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Past papers/ Cost & Mgmt/ January 2026
Paper 26 Qs
Revision Test Paper (RTP) · January 2026

CA Inter Cost & Mgmt

This page contains all 26 questions from the CA Inter Cost & Management Accounting Revision Test Paper (RTP) for the January 2026 attempt cycle, sourced from VSI Jaipur.

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Q.1(i) 00 marks hard Fixed cost classification in transport costing ⚡ Try this Q →
Case: EcoTrans Logistics Pvt. Ltd. is a regional goods transport company based in the industrial hub of LogiPort, providing daily freight services to and from GreenCity, located 120 kilometres away. The company operates 24 transport vehicles of varying capacities. Fleet Composition: - 6 vehicles × 10 MT - 8 vehicles × 14 MT - 6 vehicles × 18 MT - 4 vehicles × 22 MT Each vehicle operates one round trip per day. Vehicles are loaded to 85% capacity on the forward journey and 65% on the return. On average, 12% of the fleet is under maintenance at any time. The company operated for 26 days in April 202…
What is the total fixed cost for April 2025?
(A) ₹21,95,000
(B) ₹20,89,750
(C) ₹22,89,250
(D) ₹19,98,250
CTTP

Worked Solution

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Answer: (C) ₹22,89,250

In transport costing, fixed costs are those that remain constant regardless of the number of trips made or kilometres travelled. The following items qualify as fixed costs for April 2025:

Salaries & Staff Costs: The Transport Manager's salary of ₹75,000 is split — 45% (₹33,750) is charged to the workshop, so only 55% = ₹41,250 is borne by the transport department. Driver salaries (₹7,04,000) and Helper wages (₹3,64,000) are time-based and fixed.

Period-based Charges (Annual items converted to monthly): Insurance ₹9,60,000 ÷ 12 = ₹80,000; Road Licence Fee ₹5,40,000 ÷ 12 = ₹45,000; Garage Rent ₹10,80,000 ÷ 12 = ₹90,000.

Subscription & Standing Charges: GPS & Fleet Tracking @ ₹2,000 × 24 vehicles = ₹48,000 (fixed monthly subscription irrespective of usage).

Other Fixed Items: Driver Safety & Training Programmes = ₹80,000 (not linked to trips); Electricity & Utility Expenses = ₹62,000 (predominantly fixed); Depreciation on Vehicles = ₹6,80,000 (time-based, straight-line).

Workshop Apportionment: The transport department is apportioned ₹95,000 from the in-house workshop (the ₹3,40,000 gross workshop cost is absorbed by the workshop itself; only the apportioned share is charged to transport). This is treated as a fixed overhead allocation.

Variable costs excluded from fixed cost total: Loading & Unloading (₹950/trip), Toll Charges (₹250/trip), Diesel, Lubricants & Oils (₹1,30,000), Tyres/Tubes/Spare Parts (₹4,80,000 — stated as 'running basis'), and Consumable Stores (₹1,50,000 — fuel additives vary with consumption).

Total Fixed Cost = ₹22,89,250

ICAI Study Material on Transport Costing — Cost and Management Accounting (Paper 4, CA Intermediate)
PLAN

Write it like this

Time target 3 min 36 sec

1The skeleton

- Start by writing the classification rule — one line: 'Fixed costs are those that do not vary with trips made or kilometres travelled.' This frames your answer and tells the examiner you know the principle before you touch numbers.
- Handle the Transport Manager salary split in line 2 — show the 55% calculation explicitly (₹75,000 × 55% = ₹41,250). Examiners look for this adjustment; if you just write ₹75,000 you lose the mark even if your total is right.
- Group annual items together and show the ÷12 step visibly — Insurance, Road Licence Fee, Garage Rent all need '÷ 12 = ₹XX,000' written out. Skipping this step looks like you assumed monthly figures and you won't get method marks.
- Call out GPS as a 'fixed monthly subscription irrespective of usage' — those exact words signal to the examiner you know WHY it's fixed, not just that it's fixed. Also multiply clearly: ₹2,000 × 24 vehicles = ₹48,000.
- Include Workshop Apportionment (₹95,000) as a fixed overhead allocation and explicitly reject the gross ₹3,40,000 — this is the distinguishing move; write 'only the apportioned share of ₹95,000 is charged to the transport department' to show you understood the in-house workshop mechanic.
- End with a one-line exclusion list — name the variable items you are dropping (Diesel, L&U charges, Toll, Tyres, Consumables) and state they vary with trips/kilometres. This protects your answer if your total is slightly off — partial credit for correct exclusions.

2Examiner-rewarded phrases

“costs which do not vary with the level of activity (trips made or kilometres travelled)”“apportioned to the transport department by the in-house workshop”“annual charge converted to monthly basis by dividing by 12”

3Common trap

Don't fall for this

Watch out — most students include the full ₹3,40,000 Workshop Repairs as a fixed cost instead of the ₹95,000 apportioned share, inflating the total by ₹2,45,000. The gross workshop cost is absorbed by the workshop itself; only what's recharged to transport hits your cost statement.

