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Past papers/ Cost & Mgmt/ January 2025
Paper 31 Qs
Question Paper · January 2025

CA Inter Cost & Mgmt

This page contains all 31 questions from the CA Inter Cost & Management Accounting Question Paper for the January 2025 attempt cycle, sourced from VSI Jaipur, CA Exams.

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Q.VAE2(D) 00 marks easy Activity Based Costing vs Traditional Absorption Costing ⚡ Try this Q →
Direct wages rate is ₹ 14.50 per hour. Presently the company uses a single rate recovery rate based on direct labour hours. Overhead incurred by the company during the year 2023-24 are as follows: Indirect staff salary ₹ 45,000; Machine operation expenses ₹ 1,62,000; Repairs ₹ 27,000; Wages and salary of stores staff ₹ 36,000. During this period direct labour hours worked 72,000. The Company wants to adopt Activity Based Costing. For this purpose, following activities are identified: Quality control, Setup of machine for production runs, Inspection. It is also decided that salary of technical staff should be distributed among maintenance, inspection and quality control in the ratio of 1:2:3. Machine maintenance and machine operation should be distributed in the ratio of 3:1 in relation to stores and production setup activities. During this period cost drivers for these activities are identified as under: Regulation raised 5,760; Production setup 7,200; No. of quality test 720. You are required to compute: (i) The cost of products P and Q based on traditional absorption costing system. (ii) The cost of products P and Q based on ABC Costing system.
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Worked Solution

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Note: The question as presented is missing the product-specific data for Products P and Q (direct material cost per unit, direct labour hours per unit, units produced, and cost driver consumption by each product). The solution below computes all overhead rates fully and presents the cost structure framework. The final product unit costs can be inserted once that data is available.

Part (i): Traditional Absorption Costing

Overhead Absorption Rate (OAR):

Total Overhead = ₹45,000 + ₹1,62,000 + ₹27,000 + ₹36,000 = ₹2,70,000

OAR = Total Overhead / Total Direct Labour Hours = ₹2,70,000 / 72,000 hours = ₹3.75 per DLH

Cost per unit of Product P or Q = Direct Material + Direct Labour (DLH × ₹14.50) + Overhead (DLH × ₹3.75)

Part (ii): Activity Based Costing System

Step 1 — Allocate Technical/Indirect Staff Salary (₹45,000) in ratio 1:2:3 among Maintenance, Inspection, and Quality Control:
- Maintenance: ₹45,000 × 1/6 = ₹7,500
- Inspection: ₹45,000 × 2/6 = ₹15,000
- Quality Control: ₹45,000 × 3/6 = ₹22,500

Step 2 — Compute total Machine-related costs and distribute in ratio 3:1 (Stores : Production Setup):
- Machine Maintenance = Repairs ₹27,000 + Maintenance staff salary ₹7,500 = ₹34,500
- Machine Operation Expenses = ₹1,62,000
- Total Machine Costs = ₹1,96,500
- Stores (3/4): ₹1,96,500 × 3/4 = ₹1,47,375
- Production Setup (1/4): ₹1,96,500 × 1/4 = ₹49,125

Step 3 — Build Activity Cost Pools:

ActivityBasisAmount (₹)
InspectionStaff salary allocation15,000
Quality ControlStaff salary allocation22,500
Production SetupMachine cost allocation49,125
StoresMachine cost allocation (₹1,47,375) + Stores staff wages (₹36,000)1,83,375
Total2,70,000

Step 4 — Compute Activity Cost Driver Rates:

ActivityCost Pool (₹)Cost DriverVolumeRate (₹)
Inspection (Regulations raised)15,000Regulations raised5,7602.60 per regulation
Stores (Regulations raised)1,83,375Regulations raised5,76031.83 per regulation
Production Setup49,125No. of setups7,2006.82 per setup
Quality Control22,500No. of quality tests72031.25 per test

Note on cost driver mapping: Inspection and Stores both use 'Regulations raised' as the driver (stores requisitions/inspection reports). If treated as a combined pool: (₹15,000 + ₹1,83,375) / 5,760 = ₹34.44 per regulation.

Step 5 — ABC Unit Cost Structure:

For each product: Unit Cost = Direct Material + Direct Labour (DLH × ₹14.50) + Σ (Cost driver units consumed per unit × Activity rate)

Comparison: Under Traditional Costing, all overhead is recovered uniformly at ₹3.75/DLH regardless of actual activity consumption. Under ABC, overhead is traced to products based on actual consumption of each activity, producing more accurate costs — particularly where products differ in batch size, setup frequency, or quality testing requirements. Products consuming fewer setups or quality tests will show lower overhead under ABC compared to traditional costing.

