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Past papers/ Taxation/ November 2023
Paper 12 Qs
Revision Test Paper (RTP) · November 2023

CA Inter Taxation

This page contains all 12 questions from the CA Inter Taxation Revision Test Paper (RTP) for the November 2023 attempt cycle, sourced from VSI Jaipur.

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Q.1 00 marks easy Inventory management - consumption calculation ⚡ Try this Q →
Following details are related to a manufacturing concern: Re-order Level: 1,60,000 units Economic Order Quantity: 90,000 units Minimum Stock Level: 1,00,000 units Maximum Stock Level: 1,90,000 units Average Lead Time: 6 days Difference between minimum lead time and maximum lead time: 4 days Calculate:
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Worked Solution

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Step 1: Determine Maximum and Minimum Lead Times

Given: Average Lead Time = 6 days and Difference (Max LT − Min LT) = 4 days.

Using simultaneous equations:
- Max Lead Time + Min Lead Time = 2 × 6 = 12 days
- Max Lead Time − Min Lead Time = 4 days

Solving: Maximum Lead Time = 8 days and Minimum Lead Time = 4 days

Sub-part (i): Maximum Consumption per day

Using the Re-order Level formula:
Re-order Level = Maximum Consumption × Maximum Lead Time

1,60,000 = Maximum Consumption × 8
Maximum Consumption = 20,000 units per day

Sub-part (ii): Minimum Consumption per day

Using the Maximum Stock Level formula:
Maximum Stock Level = Re-order Level + EOQ − (Minimum Consumption × Minimum Lead Time)

1,90,000 = 1,60,000 + 90,000 − (Minimum Consumption × 4)
1,90,000 = 2,50,000 − (Minimum Consumption × 4)
Minimum Consumption × 4 = 2,50,000 − 1,90,000 = 60,000
Minimum Consumption = 15,000 units per day

Summary of Results:
- Maximum Consumption per day = 20,000 units
- Minimum Consumption per day = 15,000 units

PLAN

Write it like this

Time target 7 min 12 sec

1The skeleton

- Derive Max LT and Min LT first using simultaneous equations — never assume or state them without working; examiners award a dedicated step mark here before you even touch consumption.
- Write the Re-order Level formula verbatim before substituting — 'Re-order Level = Maximum Consumption × Maximum Lead Time' must appear as a line; plugging numbers cold with no formula loses the formula mark.
- Show the division step explicitly (1,60,000 ÷ 8 = 20,000) — don't mentally compute and just write the answer; the working line is where the mark sits.
- Write the Maximum Stock Level formula in full before rearranging — this is the trickiest formula in this topic and examiners specifically look for it; state it, then substitute, then rearrange.
- Show the rearrangement arithmetic step-by-step (2,50,000 − 1,90,000 = 60,000 → ÷4) — skipping even one line here risks losing a step mark if your final answer is slightly off.
- End with a mini-summary table or two boxed lines stating both answers with 'units per day' — examiners scanning fast will tick your answer only if units are explicit and answers are visually distinct.

2Examiner-rewarded phrases

“Re-order Level = Maximum Consumption × Maximum Lead Time”“Maximum Stock Level = Re-order Level + EOQ − (Minimum Consumption × Minimum Lead Time)”“units per day”

3Common trap

Don't fall for this

The killer mistake here is using Average Consumption in the Maximum Stock Level formula instead of Minimum Consumption — the formula literally says 'Minimum Consumption × Minimum Lead Time' but students on autopilot write average everywhere. Double-check which consumption goes into which formula before you start substituting.

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Q.2 00 marks easy Incentive schemes - Rowan and Halsey plans ⚡ Try this Q →
A skilled worker is paid a guaranteed wage rate of ₹120 per hour. The standard time allowed for a job is 6 hours. He took 5 hours to complete the job. He is paid wages under Rowan Incentive Plan.
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Worked Solution

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Part (i): Effective Hourly Rate under Rowan Incentive Plan

Under the Rowan Plan, the bonus is calculated as a proportion of the time saved to the standard time, applied to the actual time worked at the day rate.