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Q.1(ii) 00 marks hard Variable cost classification in transport costing ⚡ Try this Q →
Case: EcoTrans Logistics Pvt. Ltd. is a regional goods transport company based in the industrial hub of LogiPort, providing daily freight services to and from GreenCity, located 120 kilometres away. The company operates 24 transport vehicles of varying capacities. Fleet Composition: - 6 vehicles × 10 MT - 8 vehicles × 14 MT - 6 vehicles × 18 MT - 4 vehicles × 22 MT Each vehicle operates one round trip per day. Vehicles are loaded to 85% capacity on the forward journey and 65% on the return. On average, 12% of the fleet is under maintenance at any time. The company operated for 26 days in April 202…
Calculate the total variable cost for April 2025.
(A) ₹44,71,885
(B) ₹31,50,000
(C) ₹29,65,920
(D) ₹48,45,000
CTTP

Worked Solution

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Answer: (A) ₹44,71,885

To calculate total variable cost, we first identify costs that vary directly with distance travelled or trips made: Diesel, Loading & Unloading charges, Toll charges, Lubricants & Oils, Tyres/Tubes/Spare Parts (running basis), and Consumable Stores.

Fixed costs excluded from variable computation: Salary of Transport Manager, Drivers' salaries, Helpers' wages, Insurance, Road Licence Fee, GPS subscription, Garage Rent, Depreciation, Electricity, Driver Training, and Workshop repair charges/credits — all these are time-based or standing charges unaffected by output level.

Step 1 — Operating Fleet:
Vehicles under maintenance = 24 × 12% = 2.88; Operating vehicles = 24 − 2.88 = 21.12 vehicles

Step 2 — Diesel Cost (using 21.12 for continuous km calculation):
Total km = 21.12 vehicles × 240 km (round trip) × 26 days = 1,31,788.8 km
Fuel consumed = 1,31,788.8 ÷ 4.5 = 29,286.4 litres
Diesel cost = 29,286.4 × ₹82 = ₹24,01,485

Step 3 — Trips-based costs (rounding 21.12 to 21 whole vehicles for discrete trip counts):
One-way trips = 21 × 2 × 26 = 1,092 trips

Loading & Unloading = 1,092 × ₹950 = ₹10,37,400
Toll Charges = 1,092 × ₹250 = ₹2,73,000

Step 4 — Other Variable Costs (running/usage-linked, given as monthly actuals):
Lubricants & Oils = ₹1,30,000
Tyres, Tubes & Spare Parts (running basis) = ₹4,80,000
Consumable Stores (Fuel Additives, Tools) = ₹1,50,000

Total Variable Cost = ₹24,01,485 + ₹10,37,400 + ₹2,73,000 + ₹1,30,000 + ₹4,80,000 + ₹1,50,000 = ₹44,71,885

PLAN

Write it like this

Time target 14 min 24 sec

1The skeleton

- Start with a two-column classification table — label every cost as either 'Running/Variable' or 'Standing/Fixed' before touching a single number; examiners award a presentation mark just for this split and it forces you not to miss any item.
- Calculate operating fleet first, separately — write '24 × 12% = 2.88 under maintenance → 21.12 operating vehicles' as its own numbered step, because every downstream figure depends on it and the examiner needs to see you derived it, not assumed it.
- Split diesel and trip-based costs into two sub-steps — use 21.12 (continuous) for km/diesel, then explicitly round to 21 whole vehicles for trip counts and state WHY; this one-line explanation is what separates a 7/8 from a 5/8.
- Show the trips formula explicitly — '21 vehicles × 2 one-way trips × 26 days = 1,092 trips' must appear as a line of its own before multiplying by ₹950 and ₹250; examiners cannot award step marks if you bury it inside a running multiplication.
- List the four 'given as monthly actuals' items in a mini-table — Lubricants, Tyres/Tubes/Spare Parts, Consumable Stores each get their own row; do NOT lump them into a bracket sum or you lose traceability marks.
- Close with a single bold summation line — add all six components with ₹ signs and write '= ₹44,71,885 (Total Variable Cost)'; the label at the end signals to the examiner that you know WHAT you computed, not just that you can add numbers.

2Examiner-rewarded phrases

“costs that vary directly with distance travelled or trips made”“standing charges — being time-based, are excluded from variable cost computation”“vehicles under maintenance = Total fleet × maintenance percentage; operating vehicles = Total fleet − vehicles under maintenance”

3Common trap

Don't fall for this

Heads up — almost everyone uses all 24 vehicles for BOTH the km calculation AND the trip count, then loses 3–4 marks in one shot. The real trick is 21.12 for continuous diesel km, but 21 whole vehicles for discrete trips — if you don't explicitly write that rounding rationale, the examiner marks your trip figure wrong even if your final answer is close.

