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. | |
Marks |
1. | (a) | Discuss two types of Costs which are associated with labour turnover. | 3 | ||||||||||||||||||||||||
(b) | Discuss the purpose of Cost Audit, and circumstances under which a Cost Audit is desirable. | 3 | |||||||||||||||||||||||||
(c) | Alpha Limited has decided to analyse the profitability of its five new customers. It buys bottled water at Rs. 90 per case and sells to retail customers at a list price of Rs. 108 per case. The data pertaining to five customers are : | ||||||||||||||||||||||||||
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( 2 )
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Its five activities and their cost drivers are :
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Required :
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7+3+2 =12 |
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2. | (a) | Write short notes on any three of the following :
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6 | ||||||
(b) | A fire occurred in the factory premises on October 31, 2003. The accounting records have been destroyed. Certain accounting records were kept in another building. They reveal the following for the period September 1, 2003 to October 31, 2003 : | 3+3+ 2=8 |
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( 3 )
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The loss is fully covered by insurance. The insurance company wants to know the historical cost of the inventories as basis for negotiating a settlement, although the settlement is actually to e based on replacement cost, not historical cost. |
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Required :
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3. | (a) | e-books is an online book retailer. The Company has four departments. The two sales departments ae Corporate Sales and Consumer Sales. The two support-departments are Administrative (Human resources, Accounting), and Information systems. Each of the sales departments conducts merchandising and marketing operations independently. |
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The following data are available for October, 2003 :
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( 4 )
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Cost incurred in each of four departments for October, 2003 are as follows :
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The company uses number of employees as a basis to allocate Administrative costs and processing time as a basis to allocate Information systems costs. |
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Required :
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2+2+ 1+5 =10 |
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(b) | Dsicuss the accounting treatment of spoilage and defectives in Cost Accounting. | 4 | |||||||||
4. | (a) | Discuss the process of estimating profit/loss on incomplete contracts. | 4 | ||||||||
(b) | BPR Limited keeps books on integrated accounting system. The following balances appear in the books as on April 1, 2002 : | ||||||||||
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( 5 )
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The transactions for the year ended March 31, 2003 were as given below :
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( 6 )
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Required :
Write up accounts in the integrated ledger of BPR Limited and prepare a Trial Balance. | 10 | |||||||||
5. | (a) | From the following information for the month of October 2003, prepare Process III Cost accounts :
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Degree of completion :
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The normal loss in the process was 5% of the production and scrap was sold @ Rs. 6.75 per unit. | ||||||||||
(b) | Discuss the different stages in the Activity-based Costing. | 4 |
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( 7 )
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6. | The Financial statements of Excel AMP Graphics Limited are as under the sheet : | ||||||||||||||||||||||||||
Balance Sheet
As at 31 December, 2001
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( 8 )
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Profit and Loss Account For the year ended 31 December, 2001 |
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( 9 )
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Required :
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8+4+4 =16 |
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7. | Beta Company Limited is considering replacement of its existing machine by anew machine, which is expected to cost Rs. 2,64,000. The new machine will have a life of years and will yield annual cash revenues of Rs. 5,68,750 and incur annual cash expenses of Rs. 2,95,750. The estimated salvage value of the new machine is Rs. 18,200. The existing machine has a book value of Rs. 91,000 and can be sold for Rs. 45,500 today. |
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The existing machine has a remaining useful life of five years. The cash revenues will be Rs. 4,55,000 and associated cash expenses will be 3,18,500. the existing machine will have a salvage value of Rs. 4,550, at the end of five years. |
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The Beta Company is in 35% tax-bracket, and write off depreciation at 25% on written-down value method. |
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The Beta Company has a target debt to value ratio of 15%. The Company in the past has raised debt at 11% and it can raise fresh debt at 10.5%. |
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Beta Company plans to follow dividend discount model to estimate the cost of equity capital. The Company plans to pay a dividend of Rs. 2 per share in the next year. The current market price of Company's equity share is Rs. 20 per equity share. The dividend per equity share of the Company is expected to grow at 8% p.a. |
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Required :
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5+3+2 +1+1=12 |
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( 10 )
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8. | (a) | A firm has a current sales of Rs. 2,56,48,750. The firm has unutilized capacity. In order to boost its sales, it is considering the relaxation in its credit policy. The proposed terms of credit will be 60 days credit against the present policy of 45 days. As a result, the bad debts will increase from 1.5% to 2% of sales. The firm's sales are expected to increase by 10%. The variable operating costs are 72% of the sales. The firm's Corporate tax rate is 35%, and it requires an after-tax return of 15% on its investment. Should the firm change its credit period? | 6 | ||||||
(b) | Discuss the 'Profit maximisation' and 'Wealth maximisation' objective of a firm. | 6 | |||||||
9. | (a) | Write short notes on any two of the following :
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(b) | Discuss the major consideration in Capital structure planning. | 6 |
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