PLAN

Write it like this

Time target 14 min 24 sec

1The skeleton

- Write the OAR formula first, then substitute — examiners look for '₹2,70,000 / 72,000 DLH = ₹3.75 per DLH' as a standalone line, not buried inside a paragraph, because it anchors Part (i) and shows you know the traditional method cold.
- Show the 1:2:3 split with rupee values explicitly — write 'Maintenance ₹7,500 | Inspection ₹15,000 | Quality Control ₹22,500' as a mini-table; lumping them loses the step marks even if your total is right.
- Aggregate machine costs BEFORE distributing — your examiner wants to see Repairs ₹27,000 + Maintenance allocation ₹7,500 = ₹34,500 as one labelled line, THEN add Machine Operation ₹1,62,000 to get ₹1,96,500; skipping this step loses the logic trail.
- Present the Activity Cost Pool table with a 'Total = ₹2,70,000' cross-check row — this proves your allocation is exhaustive and examiners reward the reconciliation even if individual pool figures are off by a small calculation error.
- Compute each driver rate as a separate row — write 'Cost Pool ÷ Driver Volume = Rate' for all four activities in columnar format; examiners award one mark per correct rate, so format makes each rate independently scoreable.
- End with a two-line comparison statement — 'Under traditional costing, overhead absorbed uniformly @ ₹3.75/DLH; under ABC, overhead traced via activity consumption' seals the question and shows conceptual grasp, which fetches the last presentation mark.

2Examiner-rewarded phrases

“activity cost driver rate = total cost of activity pool / total cost driver volume”“overhead is absorbed on the basis of direct labour hours under the traditional absorption costing system”“the cost of each activity is traced to products using the respective cost driver”

3Common trap

Don't fall for this

Watch out — most students distribute machine costs (₹1,62,000 + ₹27,000) in the 3:1 ratio directly, forgetting to first add the Maintenance staff salary allocation (₹7,500) to Repairs before forming the 'Machine Maintenance' pool. That single miss cascades wrong figures into every ABC driver rate and wipes out most of Part (ii) marks even if your method is textbook-perfect.

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Q.a 09 marks hard Audit procedure and department classification ⚡ Try this Q →
पी. कन्नौर एवं अमित कदम के और (i) किचत & निकट में विभिन्न करने के समान खाकी और (ii) किचत के बिदेश में विभिन्न करने के समान खाकी। प्रश्न सामग्री: ख - 4 मिलियन ₹ 50 जीर्ण, ख - 5 मिलियन ₹ 40 जीर्ण, प्रश्न: ₹ 6 रुपये ₹ 20 जीर्ण। खरीदी & पास के किसी & 1600 शेष उप्सान्त और विभिन्न मिश्रे। खाकी एवं सामग्री के ऊपर निर्दिष्ट मिश्रे खा क्षेत्र है परन्तु। परिणामित विभागों की नामक स्पष्ट सामग्री की अनुमोदन व संशोधिता को हटाकर दर्ज करें: (i) खाकी सामान विभाग (ii) खाकी चोख विभाग (iii) खाकी उम्मीद विभाग (iv) खाकी विभिन्न विभाग (v) खाकी क्षेत्र (खेत) विभाग (vi) खा सामान विभाग (vii) खा दस विभाग (viii) खा स्पष्ट विभाग (ix) खा परिभाषित सामान विभाग
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Worked Solution

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Note on Question Clarity: The question text as presented appears to be severely garbled or corrupted Hindi/transliterated text that does not form coherent sentences or recognisable accounting/audit terminology. The sub-part labels (e.g., 'खाकी सामान विभाग', 'खा दस विभाग') do not correspond to any standard CA Intermediate syllabus topic in their current form. It is likely the source text was distorted during OCR, translation, or copy-paste. A confident, accurate answer cannot be constructed without the original, legible question.

What can be attempted based on available context:

The topic stated is 'Audit procedure and department classification' under Paper 4 (Auditing and Assurance). If the question is asking about classification of departments from an internal/government audit perspective, the following framework applies:

Classification of Departments for Audit Purposes (as relevant under SA 315 — Identifying and Assessing the Risks of Material Misstatement and provisions under the Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 1971 for government entities):

Purchase / Procurement Department: Auditor verifies purchase orders, supplier invoices, and approval authorities. Risk of fictitious purchases and over-invoicing is assessed.

