INTERMEDIAE EXAMINATION SET - 2

MODEL ANSWERS TERM – DECEMBER 2023

PAPER – 8 SYLLABUS 2022
COST ACCOUNTING
Time Allowed: 3 Hours Full Marks: 100

The figures in the margin on the right side indicate full marks.
Where considered necessary, suitable assumptions may be made and
clearly indicated in the answer.

Section - A (Compulsory)

1. Choose the correct alternative: [15 × 2 = 30]

(i) Which of the following is not a feature of Job Costing?

a. Each job maintains its separate identity throughout the production stage
b. The job is meant for a mass market
c. Production pattern is not repetitive and continuous
d. Production begins only after getting order from the customer

(ii) Cost of Sales = Cost of Production + _______________________.

a. Selling and Distribution Overhead rate per unit
b. Factory Overhead Cost
c. Direct Labour
d. None of the above

(iii) Charging to a cost centre those overheads that result solely for the existence of that cost centre
is known as:
a. Allocation
b. Apportionment
c. Absorption
d. Allotment

(iv) P/V ratio will increase if:

a. There is a decrease in fixed cost
b. There is an increase in fixed cost
c. There is a decrease in selling price per unit.
d. There is a decrease in variable cost per unit.

(v) The following is not treated as a manufacturing overhead:

a. Lubricants
b. Cotton waste
c. Apportioned administration overheads
d. Night shift allowance paid to a factory worker due to general work pressure.

(vi) Which of the following would not be used to estimate standard direct material prices?
a. The availability of bulk purchase discounts
b. Purchase contracts already agreed
c. The forecast movement of prices in the market
d. Performance standards in operation

(vii) The main purposes of accounting of joint products and by-products is to:
a. Determine the replacement cost

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 INTERMEDIAE EXAMINATION SET - 2
MODEL ANSWERS TERM – DECEMBER 2023
PAPER – 8 SYLLABUS 2022
COST ACCOUNTING
b. Determine the opportunity cost
c. Determine profit or loss on each product line
d. None of the above

(viii) A certain process needed standard labour of 24 skilled labour hours and 30 unskilled labour
hours at ` 60 and ` 40 respectively as the standard labour rates. Actually, 20 and 25 labour
hours were used at ` 50 and ` 50 respectively. Then, the labour mix variance will be:
a. Adverse
b. Favourable
c. Zero
d. Favourable for skilled and unfavourable for unskilled

(ix) 1200 units were introduced in a process in which 120 units is the normal loss. If the actual
output is 900 units, then there is:
a. No abnormal gain
b. Abnormal loss of 180 units
c. No abnormal loss
d. Abnormal gain of 180 units

(x) Z Ltd. is planning to sell 1,00,000 units of product A for ` 12.00 per unit. The fixed costs are `
2,80,000. In order to realize a profit of ` 2,00,000, what would the variable costs be?
a. `4,80,000
b. ` 7,20,000
c. ` 9,00,000
d. ` 9,20,000

(xi) A firm has fixed expenses ` 90,000, sales ` 3,00,000 and profit ` 60,000. The P/V ratio of the
firm is:
a. 10%
b. 20%
c. 30%
d. 50%

(xii) When costing loss is ` 5,600, administrative overhead under-absorbed being ` 600, the loss as
per financial accounts should be _______ .
a. ` 5,000
b. ` 5,600
c. ` 6,200
d. None of the above

(xiii) At the economic ordering quantity level, the following is true:

a. The ordering cost is minimum
b. The carrying cost is minimum
c. The ordering cost is equal to the carrying cost
d. The purchase price is minimum

(xiv) A company has to pay a ` 1 per unit royalty to the designer of a product which it manufactures
and sells. The royalty charge would be classified in the company’s accounts as a ____

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 INTERMEDIAE EXAMINATION SET - 2
MODEL ANSWERS TERM – DECEMBER 2023
PAPER – 8 SYLLABUS 2022
COST ACCOUNTING
a. Direct expense
b. Production overhead
c. Administrative overhead
d. Selling overhead.

(xv) If the time saved is less than 50% of the standard time, then the wages under Rowan and
Halsey premium plan on comparison gives:
a. Equal wages under two plans
b. More wages to workers under Halsey Plan than Rowan Plan
c. More wages to workers under Rowan Plan than Halsey Plan
d. None of the above.

