QNoneCost of Capital, Marginal Cost of Capital
0 marks easy
The company issued new debentures carrying 16% rate of interest and the current market price of debenture is ₹ 96. Preference share ₹ 9.20 (with dividend of ₹ 1.1 per share) were also issued. The company is in 50% tax bracket. EPS data from 2006-2015 is provided (ranging from ₹ 1.00 to ₹ 2.36).
Q1Cost Accounting - Machine Hour Rate, Inventory Valuation
20 marks very hard
Answer the following:
Q1(c)(i)Sinking Fund
0 marks easy
What is a sinking fund and how is it calculated?
Q1(c)(ii)Sinking Fund Calculation
0 marks easy
A company has purchased a plant for ₹ 10,00,000 with a useful life of 6 years. It expects that ₹ 15,00,000 will be required to replace the plant after 6 years. To ensure that money is available at the time of replacement, the company has created a sinking fund. You are required to determine the amount to be deposited annually, if the fund earns interest at 8% per annum. Given CVFA₀.₀₈, ₆ = 7.336
Q1(d)Leverage Analysis
0 marks hard
A company had the following balance sheet as on 31st March, 2015: Liabilities - Equity share capital of ₹ 10 each: ₹ 40,00,000; Reserve & Surplus: ₹ 8,00,000; 15% Debentures: ₹ 80,00,000; Current Liabilities: ₹ 32,00,000. Assets - Fixed Assets (Net): ₹ 1,28,00,000; Current Assets: ₹ 32,00,000. Additional information: Fixed cost per annum (excluding interest) = ₹ 32,00,000; Variable operating cost ratio = 70%; Total assets turnover ratio = 2.5; Income tax rate = 30%.
Q1(iii)Break-even Analysis
0 marks easy
In 2015, fixed cost per unit was ₹ 60 and it is expected to increase by 10% in 2016. The variable cost is expected to increase by 25%. Selling price for 2016 has been fixed at ₹ 300 per packet. You are required to calculate the Break-even volume in units for 2016.
Q2Ledger Control Accounts, Cost Accounting
8 marks very hard
एक कंपनी के रिकर्ड्स में मार्च, 2016 के लिए निन्न सूचनायें उपलब्ध हैं : (a) लेनदारों का प्रारम्भिक शेष ₹ 25,000 (b) लेनदारों का अन्तिम शेष ₹ 40,000 (c) लेनदारों को भुगतान ₹ 5,80,000 (d) स्टोर्स लेजर निर्यन खाते का प्रारम्भिक शेष ₹ 40,000 (e) स्टोर्स लेजर निर्यन खाते का अन्तिम शेष ₹ 65,000 (f) मजदूरी भुगतान (8000 घंटों के लिए) (20% अप्रत्यक्ष श्रमिकों से सम्बंधित) ₹ 4,00,000 (g) विभिन्न अप्रत्यक्ष व्यय ₹ 60,000 (h) चालू कार्य निर्यन खाते का प्रारम्भिक शेष ₹ 50,000 (i) माह के अन्त में चालू कार्य रहितये में सामग्री ₹ 35,000 की तथा 400 श्रम घण्टे प्रभारित (j) कारखाना उपरिव्यय उत्सादन पर बजट दर से जो कि प्रत्यक्ष मजदूरी घंटों पर आधारित है (k) बजट उपरिव्यय लागत ₹ 20,80,000 है जो कि 1,04,000 प्रत्यक्ष मजदूरी घंटों के लिए है। आपसे अपेक्षित है कि लेनदार खाता, स्टोर्स लेजर निर्यन खाता, चालू रहितया निर्यन खाता तथा कारखाना उपरिव्यय निर्यन खाता बनाइये।
Q2(a)Cost Accounting - Control Accounts
8 marks very hard
The following information is available from a company's records for March, 2016: Opening Balance of Creditors Account = ₹ 25,000; Closing Balance of Creditors Account = ₹ 40,000; Payment made to Creditors = ₹ 5,80,000; Opening Balance of Stores Ledger Control Account = ₹ 40,000; Closing Balance of Stores Ledger Control Account = ₹ 65,000; Wages paid (for 8000 hours) = ₹ 4,00,000, 20% relate to indirect workers; Various indirect expenses incurred = ₹ 60,000; Opening balance of WIP control account = ₹ 50,000; Inventory of WIP at the end of the month includes material worth ₹ 35,000 on which 400 labour hours have been booked; Factory overhead is charged to production at budgeted rate based on direct labour hours.