Sales / Revenue Department: Vouching of sales invoices against dispatch records, credit notes, and collections. Cut-off procedures are critical.

Finance / Accounts Department: Review of books of account, reconciliations, and financial reporting controls.

Stores / Inventory Department: Physical verification of stock, comparison with bin cards and stock registers, and assessment of obsolescence.

Production / Operations Department: Review of cost records, output reports, and wastage norms.

HR / Payroll Department: Verification of payroll with attendance records, authorisation for increments, and ghost-employee risk.

IT / Systems Department: Assessment of general IT controls (GITCs) and application controls per SA 315.

Legal / Compliance Department: Review of pending litigation disclosures and regulatory compliance.

Capital Expenditure Department: Verification of fixed asset additions, authorisation, and capitalisation policies.

For each department, the auditor applies SA 330 (The Auditor's Responses to Assessed Risks) — designing both tests of controls and substantive procedures commensurate with the risk level identified.

Request to the student/examiner: Please re-submit the original question text (in clear English or legible Hindi) so an accurate, mark-specific answer can be provided.

SA 315 — Identifying and Assessing the Risks of Material Misstatement (Revised)SA 330 — The Auditor's Responses to Assessed RisksSA 500 — Audit EvidenceComptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 1971
PLAN

Write it like this

Time target 16 min 12 sec

1The skeleton

- Start with the department name as a bold heading for each part — examiners allocate sub-marks per department, so if your heading is missing or vague, they can't tick it even if your content is right.
- State the audit objective for that department in one crisp line first — e.g. 'The primary audit objective in the Purchase Department is to verify the genuineness and proper authorisation of procurement transactions.' This signals you know WHY the audit is happening, not just WHAT to check.
- List 3-4 specific audit procedures per department as numbered points — avoid bullet soup; numbered sub-points show examiner you've structured your thinking and make it easy to award 1 mark per valid procedure.
- Cite the relevant SA (Standard on Auditing) at least once per department answer — SA 315 for risk identification, SA 330 for audit responses; even one correct SA reference lifts your answer from 'good student' to 'exam-ready candidate'.
- End each department section with the key risk or assertion being addressed — completeness, existence, valuation, cut-off — naming the assertion shows examiner-level depth and often earns the clincher half-mark.
- If the question lists 9 departments for 9 marks, write exactly 9 sections — don't club two departments together to save time; that's a guaranteed mark drop since each section is independently ticked.

2Examiner-rewarded phrases

“The auditor shall obtain an understanding of the entity's internal controls relevant to the audit in accordance with SA 315.”“The auditor designs and performs further audit procedures whose nature, timing and extent are based on and responsive to the assessed risks of material misstatement — as required under SA 330.”“Vouching of transactions with supporting documentary evidence including purchase orders, invoices, goods receipt notes and due authorisation.”

3Common trap

Don't fall for this

Most students write a single paragraph mixing all departments together — that kills you here because examiners tick marks department-by-department. If your answer isn't clearly separated by department heading, the examiner literally cannot find where one ends and the next begins, and you lose 3-4 marks on presentation alone even with correct content.

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Q.b 06 marks medium Accounting/Financial Calculation ⚡ Try this Q →
खाकी निर्दिष्ट सामग्री में अगले 30% धरती वर्तमान वर्ष की है और निर्दिष्ट अपराध के लिए प्रदिष्ट सामग्री नीचे दी है। अपराध/विभाग: 96,000 खरीदार, ₹ 20 जीर्ण, ₹ 40,000, ₹ 20,00,000, विभिन्न सामग्री, विभिन्न पूर्णता (खाती), विभिन्न सामग्री। अपराध का विभिन्न पूर्ण ₹ 120 जीर्ण है और क्षणिकता उप्सन्न है। खाकी निर्दिष्ट के अभिलेख को वर्ण नामित प्रास्त की कि अपराध का है अपराध की भीड़ व अभ्यास अनुच्छेद रिंग अभी अपराध की भीड़ को निर्णीत करना उपयोग का होगा। प्रश्न या होगा। निर्दिष्ट 3 60%, 40% और 100% धरती स्पष्ट में तरीकेशन करने का विभिन्न होगा। अपने प्रक्षेप धरती पर अपराध के क्षेत्र सामग्री द्वारा उप्सयुक्त करने को देखा जाता है।
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Worked Solution

✓ Verified

Note: The question text appears to be severely garbled/corrupted Hindi and cannot be parsed into a coherent, solvable problem. The text contains fragments that do not form a complete, intelligible question. Partial data visible includes: 96,000 units, ₹20 per unit, ₹40,000, ₹20,00,000, ₹120 per unit, and completion percentages of 60%, 40%, and 100%. These figures suggest this may be an Equivalent Production (Process Costing) problem under Cost Accounting (Paper 4 — Cost and Management Accounting), or possibly a Contract Accounting problem under AS 7.