Basic Wages = Actual Time × Rate per Hour = 5 × ₹120 = ₹600

Bonus = (Time Saved / Standard Time) × Actual Time × Rate per Hour
Bonus = (1/6) × 5 × ₹120 = ₹100

Total Earnings = ₹600 + ₹100 = ₹700

Effective Hourly Rate = Total Earnings / Actual Time = ₹700 / 5 = ₹140 per hour

---

Part (ii): Time to Complete Job under Halsey (50%) to Maintain ₹140/hour

Let the actual time taken = T hours

Under the Halsey 50% Plan:

Total Earnings = (T × ₹120) + 50% × (6 − T) × ₹120
= 120T + 60(6 − T)
= 120T + 360 − 60T
= 60T + 360

For effective hourly rate to equal ₹140:
(60T + 360) / T = 140
60T + 360 = 140T
360 = 80T
T = 4.5 hours

The worker should complete the job in 4.5 hours under the Halsey 50% Scheme to maintain the same effective hourly rate of ₹140 per hour.

PLAN

Write it like this

Time target 14 min 24 sec

1The skeleton

- Label Part (i) and Part (ii) as separate headed sections — examiners mark part-wise and if your Halsey working bleeds into the Rowan section, you lose the structure marks even if the numbers are right.
- Write the Rowan formula in words FIRST, then substitute — don't just show (1/6 × 5 × 120); write 'Bonus = (Time Saved / Standard Time) × Actual Time × Rate per Hour' so the examiner sees you know the formula, not just the arithmetic.
- Highlight the Effective Hourly Rate line as a standalone calculation — this is the bridge between Part (i) and Part (ii), so box it or bold it; examiners scan for it as the pivot answer.
- For Part (ii), immediately introduce T as a variable and state the Halsey 50% formula — don't trial-and-error with random numbers; the algebra signals you understand the structure, and that's where the method marks sit.
- End Part (ii) with a one-line conclusion sentence — write 'The worker must complete the job in 4.5 hours to earn the same effective hourly rate of ₹140 per hour'; examiners expect a conclusion, not just a boxed number.

2Examiner-rewarded phrases

“Bonus under Rowan Plan = (Time Saved / Standard Time) × Actual Time × Rate per Hour”“Effective Hourly Rate = Total Earnings / Actual Time Taken”“Under Halsey 50% Plan, Bonus = 50% × Time Saved × Rate per Hour”

3Common trap

Don't fall for this

Heads up — the classic killer here is swapping the Rowan bonus formula with Halsey's: Rowan multiplies by (Actual Time / Standard Time), Halsey just takes 50% of time saved flat. If you mix these up, both parts collapse and you lose all method marks. Also, in Part (ii), do NOT plug in T = 4.5 directly to verify and present it as your working — you must show the algebraic setup first or the examiner won't award process marks.

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Q.3 00 marks easy Machine hour rate calculation ⚡ Try this Q →
The following particulars refer to process used in the treatment of material subsequently incorporated in a component forming part of an electrical appliance: (i) The original cost of the machine used (Purchased in June 2018) was ₹10,00,000. Its estimated life is 10 years, the estimated scrap value at the end of its life is ₹10,000, and the estimated working time per year (50 weeks of 44 hours) is 2,200 hours. Out of which machine maintenance is estimated to take up 200 hours. Setting up time, estimated at 100 hours, is regarded as productive time. (ii) Electricity used by the machine during production is 16 units per hour at cost of ₹7 per unit. No power is consumed during maintenance or setting up. (iii) The machine requires a chemical solution which is replaced at the end of week at a cost of ₹2,000 each time. (iv) The estimated cost of maintenance per year is ₹1,20,000. (v) Two attendants control the operation of machine together with five other identical machines. Their combined weekly wages, insurance and employer's contribution to holiday pay amount to ₹9,000. (vi) Departmental and general works overhead allocated to this machine for the current year amount to ₹20,000. You are required to calculate the machine hour rate of operating the machine.
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Worked Solution

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Machine Hour Rate Calculation

The Machine Hour Rate (MHR) is computed by dividing the total machine-related costs for the year by the effective machine hours (i.e., hours during which the machine is productively engaged, including setting-up time).

