K S ACADEMY SAP 10-03-2024

KS ACADEMY
CA – INTER
COSTING

Roll Number ……….. Code…CAINTER

Time Allowed: 2 hours Total number of Printed Page :09
Total Number of Questions: Maximum Marks :

1. A meeting of the heads of departments of the Arnav Ltd. has been called to review the
operating performance of the company in the last financial year. The head of the
production department appraised that during the last year the company could operate
at 70% capacity level but in the coming financial year 95% capacity level can be achieved
if an additional amount of `100 Crore on capex and working capital is incurred.

The head of the finance department has presented that during the last financial year the
company had a P/V ratio of 40%, margin of safety and the break-even were `50 crore
and `200 crore respectively.

To the reply to the proposal of increasing the production capacity level to 95%, the head
of the finance department has informed that this could be achieved if the selling price
and variable cost are reduced by 8% and 5% of sales respectively. Fixed cost will also
increase by `20 crore due to increased depreciation on additional assets. The additional
capital will be arranged at a cost of 15% p.a. from a bank.

In the coming financial year, it has been aimed to achieve an additional profit
of `10 crore over and above the last year’s profit after adjusting the interest
cost on the additional capital.

The following points is required to be calculated on urgent basis to put the

same in the meeting. You being an assistant to the head of finance, has been
asked the followings (10 Marks)

i.What will be the revised sales for the coming financial year?
A. 322.22 Crore
B. 311.11 Crore
C.300.00 Crore
D. 324.24 Crore

ii.What will be the revised break-even point for the coming financial year?
A.222.22 Crore
B. 252.22 Crore
C. 244.44 Crore
D. 255.56 Crore

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K S ACADEMY SAP 10-03-2024

iii. What will be the revised margin of safety for the coming financial year?
A. 100 Crore
B. 58.89 Crore
C.55.56 Crore
D. 66.66 Crore

iv. The profit of the last year and for the coming year are:
A.50 Crore & 295 Crore respectively
B. 20 Crore & 65 Crore respectively
C. 20 Crore & 30 Crore respectively
D. 45 Crore & 66.66 Crore respectively

v.The total cost of the last year and for the coming year are:
A. 230 Crore & 292.22
B. 230 Crore & 275 Crore
C. 220 Crore & 282.22 Crore
D. 220 Crore & 292.22 Crore

2. K Ltd. is a manufacturer of a single product A. 8,000 units of the product A has been
produced in the month of March 2024. At the beginning of the year a total 1,20,000 units
of the product-A has been planned for production. The cost department has provided
the following estimates of overheads
Fixed Rs.12,00,000 Variable Rs.6,00,000
Semi-Variable Rs.19,200
Semi-variable charges are considered to include 60 per cent expenses of fixed nature and
40 per cent of variable character 3 The records of the production department shows that
the company could have operated for 20 days but there was a festival holiday during the
month.
The actual cost date for the month of march 2024 are as followings
Fixed Rs.1,19,000 Variable Rs.48,000
Semi-Variable Rs.19,200
The cost department of the company is now preparing a cost variance report for
managerial information and action. You being an accounts officer of the company are
asked to calculate the following information for preparation of the variance
Report (10 Marks)

i.What is the amount of variable overhead cost variance for the month of
March 2024:
A.10,200 (A)
B.10,400 (A)
C.10,800 (A)
D.10,880 (A)

ii. What is the amount of fixed overhead volume variance for the month of
March 2024:
A.9,000 (F)
B.9,000 (A)

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C.21,800 (A)
D. 11,000 (A)

iii. What is the amount of fixed overhead expenditure variance for the month
of March 2024
A.21,520 (A)
B. 21.500 (A)
C.21.400 (A)
D. 21.480 (A)

iv. What is the amount of fixed overhead calendar variance for the month of
March 2024:
A.5,400 (A)
B.5,450 (A)
C.5,480 (A)
D.5.420 (A)

v. What is the amount of fixed overhead cost variance for the month of
March 2024
A.43,320 (A)
B.43,300 (A)
C.43,200 (A)
D.43,380 (A)

3. If the amount of wages under Halsey plan is ` 420, total time allowed is 8 hours and the
guaranteed time rate is ` 60 per hour. What is the total time saved by the worker?
(a) 2 hours
(b) 3 hours
(c) 6 hours
(d) 3.5 hours (2 Marks)