If this is an Equivalent Production problem, the typical approach would be:
1. Prepare a Statement of Equivalent Production using FIFO or Weighted Average method.
2. For units at 60%, 40%, 100% completion, multiply physical units by the respective completion percentage to get equivalent units for labour/overhead.
3. Divide total cost by equivalent units to get cost per equivalent unit.
4. Multiply cost per equivalent unit by equivalent units in closing WIP to value closing WIP.

If this is an AS 7 Construction Contract problem, the Percentage of Completion Method under AS 7 (Accounting Standard 7 — Construction Contracts) would apply: recognize revenue = (Work certified / Contract price) × Total contract price.

Please resubmit the question in clear English or properly formatted Hindi with all data legible so a complete and accurate solution can be provided.

AS 7 — Construction Contracts (ICAI)ICAI Study Material — Cost Accounting, Chapter: Process Costing / Equivalent Production
PLAN

Write it like this

Time target 10 min 48 sec

1The skeleton

- Identify the method first — write 'FIFO Method' or 'Weighted Average Method' as a heading before any table, so the examiner knows your framework before scanning your numbers.
- Draw the Statement of Equivalent Production as a ruled table — columns: Particulars | Physical Units | % Completion (Material) | Eq. Units (Material) | % Completion (Labour & OH) | Eq. Units (Labour & OH). Examiners award 1-2 marks just for the correct table structure, even if your numbers slip.
- Show the Cost per Equivalent Unit working separately — write it as a fraction: Total Cost ÷ Total Equivalent Units = ₹ X per unit. Never bury this inside the table; it needs its own line so partial marks are guaranteed.
- Value the closing WIP in a separate final table — Material cost + Labour cost + Overhead cost = Total WIP value. This is where the last 1-2 marks sit; if you club it into the main table the examiner may miss it.
- State your assumption if the method is not given — one line: 'Since the method is not specified, Weighted Average Method has been used.' This protects you from a zero if the examiner expected FIFO.

2Examiner-rewarded phrases

“Statement of Equivalent Production (Weighted Average / FIFO Method)”“Cost per equivalent unit = Total cost incurred / Total equivalent units”“Closing work-in-progress has been valued at equivalent units multiplied by cost per equivalent unit”

3Common trap

Don't fall for this

Most students write the equivalent units correctly but forget to separate Material completion % from Labour & Overhead completion % — the question almost always gives different percentages for each, and clubbing them into one column drops you 2 marks instantly even if your final WIP value looks right.

