AKASH AGARWAL

CLASSES
SUBJECT: COSTING SET:1 MARKS : 25
CMA INTER GROUP 1 TIME: 1 HR

Q.1 In a particular situation, ASA Inc, furnishes the following information; Standard quantity
of materials for producing 1 unit of finished product ‘P’ is 5 kg. The standard price is ₹ 6 per
kg. During a particular period, 500 units of ‘P’ were produced. Actual material consumed was
2700 kg at a cost of ₹16,200. The owner, Subbuji requests his son, Nikkhil, to calculate the
direct material cost variances from the above data. (5M)

Q.2 Suppose that the Mr Arun Singji, the owner of Lotus Inc. is worried about the variances in
the direct material cost in his fountain pen manufacturing unit, Lotus Inc. In the
manufacturing unit he has adopted standard costing system and for a particular month he
extracts following information:

Standard: Material for 70 kg finished products 100kg

Price of material ₹ 1 per kg

Actual: Output 2,10,000 kg.

Material used 2,80,000 kg.
Cost of Materials ₹2,52,000
Mr Arun asks his Cost Accountant to calculate the direct material variances and reports
the same to him. (5 M)

Q.3 Suppose that in a factory, Chemical A, B and C are mixed to manufacture Chemical D.
After elaborate discussion with various stakeholders the following standards for material
cost was designed.

The standard material cost for 100 kg of output, Chemical D, is made up of:
Chemical A 30 kg. @ ₹ 4 per kg
Chemical B 40 kg. @ ₹ 5 per kg
Chemical C 80 kg. @ ₹ 6 per kg
For a particular period 500 kg. of Chemical D was produced from a mix of
Chemical A 140 kg. @ ₹588
Chemical B 220 kg. @ ₹ 1,056
Chemical C 440 kg. @ ₹2,860
How do yield mix and price of factors contribute to the variance in the actual cost per
100kg of chemical D over the standard cost? (10 M)

Akash Agarwal Classes 9545879706

 Q.4 From the following you are required to calculate
(a) Material Cost Variance
(b) Material Price Variance
(c) Material Usage Variance
Quantity of material purchased 3,000 units
Value of material purchased ₹ 9,000
Standard quantity of material required
for one tonne of finished product 25 units
Standard rate of material ₹ 2 per unit
Opening stock of material NIL
Closing stock of material 500 units
Finished production during the period 80 tonnes.
(5 M)

Akash Agarwal Classes 9545879706

Akash Agarwal Classes 9545879706