The Institute of Cost and Works Accountants of India 2008 Certification CWA/ICWA Cost & Management Accounting - Test 4 - Question Paper
Paper-8
COST AND MANAGEMENT ACCOUNTING
Time Allowed: 3 hours Marks: 100
Attempt Question No.1, which is compulsory and carries 20 marks. [ Five marks each for 1 A and 1 B and 10 marks for 1 C] and attempt any five of the remaining, which carry 16 marks each Q1]
A] Match the following correctly to what it relates
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Uniform costing |
Flow of funds |
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Variance analysis |
Continuous physical verification |
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Ratio analysis |
Cost of alternative course of action |
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Relevant cost |
Technique to assist inter firm comparison |
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Perpetual inventory system |
Performance evaluation |
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Management by exception | |
B] State whether the following statements are True [T] or False [F]
I] Standard costing can be introduced in all types of manufacturing industries.
II] Net profit under marginal costing and absorption costing will be the same if no inventory exists.
III] Fixed cost vary with volume rather than time.
IV] Centralized purchasing is always advisable in a multi unit industry.
V] Slow moving material has a high turnover ratio
C] Choose the correct answer from the answers given for each of the following questions. Indicate working briefly wherever necessary
I] A company have a margin of safety of Rs.40 lakhs and earns an annual profit of Rs.10 lakhs. If the fixed cost amount to Rs.20 lakhs, annual sales will be
A] Rs.160 lakhs B] Rs.140 lakhs C] Rs.120 lakhs D] Rs.200 lakhs
II] The current ratio of ABC Ltd is 2:1, while Quick ratio is 1.80:1. If the current liabilities are Rs.40, 000 the value of stock will be,
A] Rs.6400 B] Rs.8000 C] Rs.10, 000 D] Rs.12, 000
III] In a mill, number of employees at the beginning and end of a period were 2486 and 2334 respectively. During the period, 320 workers left the mill while 168 persons joined in service. Labor turnover rate as per Flux method will be,
A] 8.22% B] 9.46% C] 10.12% D] None of the above.
IV] Under Gantts Task and Bonus plan, no bonus is payable to a worker if his efficiency is less than,
A] 50%
B] 662/3%
C] 831/3%
D] 100%
V] Bad debt is an example of,
A] Production overheads
B] Administration overheads
C] Selling overheads
D] Distribution overhead
Q2] Distinguish between the following [Any Four]
I] Prime cost and conversion cost
II] Direct cost and indirect cost
III] Fixed budget and flexible budget
IV] First in first out and Last in first out
V] Time keeping and Time booking
Q3] The New Enterprise Ltd has three departments, P1, P2, P3 and in addition two service departments, S1 and S2. The following figures are extracted from the records of the company.
Rs
Rent and Rates 5,000 General lighting 600
Indirect wages 1,500 Power 1,500
Depreciation of machinery 10,000
Sundries 10,000
The following further details are also available
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Particulars |
Total |
P1 |
P2 |
P3 |
S1 |
S2 | ||||||
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Floor space | ||||||||||||
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(sqm) |
10,000 |
2,000 |
2,500 |
3,000 |
2,000 |
500 | ||||||
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Light Points |
60 |
10 |
15 |
20 |
10 |
5 | ||||||
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Direct Wages (Rs) 10,000 |
3,000 |
2,000 |
3,000 |
1,500 |
500 | |||||||
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H.P.of Machines |
150 |
60 |
30 |
50 |
10 | |||||||
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Value of Machinery | ||||||||||||
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( in 000s of Rs) |
250 |
60 |
80 |
100 |
5 |
5 | ||||||
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Working hours |
6226 |
4028 |
4066 | |||||||||
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Expenses of S1 and |
S2 are allocated as follows | |||||||||||
|
Dept S1 |
20% |
30% |
40% |
Dept S2 |
40% |
20% |
30% |
10% | ||||
What should be the cost of job if the direct materials cost is Rs. 50, Direct labour cost is Rs. 30 and it passes through departments P1, P2 and P3 for 4, 5, and 3 hours respectively?
Q4] A manufacturer purchases 800 units of a certain component p.a. @ Rs.30 per unit from outside supplier. The annual usage is 800 units, order placing and receiving cost is Rs.100 per order and cost of holding one unit of the component for one year is Rs.4. Calculate the Economic Order Quantity by tabular method. Also calculate the number of orders to be placed per year
Q5] Define joint products and by-products. Explain the various bases available for apportionment of joint costs to joint products.
Q6] A factory engaged in manufacturing plastic toys is working at 40% capacity and produces 10000 toys per month. The present cost break up for one toy is as under Material: Rs.100 Labor: Rs.30
Overheads: Rs.50 [60% fixed]
The selling price is Rs.200 per toy. If it is decided to work the factory at 50% capacity, the selling price falls by 3%. At 90% capacity the selling price falls by 5% accompanied by a similar fall in the price of material. You are required to prepare a statement showing profits at 50% and 90% capacity.
Q7] Write short notes on [Any Four]
A] Opportunity costs
B] Perpetual inventory system
C] Escalation clause in contracts
D] Key factor
E] Types of standards.
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Attachment: |
| Earning: Approval pending. |