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Q.b 05 marks medium Indirect Audit Documentation (IAT) procedure ⚡ Try this Q →
विदेश-ऑडिट-सूचनालय (IAT) प्रक्रिया का आयाज क्रीडा & टेस्ट समीक्षा के 2+3 लिए निम्नलिखित प्रश्नों का उत्तर दें:
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Q.1 05 marks hard Cost & Management Accounting ⚡ Try this Q →
Case: Language Achievers, a renowned institute specializing in TOEFL preparation, has secured a spacious hall for ₹ 20,000 on weekly basis with a seating capacity of 250 students. The instructor, highly qualified and experienced, is compensated generously with an honorarium of ₹ 1,500 per week. Additionally, he receives reimbursement for travel expenses of ₹ 200 per day along with refreshments costing ₹ 1,500 per week to ensure his comfort and focus during teaching sessions. Administrative and miscellaneous expenses, covering essential utilities and support staff, are ₹ 500 per week. Language Achiev…
Required: (i) Calculate the total cost per batch. (ii) Determine the minimum fee per student in a batch to cover costs, if the batch is fully occupied. (iii) Calculate the fee to be charged from each student if batch is 80% filled and institute aims to achieve a profit margin of 25% on the fee.
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Q.1 05 marks hard Break-even Analysis, Cost Accounting ⚡ Try this Q →
Case: XYZ Company has an option to buy any one of the two machines N or M for the same cost. Each of the machines have the capacity to produce same quality of component P and are almost identical except for the fact that they are being produced by a different manufacturers.
XYZ Company has an option to buy any one of the two machines N or M for the same cost. Each of the machines have the capacity to produce same quality of component P and are almost identical except for the fact that they are being produced by a different manufacturers. The specifications for each machine are: Machine M: It has the capacity to produce 50,000 components of P per annum, the fixed costs being ₹ 1,50,000 and could generate a profit of ₹ 2,25,000 on the sale of all the components produced. Machine N: It is also having the equal capacity to produce same number of components as that of Machine M per annum and all the components thus produced could be sold in the open market without any difficulty. Fixed cost of Machine N is ₹ 60,000 less than that of Machine M and yield a profit of ₹ 1,60,000 by selling all the components thus produced. The selling price of each component of P is ₹ 100.
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Q.1(b) 05 marks hard Cost Accounting - Reconciliation of Profit ⚡ Try this Q →
Case: XYZ Ltd. declared a net profit of ₹ 2,23,000 based on their financial statements for the year ending 31st March, 2024. The profit declared in Directors report was ₹ 2,50,000.
XYZ Ltd. declared a net profit of ₹ 2,23,000 based on their financial statements for the year ending 31st March, 2024. The profit declared in Directors report was ₹ 2,50,000. A difference of ₹ 27,000 in information was revealed during the scrutiny of the figures of both the sets of books. Particulars: Preliminary written off in financial accounts: ₹ 35,000 Goodwill written off in financial accounts: ₹ 40,000 Expenses on issue of shares in financial accounts: ₹ 30,000 Under valuation of closing stock in cost accounts: ₹ 65,000 Interest on Bank Deposits in financial accounts: ₹ 60,000 Under recovery of administration overheads in cost accounts: ₹ 25,000 Notional fuel of own premises charged in cost accounts: ₹ 30,000 Under recovery of selling overheads in cost accounts: ₹ 35,000 Bad debts recovered in financial accounts: ₹ 30,000 Prepare Reconciliation Statement to arrive at net profit/loss as per Cost Accounts
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Q.1(b) 05 marks hard Cost Accounting - Contribution and Profitability ⚡ Try this Q →
PQR Ltd. manufactures a product in batches of 2,000 units. The following costs are incurred for each batch: Direct Material Cost per Batch: ₹ 2,40,000; Direct Labour Cost per Batch: ₹ 1,65,000; Overhead Absorption Rate (variable): 120 per machine hour; Expected Rejection Rate: 3%; Scrap Value per Rejected Unit: 75. Other Information: Selling Price per Good Unit: ₹ 250; Total Available Machine Hours per month: 3,000 hours; Fixed Overheads per Month: ₹ 1,25,000; Batches Manufactured per Month: 10 batches.
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Q.1(c) 04 marks hard Cost Accounting - Special Order Evaluation and Decision Maki ⚡ Try this Q →
Case: JC Ltd. has a production capacity of 80,000 units per year. Presently producing 60,000 units with specific cost structure and a special order offer from a Japanese client.
JC Ltd. has a production capacity of 80,000 units per year. Presently a production and capacity of 60,000 units. Its cost structure is as under: Labour Cost: ₹ 4 per unit Variable overheads: ₹ 2 per unit Total fixed cost ₹ 3,00,000 per annum. Presently selling price ₹ 20 per unit. It intends to offer from a Japanese client to supply 20,000 units at a price of ₹ 14 per unit with the additional shipping cost of ₹ 8,000. Required: (i) On the basis of charges in the profit, advise to the company, whether the order should be accepted or not? (ii) Will your advice be different, if the customer is local one? (iii) If Japanese client offer for supply of 30,000 units at a price of ₹ 14 (part supply of order not accepted) and shipping cost treated as Variable cost, analyze the impact on the profit of JC Ltd., if so accepted.
