Q1(a)Break Even Analysis
20 marks very hard
SHA Limited provides the following trading results:
Year | Sale | Profit
2012-13 | ₹ 25,00,000 | 10% of Sale
2013-14 | ₹ 20,00,000 | 8% of Sale
You are required to calculate:
Q1(b)Reconciliation of Cost and Financial Accounts
0 marks easy
A manufacturing company has disclosed net loss of ₹ 48,700 as per their cost accounting records for the year ended 31st March, 2014. However their financial accounting records disclosed net profit of ₹ 35,400 for the same period. A scrutiny of data of both the sets of books of accounts revealed the following informations:
(i) Factory overheads under absorbed: ₹ 30,500
(ii) Administrative overheads over absorbed: ₹ 65,000
(iii) Depreciation charged in financial accounts: ₹ 2,25,000
(iv) Depreciation charged in cost accounts: ₹ 2,70,000
(v) Income-tax provision: ₹ 52,400
(vi) Transfer fee (credited in financial accounts): ₹ 10,200
(vii) Obsolescence loss charged in financial accounts: ₹ 20,700
(viii) Notional rent of own premises charged in cost accounts: ₹ 54,000
(ix) Value of opening stock: in cost accounts ₹ 1,38,000; in financial accounts ₹ 1,15,000
(x) Value of closing stock: in cost accounts ₹ 1,22,000; in financial accounts ₹ 1,12,500
Prepare a Memorandum Reconciliation Account by taking costing loss as base.
Q2(b)Financial Analysis - Leverage and EPS
0 marks easy
Calculate the following and comment:
(i) Earnings Per Share
(ii) Operating Leverage
(iii) Financial Leverage
(iv) Combined Leverage
Q2aEconomic Order Quantity, Inventory Management
8 marks hard
A company manufactures a product from a raw material, which is purchased at ₹ 80 per kg. The company incurs a handling cost of ₹ 370 plus freight of ₹ 380 per order. The incremental carrying cost of inventory of raw material is ₹ 0.25 per kg per month. In addition, the cost of working capital finance on the investment in inventory of raw material is ₹ 12 per kg per annum. The annual production of the product is 1,00,000 units and 2.5 units are obtained from one kg. of raw material. Assume 360 days in a year.
Q2bFinancial Analysis, Leverage, Return on Capital
8 marks hard
Case: Balance Sheet Analysis with additional financial information
A company had the following Balance Sheet as on 31st March, 2014: Liabilities [Equity Share Capital (50 lakh shares of ₹ 10 each) ₹ 5 crores; Reserves and Surplus ₹ 1 crore; 15% Debentures ₹ 10 crores; Current Liabilities ₹ 4 crores]; Assets [Fixed Assets (Net) ₹ 12.5 crores; Current Assets ₹ 7.5 crores]. Additional information: Fixed cost per annum (excluding interest) ₹ 4 crores; Variable operating cost ratio 65%; Total assets turnover ratio 2.5; Income Tax rate 30%.
Q3Process Costing
8 marks hard
M. Vets Pvt. Ltd. manufactures 'SKY' through two processes: Process - A and Process - B. The following details are for the year ended 31 March 2014:
Q3(a)Process Costing
8 marks hard
M J Pvt. Ltd. produces a product "SKY" which passes through two processes, viz. Process-A and Process-B. The details for the year ending 31st March, 2014 are as follows:
40,000 Units introduced at a cost of ₹3,60,000 (Process-A only)
Material Consumed: Process-A ₹2,42,000, Process-B ₹2,25,000
Direct Wages: Process-A ₹2,58,000, Process-B ₹1,90,000
Manufacturing Expenses: Process-A ₹1,96,000, Process-B ₹1,23,720
Output in Units: Process-A 37,000, Process-B 27,000
Normal Wastage of Input: Process-A 5%, Process-B 10%
Scrap Value (per unit): Process-A ₹15, Process-B ₹20
Selling Price (per unit): Process-A ₹37, Process-B ₹61
Additional Information:
(a) 80% of the output of Process-A was passed on to the next process and the balance was sold. The entire output of Process-B was sold.
(b) Indirect expenses for the year was ₹4,48,080.
(c) It is assumed that Process-A and Process-B are not responsibility centre.
Required:
(i) Prepare Process-A and Process-B Account.
(ii) Prepare Profit & Loss Account showing the net profit / net loss for the year.
Q3(b)Capital Budgeting - NPV and Profitability Index
8 marks hard
FH Hospital is considering to purchase a CT-Scan machine. Presently the hospital is outsourcing the CT-Scan Machine and is earning commission of ₹15,000 per month (net of tax). The following details are given regarding the machine:
Cost of CT-Scan machine: ₹15,00,000
Operating cost per annum (excluding Depreciation): ₹2,25,000
Expected revenue per annum: ₹7,90,000
Salvage value of the machine (after 5 years): ₹3,00,000
Expected life of the machine: 5 years
Assuming tax rate @ 30%, whether it would be profitable for the hospital to purchase the machine?