Q3Cost Accounting - Standard Costing and Variances
8 marks hard
X Associates undertake to prepare income tax returns for individuals for a fee. They use the weighted average method and actual costs for the financial reporting purposes. However, for internal reporting, they use a standard costs system. The standards, based on equivalent performance, have been established as follows.
Q3bWorking Capital Management / Credit Policy Analysis
8 marks hard
A trader whose current sales are ₹ 4,20,000 per annum and an average collection period of 30 days, wants to pursue a more liberal policy to improve sales. A study made by a management consultant reveals the following information:
Credit Policy: I (10 days, ₹ 21,000 increase in sales, 1.5% present default anticipated)
Credit Policy: II (30 days, ₹ 52,500 increase in sales, 3% present default anticipated)
Credit Policy: III (45 days, ₹ 63,000 increase in sales, 4% present default anticipated)
The selling price per unit is ₹ 3. Average cost per unit is ₹ 2.25 and variable cost per unit is ₹ 2. The current bad-debts loss is 1%. Required return on additional investment is 20%. Assume a 360 days year.
Which of the above policies would you recommend for adoption?
Q4aJoint Costing / Cost Apportionment
8 marks hard
A factory producing article A also produces a by-product B which is further processed into finished product. The joint cost of manufacture is given below:
Material: ₹ 5,000
Labour: ₹ 3,000
Overhead: ₹ 2,000
Total: ₹ 10,000
Subsequent cost in ₹ are given below:
Article A: Material 3,000; Labour 1,400; Overhead 600; Total 5,000
Article B: Material 1,500; Labour 1,000; Overhead 500; Total 3,000
Selling prices are:
A: ₹ 16,000
B: ₹ 8,000
Estimated profit on selling prices is 25% for A and 20% for B.
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.
Q4bCapital Budgeting / Investment Appraisal
8 marks hard
Given below are the data on a capital project 'C':
Cost of the project: ₹ 2,28,400
Useful life: 4 years
Profitability index: 1.0417
Internal rate of return: 15%
Salvage value: 0
You are required to calculate:
(i) Annual cash flow
(ii) Cost of capital
(iii) Net present value (NPV)
(iv) Discounted payback period
Discount factors table provided (for 15%, 14%, 13%, 12% over 1-4 years).
Q5Cost Accounting, Financial Management
16 marks very hard
State the difference between cost control and cost reduction. Write treatment of items associated with purchase of material: (i) Cash discount (ii) Subsidy/Grant/Incentives (iii) VAT or State Sales Tax (iv) Commission brokerage paid. Distinguish between operating lease and finance lease. Describe the three principles relating to selection of marketable securities.
Q6Cost Accounting, Process Costing, Break-even Analysis
4 marks hard
Case: The M-Tech Manufacturing Company is presently evaluating two possible processes for the manufacture of a toy.
The M-Tech Manufacturing Company is presently evaluating two possible processes for the manufacture of a toy. The following information is available: Variable cost per unit: Process A ₹12, Process B ₹14; Sales price per unit: Process A ₹20, Process B ₹20; Total fixed costs per year: Process A ₹30,00,000, Process B ₹21,00,000; Capacity (in units): Process A 4,30,000, Process B 5,00,000; Anticipated sales (Next year, in units): Process A 4,00,000, Process B 4,00,000
Q7Cost Accounting, Cost Plus Contract, Working Capital, Capita
16 marks very hard
Answer any four of the following