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Q.2(a) 08 marks very hard Cost Accounting - Prime Cost Analysis and Costing ⚡ Try this Q →
Case: MNP Limited case with prime cost data across different capacity levels, material purchase information, and production costing details for January and February 2024.
MNP Limited have the capacity to produce 84,000 units of a product every month. Its prime cost per unit at various levels of production is as follows: Level: 10%, Prime Cost: ₹ 50 Level: 20%, Prime Cost: ₹ 48 Level: 30%, Prime Cost: ₹ 46 Level: 40%, Prime Cost: ₹ 44 Level: 50%, Prime Cost: ₹ 42 Level: 60%, Prime Cost: ₹ 40 Level: 70%, Prime Cost: ₹ 38 Level: 80%, Prime Cost: ₹ 36 Level: 90%, Prime Cost: ₹ 34 Level: 100%, Prime Cost: ₹ 32 Its prime cost consists of raw material consumed, direct wages and direct expenses in the ratio of 3 : 2 : 1. In the month of January 2024, the company worked at 40% capacity and raw material purchased amounted to ₹ 15,00,000. In the month of February 2024, the company worked at 100% capacity and raw material purchased for ₹ 16,40,400. It is the policy of the company to maintain opening stock of raw material at 20% of raw material. Factory overheads are recovered at 60% of direct wages cost. Fixed administration expenses (as part of production cost) and fixed selling and distribution expenses are ₹ 2,00,000 and ₹ 1,68,000 per month respectively. During the month of January 2024 company sold 33,600 units of ₹ 7.65 per unit. The variable distribution cost amounts to ₹ 1.5 per unit sold.
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Q.2(a) 09 marks hard Manufacturing Accounts ⚡ Try this Q →
The following information relates to a manufacturing concern A Ltd. for the year ended 31st March 2024: Raw Material (in ₹): As on 1st April 2023: 3,40,000; As on 31st March 2024: 1,80,000. Work in Progress (in ₹): As on 1st April 2023: 5,50,000; As on 31st March 2024: 3,50,000.
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Q.3 08 marks very hard Cost accounting, Multi-product analysis, Activity-based cost ⚡ Try this Q →
Case: GST Limited produces two products P and Q with given production and cost details.
GST Limited is a multi-product company. The production and cost details of its two products P and Q are given as follows: | Particulars | P | Q | |---|---|---| | Quantity produced (No.) | 9,000 | 7,200 | | Direct material cost (₹) | 72,000 | 50,000 | | Direct labour hours | 800 | 600 | | Purchase requisition (Nos.) | 180 | 144 | | Production runs (No.) | 144 | 108 | | Quality inspections (No.) | 27 | 18 |
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Q.3(a) 00 marks easy Process Costing ⚡ Try this Q →
A chemical compound is manufactured through two processes namely Process X and Process Y. Process Y is dependent on the output produced by Process X and the semi-finished product received from Process X shall be mixed up with further materials in Process Y. The details of costs and other particulars for each process are given as follows: | Particulars | Process X | Process Y | |---|---|---| | Direct Material | 1,000 kgs @ ₹50 per kg | 700 kgs @ ₹90 per kg | | Direct Labour | ₹35,000 | ₹25,000 | | Process Plant time | 200 hrs @ ₹6/hr | 120 hrs @ ₹8/hr | | Expected output | 75% of input | 80% of input (1150) | | Actual output | 700 | 1150 | | Realizable value of Normal Loss | ₹8 per kg | ₹5 per kg | Notes: (i) The departmental overhead for the period was ₹30,000 and is absorbed in each process on direct labour cost (ii) Process plant time represents the attributable plant run time with respect to each process and is a part of direct process cost (iii) Assume no finished stock and work in progress either at the beginning and end of the period. Required: Prepare Process X Account, Process Y Account, Normal Loss Account and Abnormal Gain Account.
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Q.3(b) 06 marks medium Cost-Volume-Profit Analysis ⚡ Try this Q →
SW Limited manufactures Lambi bed covers. The present cost data are as below: Variable Cost of manufacturing per unit: ₹200 Variable cost of selling and distribution per unit: ₹100 Fixed costs: ₹16,00,000 Selling price per unit: ₹800 Expected Profit for the coming year: ₹8,00,000 The management would sense a stage of stagnation/deterioration in future sales with the new entrant IK Enterprises. The SW limited has approached to one marketing consulting firm for help of cost volume profit analysis. The firm suggested three alternatives to fuel the sales growth by linking with the selling price. Alternatives: Alternative 1: Reduce selling price 10.00% - Projected increase in sales 15% Alternative 2: Reduce selling price 12.50% - Projected increase in sales 20% Alternative 3: Reduce selling price 15.00% - Projected increase in sales 25% (Projected increase from the sales level that would generate ₹8,00,000 profit) Required: Calculate the effect on profit under each alternative and recommend which alternative is most likely to get the maximum profit.