4. From the following information, calculate the Total cost of Product A and B
using the ABC analysis:
Product A Product B
Units 5,000 5,000
Number of purchase orders placed 100 220
Number of deliveries received 70 200
Ordering Cost Rs.4,00,000
Delivery Cost Rs.1,35,000
A. A = Rs.47,500; B = Rs.1,27,500
B. A = Rs.2,67,500; B = Rs.2,67,500
C. A = Rs.1,60,00; B = Rs.3,75,000
D. A = Rs.1,47,500; B = Rs.1,47,500 (2 Marks)

5. What would be Prime cost from below information?

Direct material purchased 75,000
Direct Labour 45,000

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K S ACADEMY SAP 10-03-2024

Direct expenses 15,000

Manufacturing overheads 22,500
Direct material consumed 67,500
(a) 1,35,000
(b) 1,27,500
(c) 1,57,500
(d) 1,50,000 (2 Marks)

6. A product passes through Process-I. Input raw material issued were 8,000 units. Normal
loss anticipated was 10% of input with realisable value of ` 5 per unit. 7,600 units of
output were produced and transferred to next process. If the total cost incurred under
Process-I was ` 40,000, then amount of abnormal gain/(loss) is:
(a) 2,000
(b) (5,000)
(c) (2,500)
(d) 3,000 (2 Marks)

7. Find out the most appropriate unit cost from the following information of ZMD
Transport Services Ltd. dealing in goods carriage;
Total cost 5,25,000
Kms, Travelled 8,75,000
Tonnes carries 4,000
No of drivers 25
No of trucks 20
Tonnes Km carried 6,55,000

(a) 0.6
(b) 0.8
(c) 21,000
(d) 131.25 (2 Marks)

8. (a) Explain the difference between cost accounting and management

accounting {5 Marks}
Ans;

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K S ACADEMY SAP 10-03-2024

9. (b) A company manufactures a product from a raw material, which is purchased at

Rs.180 per kg. The company incurs a handling cost of Rs.1,460 plus freight of Rs.940 per
order. The incremental carrying cost of inventory of raw material is Rs.2.5 per kg per
month. In addition, the cost of working capital finance on the investment in inventory of
raw material is Rs.18per kg per annum. The annual production of the product is 1,00,000
units and 2.5 units are obtained from one kg. of raw material.
Required:
(i) CALCULATE the economic order quantity of raw materials.
(ii) DETERMINE, how frequently company should order for procurement be placed.
(iii) If the company proposes to rationalize placement of orders on quarterly basis,
DETERMINE the percentage of discount in the price of raw materials should be
negotiated? Assume 360 days in a year. {5 Marks}
Ans;

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K S ACADEMY SAP 10-03-2024

10. (c) In a factory, The basic wage rate is Rs.300 per hour and overtime rates are as follows:
Before and after normal working hours 180% of basic wage rate
During the previous year, the following hours were worked 230% of basic wage rate
Normal time 1,00,000 hours
Overtime before and after working hours 20,000 hours
Overtime on Sundays and holidays 5,000 hours
Total 1,25,000 hours

The following hours have been worked on job ‘A’

Normal 1,000 hours
Overtime before and after working hours 100 hours
Sundays and holidays 25 hours
Total 1,125 hours
You are required to CALCULATE the labour cost chargeable to job 'A' and overhead in
each of the following instances:
(i) Where overtime is worked regularly throughout the year as a policy due to the
workers' shortage.
(ii) Where overtime is worked irregularly to meet the requirements of production.
(iii) Where overtime is worked at the request of the customer to expedite
the job {4 Marks}
Ans;

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K S ACADEMY SAP 10-03-2024

11. (a) From the following information for the month of January, 20X9, PREPARE Process-
III cost accounts.
Opening WIP in process-III 1,600 Units at Rs.24,000
Transfer from process – II 55,400 Units at Rs.6,23,250
Transferred to warehouse 52,200 Units
Closing WIP of process -III 4,200 Units
Units Scrapped 600 Units
Direct Material added in process -III Rs.2,12,400
Direct Wages Rs.96,420
Productions overheads Rs.56,400
Degree of completions:
Opening Stock Closing stock Scrap
Material 80% 70% 100%
Labour 60% 50% 70%
Overheads 60% 50% 70%

