**39**answerable questions with

**0**answered.

I—P8(CMA)Syllabus 2008 | |

Time Allowed : 3 Hours | Full Marks : 100 |

The figures in the margin on the right side indicate full marks. |

Answer Question No. 1 which is compulsory and any five from the rest. |

Marks |

1. | (a) | Match the following correctly with what is relates:
| 1x5=5 | (0) | ||||||||||||||||||||||||||||||||||||||

(b) | State whether the following statements are True (T) or False (F). | 1x5=5 | ||||||||||||||||||||||||||||||||||||||||

(i) | If an expense can be identified with a specific cost unit, it is treated as direct expense; | (0) | ||||||||||||||||||||||||||||||||||||||||

(ii) | Time and motion study which is a function of the engineering department is useless for the determination of wages; | (0) | ||||||||||||||||||||||||||||||||||||||||

(iii) | ABC analysis is made on the basis of unit prices of materials; | (0) | ||||||||||||||||||||||||||||||||||||||||

(iv) | The relationship of value, function and cost can be expressed as Cost = Value/Function; | (0) | ||||||||||||||||||||||||||||||||||||||||

(v) | Standard hour is the standard time required per unit of production. | (0) | ||||||||||||||||||||||||||||||||||||||||

(c) | Choose the correct answer from the brackets: | 1x5=5 | ||||||||||||||||||||||||||||||||||||||||

(i) | The annual demand of a certain component bought from the market is 1,000 units. The cost of placing an order is Rs. 60 and the carrying cost per unit is Rs. 3 p.a. The Economic Order Quantity for the item is ________ (200, 400, 600). | (0) | ||||||||||||||||||||||||||||||||||||||||

(ii) | The monthly cost of maintenance of machinery for 12,000 machine hours run is Rs. 1,70,000 and for 18,500 hours it is Rs. 2,02,500. The cost of maintenance for 14,000 hours is Rs. (1,90,000, 1,80,000, 1,85,000) | (0) | ||||||||||||||||||||||||||||||||||||||||

(iii) | A company’s fixed cost amounts to Rs. 120 lakhs p.a. and its overall P/V ratio is 0.4. The annual sales of the company should be Rs. ________ lakhs to have a Margin of Safety of 25% (400, 500, 600) | (0) | ||||||||||||||||||||||||||||||||||||||||

(iv) | In a company there were 1200 employees on the rolls at the beginning of a year and 1180 at the end, during the year 120 persons left and 96 replacements were made, the rate of labour turnover according to flux method is ________ (5.04, 4.03, 9.08) | (0) | ||||||||||||||||||||||||||||||||||||||||

(v) | The output of three different products P, Q and R in a factory are 20000 Kg. 15000 Kg. and 15000 Kg. respectively. If the costs are in proportion 4 : 6 : 7, then the cost per equivalent product unit is Rs.________(10, 7, 5) | (0) | ||||||||||||||||||||||||||||||||||||||||

(d) | Fill in the black; with suitably: | 1x5=5 | ||||||||||||||||||||||||||||||||||||||||

(i) | Margin of safety is ________ or ________. | (0) | ||||||||||||||||||||||||||||||||||||||||

(ii) | Material usage variance is the sum of ________ and ________. | (0) | ||||||||||||||||||||||||||||||||||||||||

(iii) | A flexible budget recognizes the behaviour of ________ and ________. | (0) | ||||||||||||||||||||||||||||||||||||||||

(iv) | Profit volume graph shows the relationship between ________ and ________. | (0) | ||||||||||||||||||||||||||||||||||||||||

(v) | Efficiency is basically a ratio of ________ and ________. | (0) | ||||||||||||||||||||||||||||||||||||||||

(e) | In the following cases, choose the correct answer: | 1x5=5 | ||||||||||||||||||||||||||||||||||||||||

(i) | In activity based costing, costs are accumulated by
| (0) | ||||||||||||||||||||||||||||||||||||||||

(ii) | A company maintains a margin of safety of 25% on its current sales and earns a profit of Rs. 30 lakhs per annum. If the company has a profit volume (P/V) ratio of 40%, its current sales amount to
| (0) | ||||||||||||||||||||||||||||||||||||||||

(iii) | In a factory of PEE Ltd. where standard costing is followed, the budgeted fixed overhead for a budgeted production of 4800 units is Rs. 24,000. For a certain period actual expenditure incurred was Rs. 22,000 resulting in a fixed overhead volume variance of Rs. 3,000 (Adv.). Then actual production for the period was
| (0) | ||||||||||||||||||||||||||||||||||||||||

(iv) | Zee Ltd. uses material—A for the production of Product M. The safety stock of material A is 300 units; the supplier quotes a delivery delay of two or three weeks. If the company uses 500 to 800 units a week according to the activity levels, the re–order level of material–A will be
| (0) | ||||||||||||||||||||||||||||||||||||||||

(v) | A worker has time rate of Rs. 15/hr. He makes 720 units of a component (standard time 5 minutes/unit in a week of 48 hours). His total wages including Rowan bonus for the week is _____.
| (0) | ||||||||||||||||||||||||||||||||||||||||