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Q.4 09 marks hard Standard Costing ⚡ Try this Q →
BG company produces a standard product and sold in a packet of 10 kg. The standard cost card per pack is as follows: Direct Material - A: 4 kg @ ₹ 50 per kg, B: 8 kg @ ₹ 40 per kg; Direct Labour: 6 hours @ ₹ 20 per hour
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Q.4(a) 08 marks hard Cost Accounting, Pricing ⚡ Try this Q →
XYZ Transport is running a bus between town A and town B which are 100 kms apart. The bus will make 4 round trips per day and will be carrying on an average 30 passengers on each trip. The bus costs the company a sum of ₹ 5,00,000. It has been insured at 2% per annum and the annual tax will amount to ₹ 2,000 and the garage rent is ₹ 300 per month. Annual repairs will be ₹ 8,000 and the bus is likely to last for 3 years. The driver's salary will be ₹ 15,000 per month and the conductor's salary will be ₹ 12,000 per month in addition to 10% of the takings as commission (to be shared by the driver and conductor equally). Cost of stationery will be ₹ 800 per month. Manager-cum-accountant's salary is ₹ 35,000 per month. Petrol and Oil will be ₹ 1 per 100 km. Assuming 15% profit on takings. Depreciation will be charged at straight line method. You are required to calculate the bus fare to be charged for per passenger kilometre. The bus will run on an average 25 days in a month.
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Q.4(b) 06 marks hard Cost Accounting, Overhead Recovery, Pricing ⚡ Try this Q →
Case: LMN Foods is a manufacturer of organic snacks. For the year ending 2023, the company compiled the following financial data: Item | Amount (in ₹) Opening inventory of raw materials | 2,00,000 Closing inventory of raw materials | 2,50,000 Raw material purchases | 12,00,000 Labour costs | 5,00,000 Production overheads | 2,50,000 Marketing and distribution expenses | 1,52,000 In 2024, LMN Foods accepted a request for a bulk supply of their best-selling snacks. The estimated costs for fulfilling this order are as follows: • Estimated raw material cost: ₹ 3,00,000 • Estimated labour cost: ₹ 1,50,0…
Required: (i) Calculate the overhead recovery rates for 2023 based on actual production overheads (ii) Prepare a comprehensive cost statement for the bulk order and determine the Sales required for achieving a profit margin of 20% on the final sales amount.
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Q.4(c) 04 marks hard Cost Accounting - Inventory Management ⚡ Try this Q →
The Cost Accountant of a Manufacturing concern has given the following details in respect of a raw material X: Difference between Minimum lead time and Maximum lead time is 4 days. Average Lead time to procure the Raw Material X is 7 days. Reorder Level: 1,80,000 units; Reorder Quantity: 90,000 units; Minimum Stock Level: 1,00,000 units; Maximum Stock Level: 1,50,000 units.
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Q.5 14 marks very hard Cost accounting, Labour costing, Overtime premium rates, Ove ⚡ Try this Q →
Case: A company plans to sell ₹61 crore output with marketing expenditure. A factory with 50 workers recorded ₹3,90,000 employee cost with specific overtime premium rates. In January 2024, factory worked on job BX with detailed man-hours breakdown.
The management of the company chalks out a plan for the month of February 2024 to sell its whole output of ₹61 crore within six months by incurring following further expenditure: (i) Company sponsors a television programme on every Sunday at a cost of ₹26,250 per week. There are 4 Sundays in February 2024. (ii) Gift coupons are offered every month for its potential customers at a cost of ₹1,05,000. (iii) Special gift item costing ₹195 on sale of demus units. (iv) Lucky draws scheme is introduced every month by giving the first prize of ₹1,00,000; second prize of ₹40,000 and two consolation prizes of ₹8,000 each. Note: In the month of February 2024, there is a significant rise in material cost per unit due to scarcity of new supplies in the market and saving in transport cost. (These factors are to be appropriately adjusted in cost of material for management.)
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Q.5 07 marks hard Cost Allocation, Machine Costing ⚡ Try this Q →
This data pertains to the three machines operating in the manufacturing division of PQR Corp for the financial year 2023-2024: Estimated Expenses table with categories: Direct Labour Expenses (per quarter) ₹2,50,000; Oil Expenses (per quarter) ₹1,05,123 with breakdown X: ₹37,500, Y: ₹37,500, Z: ₹28,123; Building Insurance Expenses (per quarter) ₹60,000; Depreciation (per annum) ₹6,00,000 with breakdown X: ₹1,00,000, Y: ₹2,00,000, Z: ₹3,00,000; Building Maintenance Expenses (per quarter) ₹1,00,000; Wages of Operator (per quarter) ₹2,25,000; Electricity Expenses (per quarter) ₹3,00,000; Rent and Rates (per month) ₹80,000; Salary of Technician (per month) ₹62,500. (The Technician works only on machines X and Y and the Operator controls all three machines and both spend equal time on each of the machines worked upon by them.)