Step 1 – Determine Effective Machine Hours (Denominator)

Total working hours per year = 50 weeks × 44 hours = 2,200 hours
Less: Maintenance time = 200 hours (machine not in productive use)
Effective machine hours = 2,000 hours (inclusive of 100 hours setting-up time, which is regarded as productive)

Step 2 – Compute Each Cost Element

(i) Depreciation:
Using Straight-Line Method: (₹10,00,000 − ₹10,000) ÷ 10 years = ₹99,000 per annum
Per hour: ₹99,000 ÷ 2,000 = ₹49.50

(ii) Electricity:
Power is consumed only during actual running; not during maintenance (200 hrs) or setting-up (100 hrs).
Running hours = 2,200 − 200 − 100 = 1,900 hours
Annual cost = 1,900 × 16 units × ₹7 = ₹2,12,800
Per hour: ₹2,12,800 ÷ 2,000 = ₹106.40

(iii) Chemical Solution:
Replaced weekly at ₹2,000; Annual cost = 50 × ₹2,000 = ₹1,00,000
Per hour: ₹1,00,000 ÷ 2,000 = ₹50.00

(iv) Maintenance:
Annual cost = ₹1,20,000
Per hour: ₹1,20,000 ÷ 2,000 = ₹60.00

(v) Labour (Attendants):
Two attendants control this machine + 5 identical machines = 6 machines in total.
Annual wages, insurance & holiday pay = ₹9,000 × 50 = ₹4,50,000
Share attributable to this machine = ₹4,50,000 ÷ 6 = ₹75,000
Per hour: ₹75,000 ÷ 2,000 = ₹37.50

(vi) Departmental & General Works Overhead:
Annual allocation = ₹20,000
Per hour: ₹20,000 ÷ 2,000 = ₹10.00

Machine Hour Rate = ₹313.40 per hour

PLAN

Write it like this

Time target 14 min 24 sec

1The skeleton

- Start with the denominator (effective hours) before touching any cost — write '2,200 − 200 maintenance = 2,000 effective hours (inclusive of 100 hrs setting-up)' as a standalone line; examiners check this first because every per-hour figure flows from it.
- Handle electricity hours separately as 1,900 (not 2,000) — explicitly state 'power not consumed during maintenance OR setting-up' and show 2,200 − 200 − 100 = 1,900 running hours; this sub-calculation is where step marks live.
- Show the labour machine-share workings in two sub-steps — first annualise (₹9,000 × 50 = ₹4,50,000), then divide by 6 machines (this + 5 identical); skipping either sub-step loses the method mark even if your final number is right.
- Present all costs in a two-column layout: Annual Amount | Per Hour — examiners at CA Inter reward a clean columnar format; it shows you know the structure of an MHR statement, not just the arithmetic.
- Close with a single boxed / underlined line 'Machine Hour Rate = ₹313.40 per hour' — your conclusion must be visually distinct; a number buried in prose gets missed during fast scanning.

2Examiner-rewarded phrases

“effective machine hours (excluding maintenance time)”“setting-up time is regarded as productive time and is therefore included in effective hours”“power is consumed only during actual production; no power is consumed during maintenance or setting-up”

3Common trap

Don't fall for this

The single biggest mark-killer here is using 2,000 hours for electricity instead of 1,900 — almost everyone forgets that setting-up time also has zero power consumption, so you lose both the electricity line AND potentially the final MHR. Double-check: maintenance (200 hrs) AND setting-up (100 hrs) are both excluded from running hours even though setting-up IS included in the denominator.

