The Institute of Chartered Financial Analysts of India University 2011 C.A Chartered Accountant Chartered Accountancy -Pcc - Mock Test Series 1 - Question Paper

Direct materials: Rs.
2.5 units of X at Rs. four per unit 8.00
3 units of Y at Rs. three per unit 9.00
15 units of Z at Re. one per unit 15.00
32.00
Direct labour three hours @ Rs. eight per hour 24.00
Total standard prime cost 56.00
The company manufactured and sold 6,000 units of the product during the year
2006.
Direct material costs were as follows:
12,500 units of X at Rs. 4.40 per unit.
18,000 units of Y at Rs. 2.80 per unit.
88,500 units of Z at Rs. 1.20 per unit.
The company worked 17,500 direct labour hours during the year 2006. For 2,500
of these hours the company paid at Rs. 12 per hour while for the remaining hours
the wages were paid at the standard rate.
calculate material price, usage variances, labour rate, and efficiency variances.
Part B :FINANCIAL MANAGEMENT
All ques. are compulsory.
Working notes should form part of the ans.
ques. 1
ans the following:
(i) discuss the concept of Profit Maximisation.
(ii) explain the concept of Debt Securitisation.
(iii) How is Price Earning Ratio calculated? What is its significance?
(iv) explain the term Indian Depository Receipts (IDRs).
(v) discuss replaced Internal Rate of Return. (5 × two = 10 Marks)
ques. 2
The subsequent figures of Royalroads Limited are presented as under:
(Rs.)
Earnings before interest and tax 23,00,000
Less: Debenture interest @ 18% 80,000
Long Term Loan interest @ 11% 2,20,000 3,00,000
20,00,000
Less: Income Tax 10,00,000
Earnings after tax 10,00,000
No. of equity shares of Rs. 10 every 5,00,000
EPS Rs. 2
Market price of share Rs. 20
P/E ratio 10
The company has undistributed reserves and surplus of Rs. 20 lakhs. It is in need of Rs. 30 lakhs
to pay off debentures and modernise its plants. It seeks your advice on the subsequent option
modes of raising finance.
option one - Raising entire amount as term loan from banks @ 12%.
option two - Raising part of the funds by problem of 1,00,000 shares of Rs. 20 every
and the rest by term loan at 12%.
The company expects to improve its rate of return by 2% as a outcome of modernisation, but P/E ratio is
likely to go down to eight if the entire amount is raised as term loan.
(i) Advise Royalroads Limited on the financial plan to be opted.
(ii) If it is presumed that there will be no change in the P/E ratio if either of the 2 options is

Earning:   Approval pending.