Give your recommendation under:
(i) Net Present Value Method
(ii) Profitability Index Method
PV factors at 12% are given: Year 1: 0.893, Year 2: 0.797, Year 3: 0.712, Year 4: 0.636, Year 5: 0.567
Q3(b)Depreciation and Asset Valuation
8 marks hard
An assessee purchased a CT-Scheme machine on a specific date. During the current time period, the assessee purchased another CT-Scheme machine with outgoing amount ₹15,000 (depreciation rate). The assessee raises the following doubts:
Q3cTrading Account, Profit & Loss Account, Financial Ratios
0 marks easy
Case: NOOR Limited
NOOR Limited provides the following information for the year ending 31st March, 2014: Equity Share Capital ₹ 25,00,000; Closing Stock ₹ 6,00,000; Stock Turnover Ratio 5 times; Gross Profit Ratio 25%; Net Profit / Sale 20%; Net Profit / Capital 1/4. You are required to prepare: Trading and Profit & Loss Account for the year ending 31st March, 2014.
Q3dWeighted Average Cost of Capital (WACC)
0 marks easy
Case: GPS Limited
The following details are provided by the GPS Limited: Equity Share Capital ₹ 65,00,000; 12% Preference Share Capital ₹ 12,00,000; 15% Redeemable Debentures ₹ 20,00,000; 10% Convertible Debentures ₹ 8,00,000. The cost of equity capital for the company is 16.30% and Income Tax rate for the company is 30%. You are required to calculate the Weighted Average Cost of Capital (WACC) of the company.
Q4Financial Analysis
8 marks hard
XYZ Ltd. provides the following comparative information:
Q4(a)Standard Costing - Overhead Variances
8 marks hard
XYZ Co. Ltd. provides the following information:
Production: Standard 4,000 Units, Actual 3,800 Units
Working Days: Standard 20, Actual 21
Fixed Overhead: Standard ₹40,000, Actual ₹39,000
Variable Overhead: Standard ₹12,000, Actual ₹12,000
You are required to calculate following overhead variances:
(a) Variable Overhead Variance
(b) Fixed Overhead Variances:
(i) Expenditure Variance
(ii) Volume Variance
Q5(a)Cost Control and Cost Reduction
4 marks medium
Distinguish between cost control and cost reduction.
Q5(b)Types of Costs
4 marks medium
Explain the following:
Q5(c)Role of CFO
4 marks medium
Discuss emerging issues affecting the future role of Chief Financial Officer (CFO).
Q5(d)Depositary Receipts
4 marks medium
State the main features of Global Depositary Receipts (GDRs) and American Depositary Receipts (ADRs).
Q6Working Capital Management
0 marks easy
Case: Additional Information: (i) Average raw material in stock - 3 weeks; (ii) Average work-in-progress - 2 weeks (% of completion with respect to Material - 75%, Labour & Overhead - 70%); (iii) Finished goods in stock - 4 weeks; (iv) Credit allowed to debtors - 2½ weeks; (v) Credit allowed by creditors - 3½ weeks; (vi) Time lag in payments of labour - 2 weeks; (vii) Time lag in payments of factory overheads - 1½ weeks; (viii) Company sells 25% of the output against cash; (ix) Cash in hand and bank is desired to be maintained ₹ 2,25,000; (x) Provision for contingencies is required @ 4% of working c…
You are required to prepare a statement showing estimate of working capital needed to finance a budgeted activity level of 104000 units of production. Finished stock, debtors and overhead are taken at cash cost.
Q6(a)Contract Accounting, WIP, Profit Recognition
8 marks very hard
M/s ABID Constructions undertook a contract at a price of ₹171.00 lacs. The relevant data for the year ended 31st March, 2014 are: Material issued at site ₹7,700,000; Direct Wages paid ₹3,300,000; Site office cost ₹550,000; Material return to store ₹175,000; Work certified ₹12,650,000; Work uncertified ₹225,000; Progress Payment Received ₹10,120,000; Prepaid site office cost as on 31-03-2014 ₹50,000; Direct wages outstanding as on 31-03-2014 ₹100,000; Material at site as on 31-03-2014 ₹110,000. Additional Information: A plant was purchased for the contract at ₹8,00,000 on 01-12-2013. Depreciation @ 15% per annum is to be charged. Material which cost ₹1,30,000 was destroyed by fire.
Q6(b)Cost Accounting, Cost Sheet, Absorption Costing
8 marks hard
Black Limited has furnished the following cost sheet: Raw Material ₹98 per unit; Direct Labour ₹53 per unit; Factory Overhead ₹88 per unit (includes depreciation of ₹15 per unit at budgeted level of activity); Total Cost ₹239 per unit; Profit ₹43 per unit; Selling Price ₹282 per unit.
Q7Cost Accounting, Financial Management, Treasury Management
16 marks very hard
Answer any four of the following:
Q7Cost Accounting - Cost Allocation, Budgeting, International
16 marks very hard
निम्नलिखित में से किन्हीं चार के उत्तर दीजिए :
Q7(b)Cash Flow Statement Preparation
8 marks hard
The Balance Sheets of 7 Ltd. as on 31st March, 2013 and 31st March, 2014 are provided with the following balance sheet data. Additional Information: (i) Depreciation charged on Plant and Land & Buildings during the year was ₹50,000 and ₹1,00,000 respectively. (ii) Income-Tax ₹1,75,000 was paid during the year 2013-14. (iii) An Interim Dividend of ₹1,00,000 has been paid in 2013-14. Prepare Cash Flow Statement.