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Q.4 00 marks easy Activity-based costing and overhead allocation ⚡ Try this Q →
L Limited manufactures three products P, Q and R which are similar in nature and are usually produced in production runs of 100 units. Product P and R require both machine hours and assembly hours, whereas product Q requires only machine hours. The overheads incurred by the company during the first quarter are as under: Machine Department expenses: ₹18,48,000 Assembly Department expenses: ₹6,72,000 Setup costs: ₹90,000 Stores receiving cost: ₹1,20,000 Order processing and dispatch: ₹1,80,000 Inspect and Quality control cost: ₹36,000 The data related to the three products during the period: Product P: 15,000 units produced and sold; 30,000 machine hours; 15,000 assembly hours; 1,250 customer orders; 40 requisitions Product Q: 12,000 units produced and sold; 48,000 machine hours; - assembly hours; 1,000 customer orders; 30 requisitions Product R: 18,000 units produced and sold; 54,000 machine hours; 27,000 assembly hours; 1,500 customer orders; 50 requisitions Prepare a statement showing details of overhead costs allocated to each product type using activity-based costing.
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Q.5 00 marks easy Cost sheet preparation and cost classification ⚡ Try this Q →
A Ltd. produces a single product X. During the month of July 2023, the company has produced 14,560 tonnes of X. The details for the month of July 2023 are as follows: (i) Materials consumed: ₹15,00,000 (ii) Power consumed in operating production machinery: 13,000 Kwh @ ₹7 per Kwh (iii) Diesels consumed in operating production machinery: 1,000 litres @ ₹93 per litre (iv) Wages & salary paid: ₹64,00,000 (v) Gratuity & leave encashment paid: ₹44,20,000 (vi) Hiring charges paid for Heavy Earth Moving machines (HEMM) engaged in production: ₹13,00,000 (vii) Hiring charges paid for cars used for official purpose: ₹80,000 (viii) Reimbursement of diesel cost for the cars: ₹20,000 (ix) The hiring of cars attracts GST under RCM @5% without credit (x) Maintenance cost paid for weighing bridge (used for weighing of final goods at despatch): ₹7,000 (xi) AMC cost of CCTV installed at weighing bridge and factory premises: ₹6,000 and ₹18,000 per month respectively (xii) TA/DA and hotel bill paid for sales manager: ₹16,000 (xiii) The company has 180 employees works for 26 days in a month Prepare a Cost sheet for the month of July 2023.
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Q.6 00 marks easy Cost accounting vs financial accounting reconciliation ⚡ Try this Q →
The financial books of a company reveal the following data for the year ended 31st March, 2023: Opening Stock: Finished goods 625 units (₹1,06,250); Work-in-process (₹92,000) Raw materials consumed: ₹16,80,000 Direct Labour: ₹12,20,000 Factory overheads: ₹8,44,000 Administration overheads (production related): ₹3,96,000 Dividend paid: ₹2,44,000 Bad Debts: ₹36,000 Selling and Distribution Overheads: ₹1,44,000 Interest received: ₹76,000 Rent received: ₹92,000 Sales: 12,615 units @ ₹45,60,000 Closing Stock: Finished goods 415 units (₹91,300); Work-in-process (₹82,400) Cost records: Factory overheads absorbed at 70% of direct wages; Administration overheads recovered at 15% of factory cost; Selling and distribution overheads charged at ₹6 per unit sold; Opening stock of finished goods valued at ₹240 per unit; Work-in-process valued at factory cost.
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Q.7 00 marks easy Job costing and overhead recovery rates ⚡ Try this Q →
SM Motors Ltd. is a manufacturer of auto components. Following are the details of expenses for the year 2022-23: Opening Stock of Material: ₹15,00,000 Closing Stock of Material: ₹20,00,000 Purchase of Material: ₹1,80,50,000 Direct Labour: ₹90,50,000 Factory Overhead: ₹30,80,000 Administrative Overhead: ₹20,50,400 During FY 2023-24, the company has received an order from a car manufacturer where the cost of material and labour is estimated at ₹80,00,000 and ₹40,50,000 respectively. The company 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 at customer's premises is estimated at ₹4,50,000.
