Master Test Duration 1 hour

Q.1. The unit cost is Rs.14 and sell price is Rs.20. If the customers pay cash, which accounts
for 35% of sales, he gives them a 10% discount. Internet and credit card payments
attract a 5% discount. These also make up about 35% of sales. 12% of credit customers
normally pay in the month following the month of sale, with a further 8% two months
following, 6% in three months following and the remaining 4% are uncollectible.
The sales estimates are as under:
May 130 Units
June 240
July 330
August 410
Company has negotiated with supplier that company can pay any purchases over a two-
month period with 50% of the price paid in the month of purchase and remainder the
following month. As an incentive the supplier has offered a 5% discount for payment
made promptly in the month of purchase. As the company is just starting up its business
in May company has cash flow issues and won’t be able to make any payments until
June when the full invoice will be settled.
Company bought 50 units in April as its opening inventory, which will need to be paid
for in May, and company would like to have enough inventory at the end of each month
to supply 60% of the following month’s sale.
Required:
1. Prepare a schedule of monthly cash receipts and schedule of monthly cash payments to
cover all the months affected by these projected sales. Round to the nearest rupee.
2. Will company need extra funds for any purchases if there are insufficient generated by
sales?

Q.2. Budget call circular, all questions related to FY 2024-25 [open book]

Q. # Question Answer
Why Finance Division prepare budget?
What’s the last date of budget submission?
Why foreign exchange budget is prepared?
What’s the last date of submission of FOREX estimates?
Are assets recorded at cost for budget purpose? If yes, in which form?
What’s the pot code of CF&AO?
What is the minimum limit of assets to be reported?
After how many years, vacant post is abolished?
For creation of any post, do we need approval of Finance Division?
BO stands for?
NIS stands for?
FABS stands for?
ERE stands for?
MDAS stands for?
PFM stands for?
DDO stands for?
PAO stands for?
 TSA stands for?
NAM stands for?
Preparation of non tax revenue is the responsibility of ?
Define budget calendar?
What’s the last date of surrendering savings?
What is gender budgeting?
What is green budgeting?
What is performance based budget?

Q.3. Budget in brief, all questions related to FY 2024-25 [open book]

Q. # Question Answer (Rs. In million)

i. How much privatisation proceeds estimated?
ii. What/s the purpose of PSPD?
iii. How much federal budget PSPD estimates?
iv. How much budget allocation for Universal service fund?
v. How much is the metro bus subsidy?
vi. What percentage is estimated on health?
vii. What percentage is estimated on defense?
viii. What percentage is estimated on education?
ix. How much is budget deficit?
x. How much is Gross Domestic Product?
xi. How much income tax estimates?
xii. How much sales tax estimates?
xiii. What is National Finance Commission?
xiv. What’s the share of FG in divisible pool?
xv. What’s the date of last National Finance Commission award?
xvi. How much interest payments?
xvii. How frequently NFC has to be constituted?

Q.4. Company produces a single product. During March, the company had net operating
income under absorption costing that was Rs.3,500 lower than under variable costing. The
company sold 7,000 units in March, and its variable costs were Rs.7 per unit, of which Rs.3
was variable selling expense. If fixed manufacturing overhead was Rs.2 per unit under
absorption costing, then how many units did the company produce during March?
Q.5.

Up to how much should the company be willing to pay for one additional hour of milling
machine time if the company has made the best use of the existing milling machine capacity?

TRUE/FALSE QUESTIONS

6. Fixed costs are sunk costs and are therefore irrelevant in decisions.

7. Future costs that do not differ between the alternatives in a decision are avoidable costs.

8. The book value of an old machine is always considered a sunk cost in a decision.

9. A product that does not cover its allocated share of general corporate administrative
expenses should be dropped.

10. In a special order situation that involves using existing idle capacity, opportunity costs
are zero.

11. In a sell or process further decision, an avoidable fixed production cost incurred after
the split-off point is relevant to the decision.
Q.12. Calculate new average contribution to sales ratio.
Q. 13.

Q.14. A company is preparing a quotation for a one-month consultancy project and seeks
your help in determining the relevant cost of one of the members of its project team.
Currently the company employs the consultant on an annual salary of £ 36,000. In
addition, the company provides the consultant with a company car which incurs
running costs of £ 6,000 each year. The car will continue to be provided to the
consultant whether this project is undertaken by the company or not.

This consultant is fully employed on current projects and, if she were to be transferred
to this new project, then an existing junior consultant would be used to cover
her current work. The junior consultant would be paid a bonus of £ 5,000 for
undertaking this additional responsibility.
Another alternative that the company is considering is hiring an external consultant
who has the necessary technical knowledge to work on the new consultancy project
on a one month contract at a cost of £ 4,500.
The relevant cost to be used in preparing the quotation is_________?

Q.15. The value of inventory of X at 31 August using a throughput accounting approach

is___________?
Q.16.

Q.17.

Q.18. A company is launching a new product. In order to manufacture this new product, two
types of labour are required. The new product required 5 hours of skilled labour and 5
hours of semi skilled.
 A skilled employee is available and is currently paid $10 per hour. A replacement
would, however, have to be obtained at a rate of $9 per hour for the work that would
otherwise be done by the skilled employee. The current rate for semi skilled workers is
$5 per hour and an additional employee would be appointed for this work.
What is the relevant cost of labour to be used in making one unit of the new product?

Q.19.

Q.20.