2. | (a) | Discuss the essentials of a good incentive scheme. | 5 | (0) | ||||||||||||||||||||||||||||||||||||||

(b) | The standard hours for job X is 100 hours. The job has been completed by Amar in 60 hours. Akbar in 70 hours and Anthony in 95 hours. The bonus system applicable to the job is as follows:
The rate of pay is Rs. 10 per hour. Calculate the total earnings of each worker and also the rate of earnings per hour. | 5 | (0) | |||||||||||||||||||||||||||||||||||||||

(c) | A company has three production departments, A, B and C and two service departments, P and Q. The following figures are available from the primary distribution summary.
The expenses of the services departments are to be apportioned on a percentage basis as follows:
Prepare secondary distribution summary as per the simultaneous equations method. | 5 | (0) | |||||||||||||||||||||||||||||||||||||||

3. | (a) | State the fundamental principles of Process Costing. | 5 | (0) | ||||||||||||||||||||||||||||||||||||||

(b) | Prabhu Builders Ltd. commenced work on 1st April, 2007 on a contract of which the agreed price was Rs. 5 lakhs. The following expenditure was incurred during the year up to 31st March, 2008.
Materials costing Rs. 10,000 proved unsuitable and were sold for Rs. 11,500 and a part of plant was scrapped and sold for Rs. 1,700. Of the contract price Rs. 2,40,000 representing 80% of work certified had been received by 31st March, 2008 and on that date the value of the plant on the job was Rs. 8,000 and the value of materials was Rs. 3,000. The cost of work done but not certified was Rs. 25,000. It was decided to (a) Estimate what further expenditure would be incurred in completing the contract. Ub) Compute from the estimate and the expenditure already incurred, the total profit that would be made on the contract and (c) Ascertain the amount of profit to be taken to the credit of Profit and Loss Account for the year ending on 31st March, 2008. While taking profit to the credit of Profit and Loss A/c. that portion of the total profit should be taken which the value of work certified bears to the contract price. Details of the estimates to complete the contract are given below:
Prepare contract account for the year ended 31st March, 2008 and show your calculations of the sum to be credited to Profit and Loss A/c. for the year. | 10 | (0) | |||||||||||||||||||||||||||||||||||||||

4. | (a) | New India Engineering Co. Ltd. produces three components A, B and C. The following particulars are provided:
Due to break–down of one of the machines, the capacity is limited to 12,000 machine hours only and this is not sufficient to meet the total sales demand.
| 5+5=10 | (0) | ||||||||||||||||||||||||||||||||||||||

(b) | What are the factors those are taken into account by the Management while considering a Make or Buy decision? | 5 | (0) | |||||||||||||||||||||||||||||||||||||||

5. | (a) | The standard process cost card for a processed item is as under:
Budgeted output for the period is 1000 kgs.
You are required to work out the following variances:
| 10 | (0) | ||||||||||||||||||||||||||||||||||||||

(b) | Distinguish between Standard Costing and Budgetary Control. | 5 | (0) | |||||||||||||||||||||||||||||||||||||||

6. | (a) | The following information relates to the production activities of Good Wish Ltd. for 3 months ending on 31st December, 2006:
It is further noted that semi–variable expenses remain constant between 40% and 70% capacity, increase by 10% of the above figures between 70% and 85% capacity and increase by 15% of the above fig. between 85% and 100% capacity. Fixed expenses remain constant whatever the level of activity. Sales at 60% capacity are Rs. 25,50,000, at 80% capacity Rs. 34,00,000 and at 100% capacity Rs. 42,50,000. All items produced are sold. Prepare a flexible budget at 60%, 80% and 100% productive capacity. | 10 | (0) | ||||||||||||||||||||||||||||||||||||||

(b) | Define ‘Operating Costing’ and mention at least five activities where it is applicable. | 5 | (0) | |||||||||||||||||||||||||||||||||||||||

7. | (a) | As of 31st March, 2008, the following balances existed in a firm’s cost ledger, which is maintained separately on a double entry basis:
During the next quarter, the following items arose:
You are required to prepare the Cost Ledger Control A/c., Stores Ledger Control A/c., Work–in progress control A/c. Finished Stock Ledger Control A/c., Manufacturing Overhead Control A/c., Wages Control A/c., Cost of Sales A/c and the Trial Balance at the end of the quarter. | 10 | (0) | ||||||||||||||||||||||||||||||||||||||

(b) | Explain the need for reconciliation of cost and financial accounts. Also state the reasons for difference in profit between the two accounts. | 5 | (0) | |||||||||||||||||||||||||||||||||||||||

8. | Write short notes on any three; | 3x5=15 | ||||||||||||||||||||||||||||||||||||||||

(a) | Cost Volume Profit Analysis; | (0) | ||||||||||||||||||||||||||||||||||||||||

(b) | Limitations of Market Based Transfer pricing; | (0) | ||||||||||||||||||||||||||||||||||||||||

(c) | Profit Centre; | (0) | ||||||||||||||||||||||||||||||||||||||||

(d) | Essentials of Inter firm comparison; | (0) | ||||||||||||||||||||||||||||||||||||||||

(e) | Concept of split–off point and joint cost. | (0) |