Roll No………………… | |
Total No. of Questions— 9] | [Total No. of Printed Pages—10 |
Time Allowed : 3 Hours | Maximum Marks : 100 |
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Answers to questions are to be given only in English except in the cases of candidates who have opted for Hindi medium. If a candidate who has not opted for Hindi medium, answers in Hindi, his answers in Hindi will not be valued. | |
Question Nos.1 and 6 are compulsory. | |
Attempt three questions out of the remaining question numbers 2, 3, 4 and 5 and attempt two questions from the remaining question numbers 7, 8 and 9. | |
Working notes should form part of the answer. | |
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1. | (a) | Discuss the essential requisites for the installation of uniform costing system. | 3 | ||||||||
(b) | Distinguish between cost control and cost reduction. | 3 | |||||||||
(c) | Family Store wants information about the profitability of individual product lines: Soft drinks, Fresh produce and Packaged food. Family store provides the following data for the year 2002-03 for each product line : | 3+7+2 =12 |
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( 2 )
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Family Store also provides the following information for the year 2002-03 : | |||||||||||
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Required: | |||||||||||
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2. | (a) | ABC Ltd. operates a simple chemical process to convert a single material into three separate items, referred to here as X, Y and Z. All three end products are separated simultaneously at a single split-off point. Distinguish between Cost reduction and Cost Control. | 4+4+2 =10 |
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Product X and Y are ready for sale immediately upon splitoff without further processing or any other additional costs. Product Z, however, is processed further before being sold. There is no available market price for Z at the split-off point. | 2 |
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( 3 )
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The selling prices quoted here are expected to remain the same in the coming year. During 2002-03, the selling prices of the items and the total amounts sold were : | ||||||
X—186 tons sold for Rs. 1,500 per ton
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The total joints manufacturing costs for the year were Rs. 6,25,000. An additional Rs. 3,10,000 was spent to finish product Z. | ||||||
There were no opening inventories of X, Y or Z. At the end of the year, the following inventories of complete units were on hand : | ||||||
X 180 tons
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There was no opening or closing work-in-progress.
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(b) | Write short notes on any two of the following:
| 2+2=4 | ||||
3. | (a) | PQR Ltd. has its own power plant, which has two users, Cutting Department and Welding Department. When the plans were prepared for the power plant, top management decided that its practical capacity should be 1,50,000 machine- | 2+2+ 2+2=8 |
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( 4 )
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hours. Annual budgeted practical capacity fixed costs are Rs. 9,00,000 and budgeted variable costs are Rs. 4 per machine-hour. The following data are available : | ||||||||||
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Required: | ||||||||||
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(b) | Discuss the accounting treatment of the following in cost-accounts :
(i) Spoilage and defectives (ii) Idle time and Over-time wages | 3+3=6 | ||||||||
4. | (a) | RST Ltd. manufactures plastic moulded chairs. There models of moulded chairs, all variation of the same design are Standard. Deluxe and Executive. The company uses an operation-costing system. | 6+3=9 | RST Ltd. has extrusion, form, trim and finish operations. Plastic sheets are produced by the extrusion operation. During the forming operation, the plastic |
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( 5 )
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sheets are moulded into chair seats and the legs are added. The standard model is sold after this operation. During the trim operation, the arms are added to the Deluxe and Executive models and the chair edges are smoothed. Only the executive model enters the finish operation, in which padding is added. All of the units produced receive the same steps within each operation. In April, 2003 units of production and direct material cost incurred are as follows : | ||||||||||||||||||||||||||||||||||
The total conversion costs for the month of April, 2003 are :
Required:
For each product produced by RST Ltd. during April, 2003, determine the unit cost and the total cost. Now consider the following information for May. All unit costs in May are identical to the April unit costs calculated as above in(i). At the end of May, 1,500 units of the Deluxe model remain in work-in-progress. These units are 100% complete as to materials and 65% complete in the trim operation. Determine the cost of the Deluxe model work-in-process inventory at the end of May. | ||||||||||||||||||||||||||||||||||
(b) | What do you understand by labour turnover? How is it measured? | 1+4=5 |
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( 6 )
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5. | (a) | Distinguish between any three of the following:
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2+2+2 6 |
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(b) | A manufacturing company disclosed a net loss of Rs. 3,47,000 as per their cost accounts for the year ended March 31, 2003. The financial accounts however disclosed a net loss of Rs. 5,10,000 for the same period. The following information was revealed as a result of scrutiny of the figures of both the sets of accounts:
Prepare a Memorandum Reconciliation Account. | 8 | ||||||||||||||||||||||||||
6. | (a) | The cash flows of projects C and D are reproduced below :
| 4+4=8 |
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( 7 )
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(b) | Calculate the level of earnings before interest and tax (EBIT) at which the EPS indifference point between the following financing alternatives will occur.
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Assume the corporate tax rate is 35% and par value of equity share is Rs. 10 in each case. | ||||||||||||
(c) | Discuss the impact of financial leverage on shareholders wealth by using return-on-assets (ROA) and return-on-equity (ROE) analytic frame work. | 3 | ||||||||||
(d) | Explain the importance of trade credit and accruals as source of working capital. What is the cost of these sources? | 2 | ||||||||||
7. | (a) | XYZ Ltd. Company's Comparative Balance Sheet for 2002 and the Company's Income Statement for the year follow : | 9 | |||||||||
XYZ Lrs. Comparative Balance Sheet December 31, 2002 and 2001 (Rs. in crores) | ||||||||||||
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( 8 )
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XYZ Ltd. Income Statement For the year ended December 31, 2002 (Rs. in crores) | ||||||||||||||||
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( 9 )
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Additional information :
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(b) | In what ways is the "Firm value" maximisation objective superior to "Profit maximisation" objective? Explain. | 3 | |||||||||||||
8. | (a) | Discuss the need for social cost benefit analysis. | 3 | ||||||||||||
(b) | Discuss the relationship between the financial leverage and firm's required rate of return to equity shareholders as per Modigliani and Miller Proposition II. | 3 | |||||||||||||
(c) | An engineering company is considering its working capital investment for the year 2003-04. The estimated fixed assets and current liabilities for the next year are Rs. 6.63 crore and Rs. 5,967 crore respectively. The sales and earnings before interest and taxes (EBIT) depend on investment in its current assets— particularly inventory and receivables. The company is examining the following alternative working capital policies :
| 1+1+ 1+3 =6 |
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( 10 )
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9. | (a) | JKL Ltd. has the following book value capital structure as on March 31, 2003.
The equity share of the company sells for Rs. 20. It is expected that the company will pay next year a dividend of Rs. 2 per equity share, which is expected to grow at 5% p.a. forever. Assume a 35% corporate tax rate.
| 3+3+2 =8 |
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(b) | Distinguish between the following :
| 2+2=4 |
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