Answer:

(i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv)
b a a d d d c c b b d c c a c

Section - B

(Answer any five questions out of seven questions given. Each question carries 14 marks.)

2. (a) MNQ LLP submits the following information on 31st March 2023. Based on the given data,
illustrate and prepare a statement of cost.
Details (`)
Sales for the year 2,75,000
Inventories at the beginning of the year: Finished goods 7,000
Work in Progress 4,000
Purchase of the material for the year 1,10,000
Material inventory: At the beginning of the year 3,000
At the end of the year 4,000
Direct Labour 65,000
Factory overhead: 60% of direct labour cost
Inventories at the end of the year: Finished goods 8,000
Work in Progress 6,000
Other expenses for year:
Selling expenses - 10% of sales
Administrative expense – 5% of sales
[7]

(b) The management of XYZ Ltd is worried about the increasing Labour Turnover in the factory
and before analysing the causes and taking remedial steps; they want to have an idea of the
profit foregone as a result of Labour Turnover during the last year. Last year’s sales amounted
to ₹83,03,300 and the profit / volume ratio was 20%. The total number of actual hours worked
by the direct labour force was 4.45 lakhs. As a result of the delays by the personnel department
in filling vacancies due to Labour Turnover, 1,00,000 potentially productive hours were lost.
The actual direct labour hours included 30,000 hours attributable to training new recruits,
out of which, half of the hours were unproductive. The cost incurred consequent on labour
turnover revealed, on analysis the following: Settlement cost due to leaving: ₹43,820,
recruitment costs: ₹26,740, selection costs: ₹12,750 and training costs: ₹30,490.
Assuming that the potential production lost as a consequence of Labour Turnover could have
been sold at prevailing prices, compute the profit foregone last year on account of Labour
Turnover. [7]

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 INTERMEDIAE EXAMINATION SET - 2
MODEL ANSWERS TERM – DECEMBER 2023
PAPER – 8 SYLLABUS 2022
COST ACCOUNTING

Answer:

(a)

Particulars ₹ ₹
Inventory (RM) at the beginning of the year 3,000
Add: Inventory (RM) during the year 1,10,000
1,13,000
Less: Inventory (RM) at the end of the year (4,000)
Material consumed 1,09,000
Add: Direct Labour 65,000
Prime Cost 1,74,000
Add: Factory Overhead @ 60% of direct labour 39,000
Works Cost 2,13,000
Adjustment for work in progress
Opening WIP 4,000
Less: Closing WIP (6,000) (2,000)
2,11,000
Add: Administrative Overhead5% of Sales i.e. 2,75,000 13,750

Cost of Production 2,24,750

Adjustment for Finished Goods

Opening Stock of Finished Goods 7,000

Less: Closing Stock of Finished Goods (8,000) (1,000)

Cost of goods sold 2,23,750

Add: Selling overhead @10% of Sales i.e. ₹2,75,000 27,500

Cost of Sales 2,51,250

Profit (Balancing figure) 23,750

Sales 2,75,000

(b) Profit foregone = Loss in Contribution + Additional Cost incurred as a result of labour turnover

(i) Actual Productive Hours during last year

= 4,45,000 – 15,000 [i.e. 50% × 30,000 hours]
= 4,30,000 hours

(ii) Sales during last year = ₹83,03,300

(iii) Productive Hours Lost in Current Year = 1,00,000 Hrs.

`83,03,300
∴ Loss in Sales during the current year = ×1,00,000 Hrs.
4,30,000

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 INTERMEDIAE EXAMINATION SET - 2
MODEL ANSWERS TERM – DECEMBER 2023
PAPER – 8 SYLLABUS 2022
COST ACCOUNTING
= `19,31,000

and Loss in Contribution = 20% × ₹19,31,000 = ₹3,86,200

Computation of Profit Foregone during the current year

Amount (₹)

Contribution Lost 3,86,200

Settlement Cost due to leaving 43,820
Recruitment Cost 26,740
Selection Cost 12,750
Training Cost 30,490
Profit Foregone 5,00,000

3. (a) The summary as per primary distribution is as follows:

Production departments A- ` 2,500; B- ` 2,300 & C- ` 1,700
Service departments X–` 700; Y–` 900

Expenses of service departments are distributed in the ratios of:

X department: A- 20%, B- 40%, C- 30% and Y- 10%
Y department: A- 40%, B- 20%, C- 20% and X- 20%

