The Institute of Cost and Works Accountants of India 2009 CWA Inter Stage I Cost and Management Accounting - Question Paper
June 2009: The Institute of Cost and Works Accountants CWA Inter Stage I: Cost and Management Accounting: June 2009 University ques. paper
CWA ICWA Inter Stage I: Cost and Management Accounting - June 2009
15(CMA)
Revised Syllabus
Time Allowed : 3 Hours Full Marks : 100
The figures in the margin on the right side indicate full marks.
Answer Question No. 1 carrying 20 marks and any five from the rest each carrying 16 marks.
Marks
1x5
1
(a)
State if each of the following statements is T (= true) or F (= false):
A blanket overhead rate is a single overhead rate computed for the entire factory.
(i)
(ii)
(iii)
(iv)
(v)
A production order is in order received from the customer.
Process accounts should always be presented in conventional T forms.
Opportunity costs are out-of-packet costs.
Marginal costing is basically relevant for short-term decision making.
Each of the following sums gives four possible answers. Find the correct answer. Show working in support of your chosen answer:
2x5=
10
(b)
Fixed cost of operating Plant A is Rs.30,000, while the variable cost is Rs.4 per unit. For Plant B of the same firm the variable cost per unit of identical product is Rs.3 but its fixed cost amounts to Rs.40,000 for the same period. At what production level will the total cost of production be same for both the plants?
(i)
(A) 8,000 units
(B) 10,000 units
(C) 11,000 units
(D) 12,000 units
A hospitals records show that the costs of carrying out health checks in the last five accounting periods have been as follows:
Total cost
No. of patients seen
Period
1
2
3
4
5
(Rs)
17,125
17,800
18,650
17,980
18,360
650
940
1,260
990
1,150
Using the high-low method and ignoring inflation, the estimated cost of carrying out health checks on 850 patients in period 6 is
(A) Rs.17,515
(B) Rs.17,570
(C) Rs.17,625
(D) Rs.17,680
Budgeted variable overheads of a factory was Rs. 12,000 per month and budgeted production was 3,000 units. During a month, actual production was 3,200 units and variable overhead expenses amounted to Rs.12,500. Variable production overhead variance for the month was
(iii)
(A) Rs.800 favorable
(B) Rs.500 favorable
(C) Rs.300 adverse
(D) Rs.300 favorable.
A K Chemicals produces high quality plastic sheeting in a continuous manufacturing operation. All materials are input at the beginning of the process. Conversion costs are incurred evenly throughout the process. A quality control inspection occurs 75% through the manufacturing process, when some units are separated out as inferior quality. The following data are available for May:
Materials costs Rs. 90,000
Conversion costs Rs. 70,200
Units started 40,000
Units completed 36,000
(iv) There is no opening or closing work - in - progress. Past
experience indicates that approximately 7.5% of the units started are found to be defective on inspection by quality control.
The cost of abnormal loss for May is then
(A) Rs.3,600
(B) Rs.4,050
(C) Rs. 4,680
(D) Rs. 10,800
A limited has fixed costs of Rs.6,00,000 per annum. It manufactures a single product which it sells for Rs.200 per unit.
Its contribution to sale ratio is 40%.
A Limiteds break-even point in units is
(A) 7,500
(B) 8,000
(C) 3,000
(D) 1,500
From the following two groups of words match one capital letter with one
(c)
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1x5 | ||||||||||||||||||||||||||||||||||||||||||||
The following particulars are extracted from the records of ABC Ltd:
Per unit
2
(a)
10
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Product A Product B | ||||||||||||||||||||||||||||||||||||||||
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Direct wages per hour is Rs.5 Comment on the profitability of each product (both use the same raw material)when-
(1) Total sales potential in units is limited.
(2) Total sales potential in value is limited.
(3) Raw material is in short supply.
(4) Production capacity (in terms of machine hours) is the limiting factor.
Assume that only one constraint is effective at a time when other factors do not pose a problem.
(b) Assuming raw material as the key factor, availability of which is 10,000 6
kg, and maximum sales potential of each product being 3,500 units, find the product mix which will yield maximum profit for ABC Ltd.
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The Trading and Profit & Loss Account of a company for the year ended 31st December, 2008 is as follows: | ||||||||||||||||||||||||||||||||||||||||||||
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8+8 | |||||||||||||||||||||||||||||||||||||||||||
The company manufactures a standard unit. In the cost accounts, factory expenses have been charged to the production at 20% on prime cost; administration expenses at Rs.6 per unit on total units produced and selling and distribution expenses at Rs.8 per unit sold.
3
You are required to prepare
(a) the costing Profit and Loss Account of the company and (b) the reconciliation statement for reconciling the difference in the net profits as shown by the financial Profit and Loss Account and the costing Profit and Loss Account.
(a) Distinguish between operating costing and operation costing.
4
4
A transport company maintains a fleet of buses as follows:
No. of buses Carrying capacity
10 60 passengers each
5 40 passengers each
Each bus makes 4 trips (i.e. both upward and downward journeys in one trip) in a day, covering a distance of 5 kilometres in each one way journey in each trip. On an average, 75% of the seats are occupied in each trip. Assuming that the company operates its fleet 25 days in a month, ascertain operating cost passenger-kilometre, taking into account the following further information:
5
(a)
8
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Discuss the essential feature of a successful wage payment plan. |
The employees in a plastic toy making unit are paid wages at the rate of Rs.7 per hour for an eight hour shift. Each employee produces 5 units per hour. The overhead in this department is Rs.10 per direct labour hour. Employees and management are considering the following piece rate wage proposal:
Upto 45 units per day of 8 hours, Rs.1.30 per unit From 46 units to 50 units Rs.1.60 per unit
From 51 units to 55 units Rs.1.65 per unit
(b)
8
From 56 units to 60 units Rs.1.70 per unit
Above 60 units Rs.1.75 per unit
The working hours are restricted to 8 hours per day. Overhead rate does not change with increased production.
Prepare a statement indicating advantages to the employees as well as the management at production levels of 40, 45, 55 and 60 units.
The capital of Akshoy Ltd. is as follows:
Rs.
9% Preference shares, Rs.10 each 4,00,000
Equity shares of Rs.10 each 10,00,000
14,00,000
Additional information:
4+4+
4+4
Profit (after tax at 33%) Rs.3,60,000
Depreciation Rs.80,000
Equity dividend paid 40 per cent
Market price of equity shares Rs.80
You are required to compute the following, showing the necessary workings:
(a) Dividend yield on the equity shares,
(c) Earnings per share,
(d) Price - earnings ratio.
The summarized profit and loss statement of Shivaji Ltd. for the last year is as
follows:
(In Rs. 000)
Sales (50,000 units) 1,000
Direct materials 350
Direct wages 200
Fixed production overhead 200
Variable production overhead 50
Administration overhead 180
Selling and distribution overhead 120 1,100
7 Profit/(loss) Rs.(100)
5+3+
8
You are required as management assistant, to evaluate the following alternative proposals to improve the situation, and to comment briefly on each:
( . Pay salesmen a commission of 10% of sales and thus increase sales to achieve
(a) break - even point.
... Reduce selling price by 10%, which it is estimated would increase sales volume
(b) by 30%.
(c) Increase sales by additional advertising of Rs.3,00,000, with an increased selling price of 20% , setting a profit margin of 10%.
4x4
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Write short notes on any four of the following: | ||||||||||||
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Attachment: |
| Earning: Approval pending. |
