Issuing Statements 8,00,000 No. of Statements 5.00. 000 Customer Inquiries 3,60,000 Telephone Minutes 6.00. 000 The following annual information on three product was also made available: Activity Driver Checking Personal Loans Gold Visa Accounts Units of Product 30,000 5,000 10,000 ATM Transactions 1,80,000 0 20,000 Computer Transactions 20,00,000 2,00,000 3,00,000 Number of Statements 3,00,000 50,000 1,50,000 Telephone Minutes 3,50,000 90,000 1,60,000 Required: (i) Calculate rates for each activity. (ii) Using the rates computed in requirement (i) Calculate the cost of each product. (10 Marks) Q.4 The managing director of a small manufacturing concern consults you as to the minimum price at which he can sell the output of one of the departments of the company if he expects to earn the same percentage of profit on cost to be earned during the next year, as he had earned in the previous year. The following is the data for the previous year: Particulars Amount in Particulars Amount in ( Rs. ) ( Rs. ) Production and Sales (100 units) 39,000 Works Overheads 7,000 Materials 13,000 Office Overheads 2,800 Direct Labour 7,000 Selling Overheads 3,200 Direct Charges 1,000 Profit 5,000 You ascertain that 40% of the works overheads fluctuate directly with production and 70% of the selling overheads fluctuate with sales. It is anticipated that the department would produce 500 units per annum and that direct labour charges per unit will be reduced by 20% while fixed works overhead charges will increase by Rs. 3.000. Office overheads and fixed selling overheads charges are expected to show an increase of 25% but otherwise no changes are anticipated. (10 Marks) Q.5 Sunmoon Ltd. produces 2,00,000 : 30,000; 25,000; 20,000 and 75,000 units of its five products A, B, C, D and E respectively in a manufacturing process and sells them at Rs. 17, Rs. 13, Rs. 8, Rs. 10 and Rs. 14 per unit. Except product D remaining products can be further processed and then can be sold at Rs. 25, Rs. 17, Rs. 12 and Rs. 20 per unit in case of A, B, C and E respectively. Raw material costs Rs. 35,90,000 and other manufacturing expenses cost Rs. 5,47,000 in the manufacturing process which are absorbed on the products on the basis of their 'Net realisable value'. The further processing costs of A, B, C and E are Rs. 12,50,000; Rs. 1,50,000; Rs. 50,000 and Rs. 1,50,000 respectively. Fixed costs are Rs. 4,73,000. In respect of the coming year, you are required to prepare: (a) Statement showing income forecast of the company assuming that none of its products are to be further processed. (b) Statement showing income forecast of the company assuming that products A, B, C and E are to be processed further. (c) Can you suggest any other production plan whereby the company can maximize the profits? If yes, then submit a statement showing income forecast arising out of adoption of that plan. (10 Marks) Q.6 Star Ltd. manufactures chemical solutions for the food processing industry. The manufacturing takes place in a number of processes and the company uses a FIFO process costing system to value work-in-process A finished goods. At the end of the last month, a fire occurred in the factory A destroyed some of the paper files containing records of the process operations for the month. Star Ltd. needs your help to prepare the process accounts for the month during which the fire occurred. You have been able to gather some information about the month's operating activities but some of the information could not be retrieved due to the damage. The following information was salvaged: Opening work-in-process at the beginning of the month was 800 litres, 70% complete for labour and 60% complete for overheads. Opening work-in-process was valued at Rs. 26,640. Closing work-in-process at the end of the month was 160 litres, 30% complete for labour and 20% complete for overheads. Normal loss is 10% of current input and total loss during the month was 1,800 litres which was partly due to the fire damage. Output sent to finished goods warehouse was 4,200 litres. Loss has a scrap value of Rs. 15 per litre. All raw materials are added at the commencement of the process The cost per equivalent unit (litre) is Rs. 39 for the month made up as follows: Particulars ( Rs. ) Raw Material 23 Labour 7 Overheads 9 39 Required: (a) Calculate the quantity (in litres) of raw material inputs during the month. (b) Calculate the quantity (in litres) of normal loss expected from the process and the quantity (in litres) of accidental loss experienced in the month. (c) Calculate the values of raw material, labour and overheads added to the process during the month. (d) Prepare the process account for the month. (10 Marks) ALL THE BEST