Prepare and show the distribution of service costs among A, B and C under repeated
distribution method. [7]

(b) The net profits of a manufacturing company appeared at ` 64,500 as per financial records for
the year ended 31st December, 2022. The cost books however, showed a net profit of ` 86,460
for the same period. A careful scrutiny of the figures from both the sets of accounts revealed
the following facts.
Particulars (`)
i. Income tax provided in financial books 20,000
ii. Bank Interest (Cr) in financial books 250
iii. Work overhead under recovered 1,550
iv. Depreciation charged in financial records 5,600
v. Depreciation recovered in cost 6,000
vi. Administrative overheads over-recovered 850
vii. Loss due to obsolescence charged in financial accounts 2,800
viii. Interest on investments not included in cost accounts 4,000
ix. Stores adjustments (Credit in financial books) 240
x. Loss due to depreciation in stock value 3,350

Prepare Reconciliation Statement. [7]

Answer:

(a)
Particulars A B C X Y
` ` ` ` `
As per primary distribution 2,400 2,100 1,500 700 900
Service department X (2:4:3:1) 140 280 210 (700) 70

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MODEL ANSWERS TERM – DECEMBER 2023
PAPER – 8 SYLLABUS 2022
COST ACCOUNTING

Service department Y (4:2:2:2) 388 194 194 194 (970)

Service department X (2:4:3:1) 38.8 77.6 58.2 (194) 19.4
Service department Y (4:2:2:2) 7.76 3.88 3.88 3.88 (19.4)
Service department X (2:4:3:1) 0.776 1.552 1.164 (3.88) 0.388
Total 2,975.336 2,657.032 1,967.244 - 0.388

(b)
Statement showing Reconciliation of Profit shown by Cost and Financial Accounts as on 31-12-2021

Particulars ₹ ₹
Profit as per Financial Accounts 64,500
Add: Income tax provided in financial accounts only 20,000
Add: Works overhead under recovered 1,550
Add: Loss due to obsolescence charged in financial accounts only 2,800
Add: Loss due to depreciation in stock value (recorded in financial 3,350 27,700
accounts only)
92,200
Less: Bank interest credited in financial accounts only 250
Less: Over recovery of depreciation in cost accounts (6,000 – 5,600) 400
Less: Administrative Overhead over recovered 850
Less: Interest on investments not included in cost accounts 4,000
Less: Stores adjustments (credit in financial accounts) 240 5,740
Profit as per Cost Accounts 86,460

4. (a) A transport service company is running five buses between two towns, which are 50 kilometers
apart. Seating capacity of each bus is 50 passengers. The following particulars are obtained
from their books for April 2022.

Particulars Amounts
₹
Wage of drivers, conductors and cleaners 2,40,000
Salaries of office staff 1,00,000
Diesel oil and other oil 3,50,000
Repairs and maintenance 80,000
Taxation, insurance etc. 1,60,000
Depreciation 2,60,000
Interest and other expenses 2,00,000
Total 13,90,000
Actually, passengers carried were 75% of seating capacity. All buses ran on all day of the
month. Each bus made one round trip per day. Calculate out the cost per passenger kilo meter.
[7]

(b) A company produces a product 'M' by three distinct processes before it is ready for sale. From
the information given below, work out the selling price of the product if the Management
decides to earn a profit of 20% over its works cost. Prepare the Process A/c for each process.

Particulars Process
A B C
1 Input of raw materials @ ₹40 per kg. (kg) 10,000 - -

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Directorate of Studies, The Institute of Cost Accountants of India
 INTERMEDIAE EXAMINATION SET - 2
MODEL ANSWERS TERM – DECEMBER 2023
PAPER – 8 SYLLABUS 2022
COST ACCOUNTING
2 Normal loss of input 5% 5% 5%
3 Delivered to next process (kg) 9,000 8,000 -
4 Total direct labour cost (₹) 15,000 15,750 13,000
5 Variable overhead (%of direct labour) 150% 120% 100%
6 Fixed overhead (% of direct labour) 250% 180% 200%
7 Finished stock held back (kg) 400 400 -
[7]

Answer:
(a)
Operating Cost Statement for the month of April 2022
Particulars Amounts ` Amounts `
A. Standing Charges
● Wages of drivers, conductors and cleaners. 2,40,000
● Salaries of office staff 1,00,000
● Taxation, insurance etc. 1,60,000
● Interest and other expenses 2,00,000
● Depreciation 2,60,000
● Total standing charges 9,60,000
B. Running and Maintenance Charges
● Repairs and maintenance 80,000
● Diesel oil and other oil 3,50,000
● Total running and maintenance charges 4,30,000

