DATE: 11-11-21 CODE: NI-3124 MARKS:100

BATCH: INTERMEDIATE NOV.21 GR I

CA INTERMEDIATE
COST & MANAGEMENT ACCOUNTING
Syllabus:FULL
[Q-1. IS COMPULSORY. ANSWER ANY FOUR OUT OF FIVE QUESTION.]
Q-1.(a) A Factory produces two products, ‘A’ and ‘B’ from a single process. The joint processing costs
during a particular month are :
Direct Material ‘30,000
Direct Labour ‘ 9,600
Variable Overheads ‘ 12,000
Fixed Overheads ‘ 32,000
Sales: A- 100 units@ ‘ 600 per unit; B – 120 units @ ‘ 200 per unit.
I. Apportion joints costs on the basis of:
(i) Physical Quantity of each product.
(ii) Contribution Margin method, and
II. Determine Profit or Loss under both the methods.
(5 Marks)
Q-1.(b) When volume is 4,000 units; average cost is ‘ 3.75 per unit. When volume is 5,000 units, average cost is ‘ 3.50 per
unit. The Break-Even point is 6,000 units. Calculate: (i) Variable Cost per unit (ii) Fixed Cost and (iii) Profit Volume
Ratio.
(5 Marks)
Q-1.(c) A Factory is engaged in the production of chemical Bomex and in the course of its manufacture a by-product
Cromex is produced which after further processing has a commercial value. For the month of April 2019 the
following are the summarised cost data:
Joint Expenses(‘) Separate Expenses(‘)
Bomex Cromex
Materials 1,00,000 6,000 4,000
Labour 50,000 20,000 18,000
Overheads 30,000 10,000 6,000
Selling Price per unit 100 40
Estimated profit per unit on sale of Cromex 5
Number of units produced 2,000 2,000
units units
The factory uses net realisable value method for apportionment of joint cost to by-products.
You are required to prepare statements showing :
(i) Joint cost allocable to Cromex
(ii) Product wise and overall profitability of the factory for April 2019.
(5 Marks)
Q-1.(d) M/s Zaina Private Limited has purchased a machine costing ‘ 29,14,800 and it is expected to have a salvage value
of ‘ 1,50,000 at the end of its effective life of 15 years.
Ordinarily the machine is expected to run for 4,500 hours per annum but it is estimated that 300 hours per annum
will be lost for normal repair & maintenance. The other details in respect of the machine are as follows :
(i) Repair & Maintenance during the whole life of the machine are expected to be ‘ 5,40,000.
(ii) Insurance premium (per annum) 2% of the cost of the machine.
(iii) Oil and Lubricants required for operating the machine (per annum) ‘ 87,384.
(iv) Power consumptions: 10 units per hour @ ‘ 7 per unit. No power consumption during repair and maintenance. ·
(v) Salary to operator per month ‘ 24,000. The operator devotes one third of his time to the machine.
You are required to calculate comprehensive machine hour rate.
(5 Marks)
Q-2.(a) A hotel is being run in a Hill station with 200 single rooms. The hotel offers concessional rates during six off-
season months in a year.
During this period, half of the full room rent is charged. The management’s profit margin is targeted at 20% of the
room rent. The following are the cost estimates and other details for th e year ending 31st March ,2019:
(i) Occupancy during the season is 80% while in the off-season it is 40%.
(ii) Total investment in the hotel is ‘ 300 lakhs of which 80% relates to Buildings and thebalance to Furniture and other
Equipment.
(iii) Room attendants are paid ‘ 15 per room per day on the basis of occupancy of rooms in a month.
(iv) Expenses:
• Staff salary (excluding that of room attendants) ‘ 8,00,000
• Repairs to Buildings ‘ 3,00,000
• Laundry Charges ‘ 1,40,000
• Interior Charges ‘ 2,50,000
• Miscellaneous Expenses ‘ 2,00,200
(v) Annual Depreciation is to be provided on Buildings @ 5% and 15% on Furniture and otherEquipments on straight
line method.
(vi) Monthly lighting charges are ‘ 110, except in four months in winter when it is ‘ 30 per room and this cost is on the
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 basis of full occupancy for a month.
You are required to workout the room rent chargeable per day both during the season and the off-season months
using the foregoing information. (Assume a month to be of 30 days and winter season to be considered as part of
off-season).
(10 Marks)
Q-2.(b) XYZ a manufacturing firm, has revealed following information for September ,2019:
1st September (‘) 30th September(‘)
Raw Materials 2,42,000 2,92,000
Works-in-progress 2,00,000 5,00,000
The firm incurred following expenses for a targeted production of 1,00,000 units during the month :
(‘)
Consumable Stores and spares of factory 3,50,000
Research and development cost for process improvements 2,50,000
Quality control cost 2,00,000
Packing cost (secondary) per unit of goods sold 2
Lease rent of production asset 2,00,000
Administrative Expenses (General) 2,24,000
Selling and distribution Expenses 4,13,000
Finished goods (opening) Nil
Finished goods (closing) 5000 units
Defective output which is 4% of targeted production, realizes ‘ 61 per unit.
Closing stock is valued at cost of production (excluding administrative expenses)
Cost of goods sold, excluding administrative expenses amounts to ‘ 78,26,000.
Direct employees cost is 1/2 of the cost of material consumed.
Selling price of the output is ‘ 110 per unit.
You are required to :
(i) Calculate the Value of material purchased
(ii) Prepare cost sheet showing the profit earned by the firm.
(10 Marks)
Q-3.(a) PJ Ltd manufactures hockey sticks. It sells the products at ‘ 500 each and makes a profit of ‘125 on each stick. The
Company is producing 5,000 sticks annually by using 50% of its
machinery capacity.The cost of each stick is as under:
Direct Material ‘ 150
Direct Wages ‘ 50
Works Overhead ‘ 125 (50% fixed)
Selling Expenses ‘ 50 (25% variable)
The anticipation for the next year is that cost will go up as under:
Fixed Charges 10%
Direct Wages 20%
Direct Material There will not be any change in selling price.
There is an additional order for 2,000 sticks in the next year. 5%
Calculate the lowest price that can be quoted so that the Company can earn the same profit as it has earned in the
current year?
(10 Marks)
Q-3.(b) The standard cost of a chemical mixture is as follows:60% of Material A @ ‘ 50 per kg40% Material B @ ‘ 60 per kg
A standard loss of 25% on output is expected in production. The cost records for a period has shown the following
usage.
540 kg of Material A @ ‘ 60 per kg
260 kg of Material B @ ‘ 50 per kg
The quantity processed was 680 kilograms of good product.
From the above given information
Calculate:
(i) Material Cost Variance
(ii) Material Price Variance
(iii) Material Usage Variance
(iv) Material Mix Variance
(v) Material Yield Variance.
(10 Marks)
Q-4.(a) KT Ltd. produces a product EMM which passes through two processes before it is completed and transferred to
finished stock. The following data relate to May 2019:
Particulars Process Finished stock
A(‘) B(‘) (‘)
Opening Stock 5,000 5,500 10,000
Direct Materials 9,000 9,500
Direct Wages 5,000 6,000
Factory Overheads 4,600 2,030
Closing Stock 2,000 2,490 5,000