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The normal loss in the process was 5% of the production and scrap was sold @ Rs.5 per
unit. (students may treat material transferred from process – II as material – A and fresh
material used in process – III as material B) {10 Marks}
Ans;

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12. (b) Discuss with example the level of activity method of segregating semi-variable costs
into fixed and variable cost ? {4 Marks}
Ans;

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K S ACADEMY SAP 10-03-2024

13. (a) Arnav Ltd manufactures a product Q , the standard cost of which is a follow:
Standard Cost per unit (Rs)
Direct Material 600
Direct Labour;
Skilled @ Rs.80 per hours 120
Unskilled @ Rs.60 per hour 90
Variable overheads 75
Fixed overheads 30
915
During the month just ended 4,000 units of Q were product . The actual labour cost was
as follows;
Rate per hour (Rs) Cost (Rs)
Skilled 87.50 5,77,500
Unskilled 55.00 2,97,000
10% of the Labour time was lost due to idle time , The standard idle time was 7.5% of
labour time. Arnav Ltd has budgeted to produce 4,200 units of Q. Arnav Ltd . absorbs its
overheads on direct labour hour (effective hours) basis. Actual fixed and variable
overheads incurred were Rs.1,55,000 and Rs.2,85,000 respectively.
CALCULATE:
(i) Labour rate variance
(ii) Labour efficiency variance
(iii) Labour mix variance
(iv) Labour yield time variance
(v) Labour idle time variance
(vi) Variable overheads expenditure variance and
(vii) Variable overhead efficiency variance {10 Marks}
Ans:

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K S ACADEMY SAP 10-03-2024

14. (b) A manufacturing company disclosed a net loss of Rs.3,47,000 as per their cost
accounts for the year ended March 31,20x8. The financial accounts however disclosed a
net loss of Rs. 5,10,000 for the same period. The following information was revealed
because of scrutiny of the figures of both the sets of accounts.
(Rs.)
(i)Factory Overheads under-absorbed 40,000
(ii)Administration Overheads over-absorbed 60,000
(iii)Depreciation charged in Financial Accounts 3,25,000
(iv)Depreciation charged in Cost Accounts 2,75,000
(v)Interest on investments not included in Cost Accounts 96,000
(vi)Income-tax provided 54,000
(vii)Interest on loan funds in Financial Accounts 2,45,000
(viii) Transfer fees (credit in financial books) 24,000
(ix)Stores adjustment (credit in financial books) 14,000
(x)Dividend received 32,000
PREPARE a memorandum Reconciliation Account. {4 Marks)

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K S ACADEMY SAP 10-03-2024

Ans;

15. (a) A jobbing factory has undertaken to supply 300 pieces of a component per month for
the ensuing six months. Every month a batch order is opened against which materials
and labour hours are booked at actual. Overheads are levied at a rate per labour hour.
The selling price contracted for is 8 per piece. From the following data CALCULATE the
cost and profit per piece of each batch order and overall position of the order for 1,800
pieces.
Month Batch output Material cost Rs Direct Wages Rs Direct labour hours
January 310 1150 120 240
February 300 1140 140 280
March 320 1180 150 280
April 280 1130 140 270
May 300 1200 150 300
June 320 1220 160 320

The other details are;

Month Chargeable Expenses Rs. Direct Labour hours
January 12,000 4,800
February 10,560 4,400
March 12,000 5,000
April 10,580 4,600
May 13,000 5,000

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June 12,000 4,800 {8 Marks}

Ans;

16. (b) KJ Motors Ltd. Is a manufacturers of auto components. Following are the details of
expenses for the year 202-21;
Rs
(i) Opening stock of material 15,00,000
(ii) Closing stock of material 20,00,000
(iii) Purchase of material 1,80,50,000
(iv) Direct Labour 90,50,000
(v) Factory overheads 30,80,000
(vi) Administrative overheads 20,50,400
During the FY 2021-22, the company has received an order from a car manufacturer
where it estimates that the cost of material and labour will be * 80,00,000 and 40,50,000
respectively. The company charges factory overhead as a percentage of direct labour
and administrative overheads as a percentage of factory cost based on previous year's
cost. Cost of delivery of the components at customer's premises is estimated at 9,50,000.
You are required to:
(i) CALCULATE the overhead recovery rates based on actual costs for 2020-21.
(ii) PREPARE a Job cost sheet for the order received and the price to be quoted if the
desired profit is 25% on sales {4 Marks}
Ans;