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Q.8 00 marks easy Process costing and equivalent units ⚡ Try this Q →
The following information is furnished by ABC Company for Process - II of its manufacturing activity for the month of April 2023: (i) Opening Work-in-Progress: Nil (ii) Units transferred from Process I: 55,000 units @ ₹3,27,800 (iii) Expenditure debited to Process – II: Consumables ₹1,57,200; Labour ₹1,04,000; Overhead ₹52,000 (iv) Units transferred to Process III: 51,000 units (v) Closing WIP: 2,000 units (Consumables 80%; Labour 60%; Overhead 60%) (vi) Units scrapped: 2,000 units, sold at ₹5 per unit (vii) Normal loss: 4% of units introduced
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Q.9 00 marks easy Joint product costing and cost apportionment ⚡ Try this Q →
A factory producing article A also produces a by-product B which is further processed into finished product. The joint cost of manufacture is: Material ₹5,000; Labour ₹3,000; Overhead ₹2,000 (Total ₹10,000) Subsequent costs - Product A: Material ₹3,000; Labour ₹1,400; Overhead ₹600 (Total ₹5,000). Product B: Material ₹1,500; Labour ₹1,000; Overhead ₹500 (Total ₹3,000) Selling prices: A ₹16,000; B ₹8,000 Estimated profit on selling prices: A 25%; B 20% Assuming that selling and distribution expenses are in proportion of sales prices, show how you would apportion joint costs of manufacture and prepare a statement showing cost of production of A and B.
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Q.10 00 marks easy Service costing and tariff determination ⚡ Try this Q →
P Holiday Resorts offers three types of rooms: Deluxe Room (100 rooms, 90% occupancy); Super Deluxe Room (60 rooms, 75% occupancy); Luxury Suite (40 rooms, 60% occupancy). Rent of 'super deluxe' room is 2 times of 'deluxe room' and 'luxury suite' is 3 times of 'deluxe room'. Annual expenses: Staff salaries ₹680.00 lakhs; Lighting, Heating and Power ₹300.00 lakhs; Repairs, Maintenance and Renovation ₹180.00 lakhs; Linen ₹30.00 lakhs; Laundry charges ₹24.00 lakhs; Interior decoration ₹75.00 lakhs; Sundries ₹30.28 lakhs. An attendant for each occupied room paid ₹500 per day. Depreciation: Building @5% on ₹900 lakhs; Furniture and fixtures @10% on ₹90 lakhs; Air conditioners @10% on ₹75 lakhs. Profit @ 25% on total takings. Assume 360 days in a year. Ascertain the tariff to be charged to customers for different types of rooms.
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Q.11 00 marks easy Standard costing and labour variances ⚡ Try this Q →
The following information has been provided by a company: Number of units produced and sold: 6,000 Standard labour rate per hour: ₹8 Actual hours required: 17,094 hours Labour efficiency: 105.3% Labour rate variance: ₹68,376 (A) You are required to calculate:
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Q.13 00 marks easy Sales budgeting and budgetary control ⚡ Try this Q →
XY Co. Ltd manufactures two products X and Y and sells them through East and West divisions. For 2022-23: Budgeted Sales - X: East 400 units @ ₹9; West 600 units @ ₹9. Y: East 300 units @ ₹21; West 500 units @ ₹21 Actual Sales - X: East 500 units @ ₹9; West 700 units @ ₹9. Y: East 200 units @ ₹21; West 400 units @ ₹21 Market analysis reveals X is underpriced; increasing price by ₹1 will find ready market. Y is overpriced; reducing price by ₹1 will increase demand. Management has agreed to these changes. Based on price changes and sales reports, Divisional Managers estimate percentage increase in sales over budgeted sales: X: East +10%, West +5% Y: East +20%, West +10% With intensive advertisement, additional sales are possible: X: East 60 units, West 70 units Y: East 40 units, West 50 units Prepare Sales Budget for 2023-24 incorporating above estimates and show the Budgeted Sales and Actual Sales of 2022-23.
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