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 Inter-process profit included in opening stock 1,000 4,000
Output of Process A is transferred to Process B at 25% profit on the transfer price and
output of Process B is transferred to finished stock at 20% profit on the transfer price.
Stock in process is valued at prime cost. Finished stock is valued at the price at which it is received from Process
B. Sales during the period are ‘ 75,000.
Prepare the Process cost accounts and Finished stock account showing the profit element at each stage.
(10 Marks)
Q-4.(b) MNO Ltd. manufactures two types of equipment A and B and absorbs overheads on the basis of direct labour
hours. The budgeted overheads and direct labour hours for the month of March 2019 are ‘ 15,00,000 and 25,000
hours respectively. The information about the company’s products is as follows:
Equipment
A B
Budgeted Production Volume 3,200 units 3,850 units
Direct Material Cost ‘ 350 per unit ‘ 400 per unit
Direct Labour Cost
A: 3 hours @ ‘ 120 per hour ‘ 360
B: 4 hours @ ‘ 120 per hour ‘ 480
Overheads of ‘ 15,00,000 can be identified with the following three major activities:
Order Processing: ‘ 3,00,000
Machine Processing: ‘ 10,00,000
Product Inspection: ‘ 2,00,000
These activities are driven by the number of orders processed, machine hours worked and inspection hours
respectively. The data relevant to these activities is as follows:
Orders processed Machine hours worked Inspection hours
A 400 22,500 5,000
B 200 27,500 15,000
Total 600 50,000 20,000
Required:
(i) Prepare a statement showing the manufacturing cost per unit of each product usingthe absorption costing method
assuming the budgeted manufacturing volume isattained.
(ii) Determine cost driver rates and prepare a statement showing the manufacturing cost per unit of each product
using activity based costing, assuming the budgeted manufacturing volume is attained.
(iii) MNO Ltd.’s selling prices are based heavily on cost. By using direct labour hours as an application base, calculate
the amount of cost distortion (under costed or over costed) for each equipment.
(10 Marks)
Q-5.(a) Following details are provided by M/s ZIA Private Limited for the quarter ending 30 September, 2018:
(i) Direct expenses ` 1,80,000
(ii) Direct wages being 175% of factory overheads ` 2,57,250
(iii) Cost of goods sold ` 18,75,000
(iv) Selling & distribution overheads ` 60,000
(v) Sales ` 22,10,000
(vi) Administration overheads are 10% of factory overheads
Stock details as per Stock Register:
Particulars 30.06.2018 30.09.2018
Raw material 2,45,600 2,08,000
Work-in-progress 1,70,800 1,90,000
Finished goods 3,10,000 2,75,000
You are required to prepare a cost sheet showing:
(i) Raw material consumed
(ii) Prime cost
(iii) Factory cost
(iv) Cost of goods sold
(v) Cost of sales and profit
(10 Marks)
Q-5.(b) An electronic gadget manufacturer has prepared sales budget for the next few months. In this respect, following
figures are available:
Months Electronic gadgets' sales
January 5000 units
February 6000 units
March 7000 units
April 7500 units
May 8000 units
To manufacture an electronic gadget, a standard cost of ` 1,500 is incurred and it is sold through dealers at an
uniform price of ` 2,000 per gadget to customers. Dealers are given a discount of 15% on selling price.
Apart from other materials, two units of batteries are required to manufacture a gadget.
The company wants to hold stock of batteries at the end of each month to cover 30% of next month's production
and to hold stock of manufactured gadgets to cover 25% of the next month's sale. 3250 units of batteries and 1200

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 units of manufactured gadgets were in stock on 1st January.
Required:
(i) Prepare production budget (in units) for the month of January, February, March and April.
(ii) Prepare purchase budget for batteries (in units) for the month of January, February and March and calculate profit
for the quarter ending on March.
(10 Marks)
Q-6.(a) Define Inventory Control and give its objectives.List down the basis to be adopted for Inventory Control.
(5 Marks)
Q-6.(b) Define Zero Base Budgeting and mention its various stages.
(5 Marks)
Q-6.(c) What are the cases when a flexible budget is found suitable?
(5 Marks)
Q-6.(d) Explain integrated accounting system and state its advantages.
(5 Marks)

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