IBP Superior Qualification

Winter 2020
The Institute of Bankers Pakistan

Time Allowed: 3 Hours Maximum Marks:100

Management Accounting for Financial Services
Date: March 31, 2021 JAIBP (Stage III) Roll No:

Instructions:
i. Attempt ALL questions;
ii. Answers must be neat, relevant and brief;
iii. In marking the question paper, the examiners take into account clarity of exposition, logic of arguments,
presentation and language;
iv. Read the instructions printed inside the top cover of answer script CAREFULLY before attempting the
paper;
v. DO NOT write your Name, Access No or Roll no. etc. anywhere inside the answer script(s);
vi. Candidates are advised not to mark any of the objective answer on the question paper, otherwise their
paper will be cancelled;
vii. Question Paper must be returned to invigilator before leaving the examination hall.

SECTION B: SUBJECTIVE

All the questions from Section B are compulsory. (55 Marks)

Q1. Dr. Muhammad Ali has set a small private clinic. He charges Rs. 500 per patient for consultation. While
he estimates variable expenses to be Rs. 180 per patient. It includes nurses’ time for measuring Blood
pressure, taking temperature, etc. The clinic fixed expenses per year Rs 2,000,000.
Required:
A. Compute Contribution Margin Ratio. (02 Marks)
B. Compute Break-even point in number of patients and in consultation fees. (04 Marks)
C. Compute the number of patients that must visit the clinic in order to earn a targeted profit of
Rs. 1,800,000 per year. (02 Marks)

Q2. All win Engineering limited presents the following costs at various activity levels of its 4th quarter of the
year:
Month Activity units Total Cost in Rs.
Oct, 2020 12,500 212,526
Nov,2020 14,000 226,402
Dec,2020 11,500 204,952
Required:
By using High & Low Method, calculate the total cost of 14,500 units. (05 Marks)

Q3. Briefly explain the following terms: (08 Marks)

A. Conversion Cost
B. Payback Period Method
C. Opportunity Cost
D. Sunk Cost

Winter 2020 – W-2020-07 Page 1 of 2

 IBP Superior Qualification
Winter 2020
The Institute of Bankers Pakistan
Q4. J.J. Corporation incurred the following costs during the year ended December 31, 2020:

Particulars Total Cost in Rs.

Direct materials consumed 925,000
Direct labor 45% of DM consumed
Factory overhead – Variable 35% of DL
Factory overhead – Fixed 145,000
Work-in- Process (opening) 19,500
Work-in- Process (closing) 23,700
Finished Goods (Opening) 35,800
Finished Goods (Closing) 32,700

Required:
Prepare the cost of goods sold statement for the year. (08Marks)

Q5. Differentiate between the following: (06 Marks)

A. Capital expenditure and Revenue expenditure with at least one example of each.
B. Direct costing and absorption costing.

Q6. The following information below relates to Basit Engineering Corporation for the month ended August 30,
2019: (06 Marks)

Actual hours worked for 140,000 units 140,000 DL Hrs.

Actual rate paid to Direct Labor Rs. 50/- per hour
Standard direct labor hours for producing 140,000 units 138,600 DL Hrs.
Standard Rate Rs. 50.25/- per hour

Compute the following:

A. Labor Rate Variance
B. Labor Efficiency Variance

Q7. Sarfaraz Corporation has a capital structure comprising of 40% debt, 10% preferred stock and 50% common
equity. The company pays 10% interest on debt and tax rate is 40%. The cost of component of preferred
stock and common stock is 13% and 12% respectively.
Required:
Compute the company’s Weighted Average Cost of Capital (WACC). (04 Marks)

Q8. Define the following: (10 Marks)

A. Fixed Cost
B. Variable Cost
C. Product Cost
D. Period Cost
E. Manufacturing Cost
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