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K S ACADEMY SAP 10-03-2024

17. (c) A factory produces two products, 'Ghee' and 'Cream' from a single process. The joint
processing costs during a particular month are:
Direct Material Rs.60,000
Direct Labour Rs.19,200
Variable Overheads Rs.24,000
Fixed Overheads Rs.64,000

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K S ACADEMY SAP 10-03-2024

Sales: Ghee - 200 litre @ Rs.600 per litre; Cream -240 litre @R200 per litre. REQUIRED:
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. {2 Marks}
Ans;

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18. (a) Explain single and multiple Overheads Rate; {8 Marks}

Ans;

19. (b) Explain standing charges and running charges in the case of transport organizations
List three examples of both. {6 Marks}
Ans;

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20. (a) A Ltd. produces a single product X. During the month of December 2021, the
company has produced 14,560 tonnes of X. The details for the month of December 2021
are as follows:
(i) Materials consumed 15,00,000
(ii) Power consumed 13,000 Kwh @7 per Kwh
(iii) Diesels consumed 1,000 litres @93 per litre
(iv) Wages & salary paid - 64,00,000
(v) Gratuity & leave encashment paid- 44,20,000
(vi) Hiring charges paid for HEMM-13,00,000
(vii) Hiring charges paid for cars used for official purpose - 80,000
(viii) Reimbursement of diesel cost for the cars - 20,000
(ix) The hiring of cars attracts GST under RCM @5% without credit.
(x) Maintenance cost paid for weighing bridge (used for weighing of final goods at the
time of despatch)-7,000
(xi) AMC cost of CCTV installed at weighing bridge (used for weighing of final goods at
the time of despatch) and factory premises is 6,000 and 18,000 per month respectively.
16,000
(xii) TA/ DA and hotel bill paid for sales manager-
(xiii) The company has 180 employees works for 26 days in a month.
Required:
(a) PREPARE a Cost sheet for the month of December 2021.
(b) COMPUTE Earnings per manshift (EMS) and Output per manshift (OMS) for the
month of December 2021 {5 Marks}
Ans;

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K S ACADEMY SAP 10-03-2024

21. (a) Arnav Ltd. is producing a single product, has the profit-volume ratio of 40%. The
company wishes to increase the selling price by 10% which will increase the variable
cost by 5%. The fixed overheads will increase from its present level of Rs.20,00,000 to
Rs.30,00,000.
Required:
(i) Compute the company's original break-even point sales and the break-even point
sales after the increase.
(ii) Estimate the sales value for the firm to make a profit of Rs. 4,50,000
after the increase. {5 Marks}
Ans;

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22. (b) Following data is available for DKG and Co:

Standard working 8 hours per day of 5 days per week Maximum capacity 50 employees
hours
Actual working 40 employees
Actual hours expected to be worked per four week 6,400 hours Std. hours expected to be
earned per four weeks 8,000 hours Actual hours worked in the four-week period 6,000
hours Standard hours earned in the four-week period 7,000 hours. The related period is
of 4 weeks. In this period there was a one special day holiday due to national event.
CALCULATE the following ratios:
(1) Efficiency Ratio, (2) Activity Ratio, (3) Calendar Ratio, (4) Standard Capacity Usage
Ratio, (5) Actual Capacity Usage Ratio.
(6) Actual Usage of Budgeted Capacity Ratio. {4 Marks}
Ans;

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K S ACADEMY SAP 10-03-2024

(or)

23. (b) NXE Manufacturing Concern furnishes the following informations;

Standard Material for 70kg finished products 100 kg
Price of material Rs,1 per kg
Actual Output 2,10,000 kg
Material Used 2,80,000 kg
Cost of materials 2,52,000
CALCULATE;(a) Material Usage variance (b) Material price variance
(c) Material cost variance {4 Marks}
Ans;

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