C. Total cost [A+B] 13,90,000

D. Cost per passenger kilometre* `13,90,000 / 5,62,500 passenger kilometers 2.471

Working:
* Passenger kilometers are computed as below:
= Number of buses × Distance in one round trip × Seating capacity available × Percentage of
seating capacity actually used × Number of days in a month × No. of trips
= 5 buses × 50 kilometers × 2 × 50 passengers × 75% × 30 days = 5,62,500 passenger-kms

(b)
Process A Account

Particulars Kg. ₹ Particulars Kg. ₹

To Input of Raw 10,000 4,00,000 By Normal loss 500 ---
Material
To Direct Labour 15,000 By Abnormal loss 100 5,000
To Variable 22,500 By Transfer to Process B 9,000 4,50,000
Overheads
To Fixed Overheads 37,500 By Closing Stock 400 20,000
10,000 4,75,000 10,000 4,75,000
Cost per kg = ₹4,75,000/9,500kg = ₹50

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 INTERMEDIAE EXAMINATION SET - 2
MODEL ANSWERS TERM – DECEMBER 2023
PAPER – 8 SYLLABUS 2022
COST ACCOUNTING
Process B Account

Particulars Kg. ₹ Particulars Kg. ₹

To Transfer From 9,000 4,50,000 By Normal loss 450 ---
Process A
To Direct Labour 15,750 By Abnormal loss 150 9,000
To Variable Overheads 18,900 By Transfer To Process C 8,000 4,80,000
To Fixed Overheads 28,350 By Closing Stock 400 24,000
9,000 5,13,000 9,000 5,13,000
Cost per kg = ₹5,13,000/8,550 kg = ₹60

Process C Account

Particulars Kg. ₹ Particulars Kg. ₹

To Transfer From 8,000 4,80,000 By Normal loss 400 ---
Process B
To Direct Labour 13,000 By Transfer to Finished 7,600 5,32,000
Stock A/c
To Variable Overheads 13,000
To Fixed Overheads 26,000
8,000 5,32,000 8,000 5,32,000
Cost per kg. = ₹ 5,32,000/7,600 kg = ₹70

Selling Price = ₹ 70 × 120/100 = ₹ 84 per kg. (20% above Works Cost)

5. (a) CBA Ltd., manufactures certain grades of products known as M, B1 and B2. In course of
manufacture of product M (main product), by-products - B1 and B2 emerge. The joint
expenses of manufacture amount to ₹ 2,37,600.

All the three products are processed further after separation and sold as per details given
below:
Product – M
(By Products)
Product – B1 Product – B2
Sales (₹) 2,00,000 1,20,000 80,000
Cost incurred after separation (₹) 20,000 15,000 10,000
Profit as percentage on sales 25 20 15

Total fixed selling expenses are 10% of total cost of sales which are apportioned to the three
products in the ratio of 20:40:40.

Required:
(i) Prepare a statement showing the apportionment of joint costs to the products (M, B1
and B2)
(ii) If the product B1 (by product) is not subject to further processing and is sold at the
point of separation, for which there is a market at ₹1,00,440 without incurring any
selling expenses, would you advise its disposal at this stage? Show the workings. [7]

(b) A manufacturing concern which has adopted standard costing furnishes the following
information:
Standard
Material for 70 kg of finished product of 100 kg
Price of materials @ ₹ 1 per kg

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Directorate of Studies, The Institute of Cost Accountants of India
 INTERMEDIAE EXAMINATION SET - 2
MODEL ANSWERS TERM – DECEMBER 2023
PAPER – 8 SYLLABUS 2022
COST ACCOUNTING

Actual
Output 2,10,000 kg.
Material used 2,80,000 kg.
Cost of materials ₹ 2,52,000
Calculate:
a. Material Cost Variance
b. Material Price Variance
c. Material Usage Variance [7]

Answer:
(a) Statement of Apportionment of Joint Cost:

Particulars Total Product By-Products

M B B
₹ ₹ 1₹ ₹2
Sales 4,00,000 2,00,000 1,20,000 80,000
Less: Profit 86,000 50,000 24,000 12,000
Cost of Sales 3,14,000 1,50,000 96,000 68,000
Less: Selling & Distribution Expenses
(10% of Rs. 3,14,000 in the Ratio 20:40:40) 31,400 6,280 12,560 12,560
Cost of Production 2,82,600 1,43,720 83,440 55,440
Less: After separation Cost 45,000 20,000 15,000 10,000
Joint Cost 2,37,600 1,23,720 68,440 45,440

By product B1 earns ₹24,000 as profit after separation

Profit before separation = ₹1,00,440 – ₹68,440 = ₹32,000
If By product B1 is sold before further processing, then the profit of the by product may be increased
by ₹ (32,000 - 24,000) = ₹8,000.
Hence it is advisable to sell the product B1 at the point of separation.

(b) Computation of Required Values

(1) SQSP (₹) (2) AQSP (₹) (3) AQAP (₹)

[210,000 x 100/70] x 1 280,000 x 1
3,00,000 280,000 252,000

Computation of Required Variances:

(i) Material Usage Variance = (1) –(2) = ₹20,000 (F)
(ii) Material Price Variance = (2) –(3) = ₹28,000(F)
(iii) Material Cost Variance = (1)–(3) = ₹48,000(F)

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 INTERMEDIAE EXAMINATION SET - 2
MODEL ANSWERS TERM – DECEMBER 2023
PAPER – 8 SYLLABUS 2022
COST ACCOUNTING
6. The Dynamic company has three divisions. Each of which makes a different product. The budgeted
data for the coming year are as follows:

Particulars Division A (₹) Division B (₹) Division C (₹)

Sales 1,12,000 56,000 84,000
Direct Material 14,000 7,000 14,000
Direct Labour 5,600 7,000 22,400
Direct Expenses 14,000 7,000 28,000
Fixed Cost 28,000 14,000 28,000
Total Cost 61,600 35,000 92,400

The management is considering to close down the Division C. There is no possibility of reducing fixed
cost. Analyse whether or not Division C should be closed down. [14]

Answer:

Statement showing computation of profit before closing down Division C

Division A Division B Division C Total

Sl No. Particulars
(₹) (₹) (₹) (₹)
i. Sales 1,12,000 56,000 84,000 2,52,000
ii. Variable Cost Direct
Material Direct 14,000 7,000 14,000 35,000
Labour Direct 5,600 7,000 22,400 35,000
Expenses 14,000 7,000 28,000 49,000
iii. Total Variable Cost 33,600 21,000 64,400 1,19,000
iv. Contribution (i. – iii.) 78,400 35,000 19,600 1,33,000

Division A Division B Division C Total

Sl No. Particulars
(₹) (₹) (₹) (₹)
v. Fixed Cost 28,000 14,000 28,000 70,000
vi. Profit (iv. – v) 63,000

Statement showing computation of profit closing down Division C

Division A Division B Total
Sl No. Particulars
(₹) (₹) (₹)
i. Sales 1,12,000 56,000 1,68,000
ii. Variable Cost Direct
Material Direct 14,000 7,000 21,000
Labour Direct 5,600 7,000 12,600
Expenses 14,000 7,000 21,000
iii. Total Variable Cost 33,600 21,000 54,600
iv. Contribution (i. – iii.) 78,400 35,000 1,13,400
v. Fixed Cost 70,000

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MODEL ANSWERS TERM – DECEMBER 2023
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COST ACCOUNTING

vi. Profit (iv. – v.) 43,400

If Division C is closed down then there is a reduction in the overall profit by ₹ 19,600 (63,000 – 43,400).
Since, there is no possibility of reducing the fixed cost of Division C, so as long as if there is a contribution
of ₹ 1 from division C, it should not be closed down.

7. (a) You are required to prepare a Selling Overhead Budget from the estimates given below:
Amount (₹)
Advertisement (Fixed) 1,000
Salaries of the Sales Department (Fixed) 1,000
Expenses of the Sales Department (Fixed) 750
Salesmen’s Remuneration (Fixed) 3,000
Salesmen’s Commission @ 1% on sales excluding Agent’s Sales
Carriage Outwards: Estimated @ 5% on sales
Agent’s Commission: 7⅟2 % on Agent’s sales

The sales during the period were estimated as follows:

(i) ₹ 80,000 including Agent’s Sales ₹ 8,000
(ii) ₹ 90,000 including Agent’s Sales ₹ 10,000
(iii) ₹ 1,00,000 including Agent’s Sales ₹ 10,500 [7]

