The Institute of Cost and Works Accountants of India 2010 CWA Inter Group II - Revalidation Test - Cost and Management Accounting -8 - Question Paper

Year 2010: The Institute of Cost and Works Accountants - CWA Inter Group II: Cost and Management Accounting Paper-8: 2010 University ques. paper

REVISED SYLLABUS 2008

REVALIDATION TEST PAPER INTERMEDIATE Group II

THE INSTITUTE OF COST AND WORKS ACCOUNTANTS OF INDIA

DIRECTORATE OF STUDIES

Copyright Reserved by the Institute of Cost and Works Accountants of India

COST AND MANAGEMENT ACCOUNTING

REVALIDATION TEST PAPER-RV/08/CMA/2010

Time Allowed-3 Hours    Full Marks-100

Answer Question No I which is compulsory and any five from the rest

Q.1)

(a)    State whether the following statements are True (T) or False (F)-Give reasons:

(i)    ABC analysis is made on the basis of unit prices of materials.

(ii)    Cost of tube used for packing tooth paste is indirect material cost.

(iii)    Value analysis helps in cost control.

(iv)    No distinction is made between direct and indirect materials in Process Costing.

(v)    Cost industry makes use of output costing.    10

(b)    Match the following correctly:

Merit rating    Pure finance not included in cost

Flexible budget    Profitability rate

Differential cost analysis    Evaluation of a job

Debenture interest    Liquidity

Angle of incidence    Considers costs by behavior

Decision taking

Budgetary control

Basis for remunerating employees

5

(c)    Choose the correct answer from the answers given for each of the following questions. Indicate workings briefly:

(i) A worker has a time rate of Rs. 15/hr. He makes 720 units of a component (standard time:5 minutes/unit in a week of 48 hours. His total wages including Rowan bonus for the week is

(A) Rs. 792 (B) Rs. 820 (C) Rs. 840 (D) Rs. 864.

(ii)    A television company manufactures several components in batches. The following data relates to on component:

Annual demand:32,000 units; Set-up cost per batch:Rs. 120.

Annual rate of interest: 12%; Cost of production per unit: Rs. 16.

The Economic Batch Quantity is_units

(A) 2,500 (B) 4,000 (C) 3,000 (D) 2,000

(iii)    A company has annual turnover of Rs. 200 lakhs and an average C/S ratio of 40%. It makes 10% profit to sales before charging depreciation and interest which amount to Rs.10 lakhs and Rs. 15 lakhs respectively The annual fi xed cost of the company is

(A) Rs. 85 lakhs (B) Rs. 75 lakhs (C) Rs. 60 lakhs (D) Rs. 55 lakhs.

(iv)    Sales for two consecutive months of a Company are Rs. 3,80,000 and Rs.4,20,000. The Companys net profits for these months amounted to Rs. 24,000 and Rs. 40,000 respectively. There is no change in C/S ratio or fixed costs. The C/S ratio of the Company is_.

(A) 1/3 (B) 2/5 (C) 1/4 (D) None of these.

(v)    In activity based costing, costs are accumulated by

(A) Cost objects (B) Cost benefi t analysis

(C) Cost Pool (D) None of the above

10

2(a) What is idle time? Explain the causes for idle time.    5

(b)A worker takes 6 hours to complete a job under a scheme of payment by results. The standard time allowed for the job is 9 hours. His wage rate is Rs.15 per hour. Material cost of the job is Rs.120 and the overheads are recovered at 15% of the total direct wages. Calculate the factory cost of job under A] Rowan and B] Halsey system of incentive system.

10

3(a) Distinguish between allocation and apportionment of overheads.    5

(b)A machine was purchased on 1st January, 2007 for Rs. 5 lakhs. The total cost of all machinery inclusive of the new machine was Rs. 75 lakhs. The following further particulars were available.

Expected life of the machine - 10 years

Scrap value at the end of the life - Rs. 5,000

Repairs and maintenance for the machine during the year Rs. 2,000

Expected number of working hours of the machine per year 4,000

Insurance premium annually for all machines Rs. 4,500

Power consumption for the machine per hour @ Rs. 5 @ per unit = 25 units

Area occupied by the machine - 100 sq feet

Area occupied by other machines - 1,500 sq. feet

Rent per month of the department Rs. 800

Lighting charges for 20 points for the whole department out of which three points are for the new machine - Rs.120 per month

Compute the machine hour rate for the machine.    10

4(a) A factory has two production processes. Normal loss in each process is 10% and scrapped units sell for Re. 0.50 each from process 1 and Rs. 3 each from process 2. Relevant information for costing purposes relating to period 5 are as follows :

Direct materials added :    Process 1    Process 2

Actual production overhead

Workout cost per unit of output and losses.

(b) State the fundamental principles of Process Costing.

5(a) New India Engineering Co. Ltd., produces three components A, B and C. The following particulars are provided :

PRODUCT

	A	B	C
	Rs.	Rs.	Rs.
Per Unit
Sale Price	60	55	50
Direct Material	20	18	15
Direct Labour	15	14	12
Variable overhead expenditure	13	13	17
Fixed Cost is Rs. 1,00,000 per year.
Estimated Sales (in No. of Units)	2000	2000	2000

Due to break-down of one of the machines, the capacity is limited to 12,000 machine hours only and this is not sufficient to meet the total sales demand.

You are required to work out

(i) what will be most profitable product mix that should be produced, and ( ii) the total contribution from the revised product mix.    10

(b) Define Operating Costing and mention at least five activities where it is applicable.

5

Q6(a) State the distinguishing features of standard cost.    5

(b) The following information was obtained from the records of a manufacturing unit using standard costing system :

Particulars

Production Working days Fixed overheads Variable overheads Calculate :

(a)    Variable overhead variance;

(b)    Fixed overhead expenditure variance;

(c)    Fixed overhead volume variance;

(d)    Fixed overhead efficiency variance;

(e) Fixed overhead calandar variance.    10

X Ltd. manufactures Product A, which yields two by-products B and C. The actual joint expenses of manufacture for a period were Rs.8, 000.

It was estimated that the profi ts on each product as a percentage of sales would be 30%, 25% and 15% respectively. Subsequent expenses were as follows:

Particulars    Product A Product B Product C

Materials Rs.100 Rs.75 Rs.25 Direct wages 200 125 50 Overheads 150 125 75 Total 450 325 150 Sales Rs. 6,000 Rs. 4,000 Rs. 2,500

Prepare a statement showing the apportionment of the joint expenses of manufacture over the different products. Also presume that selling expenses are apportioned over the products as a percentage to sales.    10

(b) Define by product and joint products.What is the difference between them? Give examples.    5

8. Write short notes on any three from the following    3*5

(a)    Cost Plus Contract

(b)    Equivalent Production

(c)    Flexible Budget

(d)    Cost Driver

(e)    Performance Budgeting

6

Attachment: the-institute-of-cost-and-works-accountants-of-india-2010--6766-1.pdf

Earning:   Approval pending.