Institute of Chartered Financial Analysts of India (ICFAI) University 2008 C.A Accounts -PCC--08_ _ 4 COST ACCOUNTING AND FINANCIAL MANAGEMENT.doc - Question Paper

PAPER - four : COST ACCOUNTING AND FINANCIAL MANAGEMENT

All ques. are compulsory.
Working notes should form part of the ans.

ques. 1

ans any 5 of the following:

(i) The annual carrying cost of material ‘X’ is Rs. 3.6 per unit and its total carrying cost is
Rs. 9,000 per annum. What would be the Economic order volume for material ‘X’, if
there is no safety stock of material X ?
(ii) A machinery was purchased from a manufacturer who claimed that his machine could
produce 36.5 tonnes in a year consisting of 365 days. Holidays, break-down, etc., were
normally allowed in the factory for 65 days. Sales were expected to be 25 tonnes during
the year and the plant truly produced 25.2 tonnes during the year. You are needed
to state the subsequent figures:
(a) rated capacity
(b) practical capacity
(c) normal capacity
(d) true capacity
(iii) State the unit of cost for the subsequent industries
(a) Transport
(b) Power
(c) Hotel
(d) Hospital
(iv) State the method of costing that would be most suitable for
(a) Oil refinery
(b) Bicycle manufacturing
(c) Interior decoration
(d) Airlines company
(v) Differentiate ranging from “scrap” and ”defectives” and how they are treated in cost
accounting.
(vi) discuss briefly the concept of ‘flexible budget’. (5 ? two = 10 Marks)

ques. 2

As of 31st March, 2008, the subsequent balances existed in a firm’s cost ledger, which is
maintained separately on a double entry basis:
Debit Credit
Rs. Rs.
Stores Ledger Control A/c 3,00,000 ?
Work-in-progress Control A/c 1,50,000 ?
Finished Goods Control A/c 2,50,000 ?
Manufacturing Overhead Control A/c 15,000
Cost Ledger Control A/c 6,85,000
7,00,000 7,00,000
During the next quarter, the subsequent items arose:
Rs.
Finished Product (at cost) 2,25,000
Manufacturing overhead incurred 85,000
Raw material purchased 1,25,000
Factory wages 40,000
Indirect labour 20,000
Cost of sales 1,75,000
Materials issued to production 1,35,000
Sales returned (at cost) 9,000
Materials returned to suppliers 13,000
Manufacturing overhead charged to production 85,000
You are needed to prepare the Cost Ledger Control A/c, Stores Ledger Control A/c, Work-inprogress
Control A/c, Finished Stock Ledger Control A/c, Manufacturing Overhead Control
A/c, Wages Control A/c, Cost of Sales A/c and the Trial Balance at the end of the quarter (15 Marks)

ques. 3

(a) ABC Ltd. can produce 4,00,000 units of a product per annum at 100% capacity. The
variable production costs are Rs. 40 per unit and the variable selling expenses are Rs.

Earning:   Approval pending.