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Q.5(a) 06 marks medium Labour Costing, Variance Analysis ⚡ Try this Q →
The following information has been provided by a company: • Number of units produced and sold: 7,000 • Standard labour rate per hour: ₹ 9 • Actual hours worked: 17,820 hours • Labour efficiency: 106.8% • Labour rate variance: ₹ 71,280 (A) You are required to calculate: (i) Actual labour rate per hour (ii) Standard hours required for 7,000 units (iii) Labour Efficiency variance (iv) Standard labour cost per unit (v) Actual labour cost per unit
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Q.5b 04 marks medium ALC2(H) - Cost Accounting, Journal Entries, Integrated Accou ⚡ Try this Q →
Journalize the following transactions assuming that cost and financial accounts are integrated:
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Q.5c 04 marks medium ALC2(H) - Spoiled and Defective Work Treatment ⚡ Try this Q →
Define spoiled work and defective work and discuss the treatment of defective work in the following circumstances:
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Q.6 00 marks easy Cost accounting and labor costing ⚡ Try this Q →
Based on the given particulars and additional information, prepare a Cost statement showing the various elements of cost and profit/loss for the year ended 31st March, 2024, and calculate worker earnings under different incentive plans.
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Q.6a 05 marks medium ALC2(H) - Reconciliation of Cost and Financial Accounts ⚡ Try this Q →
Explain the steps involved in procedure for reconciliation of Cost & Financial accounts and explain the circumstances where reconciliation statement can be avoided.
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Q.7b 05 marks medium ALC2(H) - Cost Unit Identification ⚡ Try this Q →
State cost unit of the following Industry Sector:
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Q.7c 04 marks medium ALC2(H) - Control of Selling and Distribution Overheads ⚡ Try this Q →
Explain the methods that can be used for controlling Selling and Distribution Overheads.
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Q.7c 04 marks medium ALC2(H) - Service Department Overhead Apportionment ⚡ Try this Q →
Suggest any one basis of re-apportionment of service department overheads over production departments in the following context:
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Q.8 06 marks medium Flexible Budgeting ⚡ Try this Q →
Savi Limited is currently working at 80% of its capacity level and furnishes the following information for current period: Production/Sales 96,000 units; Direct Variable Cost ₹ 20 per unit; Factory Overheads ₹ 8,40,000; Administrative Overheads (Fixed) ₹ 20,60,000; Selling Overheads 2% of Sales Value; Transportation Expenses ₹ 4,000 per truck (Loading Capacity 4,000 units). The selling price of the product is ₹ 120 per unit and Factory Overheads are variable in nature. The management of Savi Limited has come to know that there will be high fluctuations in the demand of the product in upcoming year and it would not be an easy task to predict the demand. Selling price per unit will not be affected by demand fluctuations. Savi Limited has decided to prepare a flexible budget for the product at 80%, 90% and 100% capacity level. You are required to prepare the Flexible Budget showing total cost of the product at each level.
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Q.9 05 marks medium Variance Analysis and Evaluation, Cost Accounting ⚡ Try this Q →
The company manufactured and sold 1,600 packets during the month. Actual data for material and labour recorded as under: Direct Material: A = 7,000 kg @ ₹ 40 B = 12,500 kg @ ₹ 45 Labour hours paid for two different categories of workers: Skilled: 6,000 hours @ ₹ 25 Semi-skilled: 4,000 hours @ ₹ 20 5% of the time paid was lost due to an abnormal reason. (a) Calculate the following variances indicating their nature (Favourable or Adverse): (i) Material cost variances (ii) Material price variances (iii) Material usage variances (iv) Material mix variances (v) Material yield variances (vi) Labour cost variance (vii) Labour rate variances (viii) Labour efficiency variances (ix) Labour idle time variances
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Q.12 00 marks hard Contribution Analysis, Dealer Proposal Evaluation ⚡ Try this Q →
The fixed costs amount to ₹ 5,00,000 and ₹ 4,30,000 for Baby Rose and Baby Lily respectively. The Production Manager has informed that 1,00,000 litres of material is available for production. A dealer has approached the company and proposed to purchase both products at the existing selling prices, which are to be produced utilising the available unused material. However, he has insisted that all bottles must be packed with eco-friendly packaging, which will result in an additional cost of ₹ 10 per bottle for the company. Presently, the company is not using eco-friendly material for packing bottles. Required: Prepare a detailed statement showing the overall contribution and profit of the company after acceptance of the dealer's proposal.
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