(b) Describe the disclosures to be made as per CAS 3. [7]

Answer:

(a) Selling Overhead Budget

Particulars ₹ ₹ ₹
Sales 80,000 90,000 1,00,000
A. Fixed Overhead 1,000 1,000 1,000
Advertisement 1,000 1,000 1,000
Salaries of Sales Dept. 750 750 750
Expenses of Sales Dept. 3,000 3,000 3,000
Salesmen Remuneration
Total (A) 5,750 5,750 5,750
B. Variable Overhead
Salesmen Commission 720 800 895
[(90,000 – 10,000) × [(1,00,000 – 10,500)
[(80,000 – 8,000) × 1%] × 1%]
Carriage Outward 1%] 4,500 5,000
4,000 [9,00,000 × 5%] [1,00,000 × 5%]
[80,000 × 5%]
Agent’s Commission 600 [8,000 × 7.5%] 750 [10,000 × 7.5%] 788 [10,500 × 7.5%]
Total (B) 5,320 6,050 6,683
Grand Total (A + B) 11,070 11,800 12,433

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COST ACCOUNTING
(b) Disclosures to be made as per CAS 3:
The cost statements shall disclose the following:
1. The basis of assignment of Production or Operation Overheads to the cost objects
2. Production or Operation Overheads incurred in foreign exchange
3. Production or Operation Overheads relating to resources received from or supplied to related parties
4. Any Subsidy, Grant, Incentive or any amount of similar nature received or receivable reduced
from Production or Operation Overheads
5. Credits or recoveries relating to the Production or Operation Overheads
6. Any abnormal cost not forming part of the Production or Operation Overheads
7. Any unabsorbed Production or Operation Overheads
Disclosures shall be made only where material, significant and quantifiable.

8. Write short notes on the following: [4+5+5=14]

(a) Importance and objectives of Cost Sheet

(b) Requisites of good Material Control System
(c) Items to be ‘excluded’ for the purpose of measuring Employee Cost.

Answer:

(a) Importance and objectives of cost sheet:

(i) Determining cost: The main objective of the cost sheet is to obtain an accurate product cost. Both
the total cost and cost per unit of a product is calculated with accuracy.
(ii) Fixing selling price: The cost sheet furnishes the production cost which helps fixation of selling
price.
(iii) Cost comparison: It helps the management compare the current cost of a product with a previous
per unit cost for the same product. Comparing the costs helps management take corrective
measures if costs have increased.
(iv) Cost control: The cost sheet is an important document for a manufacturing unit, as it helps in
controlling production costs. Using an estimated cost sheet aids in monitoring labour, material
and overhead costs at each step of production.
(v) Decision-making: Some of the most important decisions management makes are based on the cost
sheet. Whenever a business needs to produce or buy a component, or quote prices for its goods
on a tender, managers refer to the cost sheet.
(vi) Inter-firm and intra-firm comparison.

(b) Requisites of good Material Control System

(i) Coordination and cooperation between the various departments concerned viz. purchase,
receiving, inspection,
(ii) storage, issues and accounts and cost departments.
(iii) Use of standard forms and documents in all the stages of control.
(iv) Classification, coordination, standardization and simplification of materials.
(v) Planning of requirement of material.
(vi) Efficient purchase organisation.
(vii) Budgetary control of purchases.
(viii) Planned storage of materials, physical control as well as efficient book control through satisfactory
storage
(ix) control procedures, forms and documents.
(x) Appropriate records to control issues and utilization of stores in production.
(xi) Efficient system of internal audit and internal checks.
(xii) System of reporting to management regarding material purchase, storage and utilization.

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COST ACCOUNTING

(c) The following items are to be ‘excluded’ for the purpose of measuring employee cost:

i. Remuneration paid to non-executive director.

ii. Cost of idle time [Hours spent as idle time × hourly rate]
iii. Variance in employee payments / costs, due to abnormal reasons (if standard costing system is
followed).
iv. Any abnormal payment to an employee – which are material and quantifiable.
v. Penalties, damages paid to statutory authorities or third parties.
vi. Recoveries from employees towards benefits provided – this should be adjusted / reduced
from the employee cost.
vii. Cost related to labour turnover – recruitment cost, training cost and etc.
viii. Unamortized amount related to discontinued operations.

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