Calicut University 2006 Certification CWA/ICWA Institute Of Cost and Works Accountants Of India, - Question Paper

4. (a) elaborate equivalent units of production? Mention 2 principal methods of calculating equivalent units.
(2+2)

(b) SBL LTD. furnishes you the subsequent info relating to process-B for the month of April, 2006: +12
(i) Opening work-in-progress: NIL.
(ii) Units introduced—10,000 units @ Rs. five per unit.
(iii) Expenses debited to the process-B:
Processing Materials — Rs. 24,600; Direct Labour — Rs. 10,400; Overheads — Rs. 5,000.
(iv) 8,000 units of finished output were transferred to the next process during the month.
(v) Normal Loss in process — 10% of input.
(vi) Closing work-in progress — 800 units.
Degree of Completion: Material — 100%; Labour & Overheads — 50%.
(vii) Degree of Completion of Abnormal Loss: Material — 100%; Labour & Overheads — 80%.
(viii) Scrap realisation: Normal Loss — @ Rs. two per unit; Abnormal Loss—@ Rs. four per unit.
You are needed to prepare:
(1) Statement of Equivalent production.
(2) Statement of Cost of every element.
(3) Statement of valuation.
(4) Process-B Account.
(5) Abnormal Loss Account.

5. (a) What is Sales Value quantity Variance? 2+14
(b) The Summarised budget and true working outcomes of GEMCO LTD. for the year 2005-06 are provided beneath.
Budget true
Details Products Products
A B C A B C
Rs. Rs. Rs. Rs. Rs. Rs.
Selling Price per Unit 12 16 25 13 16 27
Cost per Unit nine 11 20 10 12 21
Sales (units) 40,000 32,000 24,000 42,000 40,000 22,000

Analyse the outcomes and compute the following:
(i) Budgeted profit, true profit and variance in profit.
(ii) Analysis of the variance in profit into the
following.
(1) Price variance.
(2) Cost variance.
(3) Sales margin quantity variance.
(4) Sales margin mix variance.
(5) Sales margin volume variance.

6. NOVINA INDUSTRIES LTD. has received an export order for its only product that would require the use of half of the factory's
current capacity of 400,000 units per annum. The factory is currently operating at 60% level to meet the demand of its domestic market. 16
As against current price of Rs. 6.00 per unit, the export order offers @ 4.50 per unit, which is less than the cost of production, the details of which are provided below:

Direct Materials Re. 2.50 per unit
Direct Labour Re. 1.00 per unit
Direct Expenses Re. 0.50 per unit
Fixed Overheads Re. 1.00 per unit
The condition of the export is that it has either to be accepted in full or totally rejected. The subsequent option proposals are
available for decision:
A. Accept the order and keep domestic sales unfulfilled to the extent of the excess demand for the identical.
B. Increase factory capacity by installing a few balancing machinery and equipments and also by working extra time to meet the balance of the needed capacity. This will increase fixed overheads by Rs. 20,000 annually and the additional cost of Overtime will work out to Rs. 40,000 per annum.
C. Out-source the production of additional requirement by supplying direct materials and paying Conversion charges of Rs. 1.75 per unit to small converter, and engaging 1 Supervisor at a cost of Rs. 3,000 per month to look after quality, packing and despatch.
D. Reject the order and remain with the domestic market only.
As a Management Accountant, you are needed to make comparative analysis of different proposals and suggest which of the option proposals is the most attractive to Novina Industries Ltd.

7. The subsequent accounting info and financial ratios of ZENITH LTD., pertain to the year ended 31.3.2006:


Paid up Capital 2,00,000
Plant and Machinery 5,00,000
Total Sales (Annual) 2,000,000
Sales Return 20% sales
Annual Credit Sales 80% of net sales
Gross Profit Margin 25%
Current Ratio 2
Inventory Turnover Ratio (Cost of Sales) 4
Fixed Assets Turnover (Net Sales) 2
avg. Collection Period 73 Days
Bank Credit to Trade Credit 2
Cash to Inventory 1:15
Total Debt to Current Liabilities 3
You are needed to prepare Balance Sheet of Zenith Ltd. as on 31.3.2006 showing the details of workings. Ignore Taxation.

8. Write short notes on any 4 of the following: 16
(a) Economic Order volume (EOQ).
(b) Principal Budget factor.
(c) Profit - quantity Chart.
(d) Value analysis.
(e) Accounting of idle time.

Earning:   Approval pending.