QUESTION PAPER

Subject: Cost Management and Accounting Batch – CA-Inter

Marks: 50 Time- 2 Hrs.

Q.1 SL Limited is engaged in manufacture of tyres. Analysis of income statement indicated a profit of Rs.150
Lakhs on a sales volume of 50,000 units. The fixed costs are Rs.850 Lakhs which appears to be high. Existing
selling price is Rs.3,400 per unit. The company is considering to revise the target profit to Rs.350 Lakhs.
You are required to compute:
(i) Break even point at existing levels in units and in rupees.
(ii) The number of units required to be sold to earn the target profit.
(iii) Profit with 15% increase in selling price and drop in sales volume by 10%
(iv) Volume to be achieved to earn target profit at revised selling price as calculated in (iii) above, if reduction of
8% in the variable costs and Rs.85 Lakhs in the fixed cost is envisaged. (10 Marks)

Q.2 You are given the following information of the cost department of a manufacturing company:
Stores:
Opening Balance 12,60,000
Purchases 67,20,000
Transfer from work-in-progress 33,60,000
Issue to work-in-progress 67,20,000
Issue to repairs and maintenance 8,40,000
Shortage found in stock taking 2,52,000
(Shortage in stock taking is treated as normal loss)

Work-in-progress:
Opening Balance 25,20,000
Direct wages applied 25,20,000
Overhead applied 90,08,000
Closing Balance 15,20,000

Finished products: Entire output is sold at a profit of 12% on actual cost from work-in-progress.

Other information:
Wages incurred 29,40,000
Overhead incurred 95,50,000
Income from Investment 4,00,000
Loss on sale of fixed assets 8,40,000
You are required to prepare:
(i) Stores control account;
(ii) Work-in-progress control account;
(iii) Costing Profit and Loss account;
(iv) Profit and Loss account and
(v) Reconciliation statement (10 Marks)
Q.3 In the current quarter, a company has undertaken two jobs. The data relating to these jobs are as under:
Job 1102 Job 1108
Selling price Rs.1,07,325 Rs.1,57,920
Profit as percentage on cost 8% 12%
Direct Materials Rs.37,500 Rs.54,000
Direct Wages Rs.30,000 Rs.42,000

It is the policy of the company to charge factory overheads as percentage on direct wages and selling and
administration overheads as percentage on factory cost.

The company has received a new order for manufacturing of a similar job. The estimate of direct materials and
direct wages relating to the new order is Rs.64,000 and Rs.50,000 respectively. A profit of 20% on sales is
required.
You are required to compute:
(i) The rates of Factory overheads and Selling and Administration overheads to be charged;
(ii) The Selling price of the new order.
(10 Marks)
Q.4 A company is producing an identical product in two factories. The following are the details in respect of both
factories:
Particulars Factory X Factory Y
Sales price per unit (Rs.) 50 50
Variable cost per unit (Rs.) 40 35
Fixed cost (Rs.) 2,00,000 3,00,000
Depreciation included in above fixed cost (Rs.) 40,000 30,000
Sales in units 30,000 20,000
Production capacity (units) 40,000 30,000
You are required to determine:
(1) Break even point (BEP) each factory individually.
(2) Cash break even point for each factory individually.
(3) BEP for company as a whole, assuming the present product mix is in sales ratio.
(4) Consequence on profit and BEP if product mix is changed to 2 : 3 and total demand remain same.
(10 Marks)

Q.5 M.L. Auto Ltd. is a manufacturer of auto components and the details of its expenses for the year 2014 are
given below:
Opening stock of materials Rs.1,50,000
Closing stock of materials Rs.2,00,000
Purchase of materials Rs.18,50,000
Direct labour Rs.9,50,000
Factory overheads Rs.3,80,000
Administrative overheads Rs.2,50,400
During 2015, the company has received an order from a car manufacturer where it estimates the cost of
materials and labour will be Rs.8,00,000 and Rs.4,50,000 respectively.
M.L. Auto Ltd. 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 Rs.45,000.
You are required to:
1. Calculate the overhead recovery rates based on actual cost of 2014.
2. Prepared a detailed cost statement for the order received in 2015 and the price to be quoted if company
wants to earn a profit of 10% on sales. (10 Marks)
ALL THE BEST