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Q.1(iii) 00 marks hard Freight rate determination with profit margin ⚡ Try this Q →
Case: EcoTrans Logistics Pvt. Ltd. is a regional goods transport company based in the industrial hub of LogiPort, providing daily freight services to and from GreenCity, located 120 kilometres away. The company operates 24 transport vehicles of varying capacities. Fleet Composition: - 6 vehicles × 10 MT - 8 vehicles × 14 MT - 6 vehicles × 18 MT - 4 vehicles × 22 MT Each vehicle operates one round trip per day. Vehicles are loaded to 85% capacity on the forward journey and 65% on the return. On average, 12% of the fleet is under maintenance at any time. The company operated for 26 days in April 202…
What should be the freight rate per ton-km to achieve a 20% profit margin?
(A) ₹4.461
(B) ₹5.576
(C) ₹4.372
(D) ₹3.845
CTTP

Worked Solution

✓ Verified

Answer: (B) ₹5.576

Step 1 — Effective Fleet (after 12% maintenance)
Operating vehicles = 24 × (1 − 0.12) = 21.12 vehicles
Breakdown: 10 MT → 5.28 | 14 MT → 7.04 | 18 MT → 5.28 | 22 MT → 3.52

Step 2 — Monthly Ton-Kilometres
Forward load (85% capacity) per day:
10 MT: 5.28 × 8.5 = 44.88 MT; 14 MT: 7.04 × 11.9 = 83.776 MT; 18 MT: 5.28 × 15.3 = 80.784 MT; 22 MT: 3.52 × 18.7 = 65.824 MT → Total = 275.264 MT
Return load (65% capacity) per day:
10 MT: 5.28 × 6.5 = 34.32 MT; 14 MT: 7.04 × 9.1 = 64.064 MT; 18 MT: 5.28 × 11.7 = 61.776 MT; 22 MT: 3.52 × 14.3 = 50.336 MT → Total = 210.496 MT
Total freight per day = 485.76 MT; each leg = 120 km
Ton-km per day = 485.76 × 120 = 58,291.2
Monthly ton-km = 58,291.2 × 26 = 15,15,571.2 ton-km

Step 3 — Monthly Cost Statement (Transport Department)

Staff Costs:
Transport Manager Salary (55% retained; 45% to workshop) = ₹41,250
Drivers: 32 × ₹22,000 = ₹7,04,000
Helpers: 28 × ₹13,000 = ₹3,64,000

Variable/Operating Costs:
Trips per month = 21.12 × 2 legs × 26 days = 1,098.24 trips
Loading & Unloading: 1,098.24 × ₹950 = ₹10,43,328
Toll Charges: 1,098.24 × ₹250 = ₹2,74,560
Diesel: (21.12 × 240 km × 26 days) / 4.5 × ₹82 = 1,31,788.8 km / 4.5 × ₹82 = ₹24,01,485

Fixed/Standing Costs:
Consumable Stores = ₹1,50,000
Insurance (₹9,60,000 / 12) = ₹80,000
Road Licence Fee (₹5,40,000 / 12) = ₹45,000
Lubricants & Oils = ₹1,30,000
Tyres, Tubes, Spare Parts = ₹4,80,000
GPS Subscription (operating vehicles: 21.12 × ₹2,000) = ₹42,240
Driver Safety & Training = ₹80,000
Garage Rent (₹10,80,000 / 12) = ₹90,000
Workshop Apportionment (charged by workshop to transport dept.) = ₹95,000
Electricity & Utilities = ₹62,000
Depreciation = ₹6,80,000

Total Monthly Cost = ₹67,62,863

Step 4 — Freight Rate at 20% Profit Margin on Selling Price
Profit Margin = 20% on revenue → Cost = 80% of Revenue
Required Revenue = ₹67,62,863 / 0.80 = ₹84,53,579

Freight Rate per ton-km = ₹84,53,579 / 15,15,571.2 = ₹5.576

The freight rate per ton-km to earn 20% profit margin is ₹5.576.

PLAN

Write it like this

Time target 14 min 24 sec

1The skeleton

- Start with effective fleet, not total fleet — write '24 × (1 − 0.12) = 21.12 vehicles' in line 1 of your answer; examiners allocate a dedicated step mark here and skip candidates who bury it mid-calculation.
- Split ton-km into forward and return legs separately — compute 85% load and 65% load as two distinct sub-totals before adding, because the examiner's marking scheme has two rows and you earn the step mark only if your workings show the split.
- Build your cost statement in labelled blocks (Staff Costs → Variable/Trip Costs → Standing Costs) — unstructured cost lists look like rough work and lose presentation marks even when the total is correct.
- Handle the workshop cross-charge explicitly in two lines — show '55% of ₹75,000 retained = ₹41,250' AND 'Workshop apportionment received = ₹95,000 added', because both directions of the adjustment carry separate marks and missing either one drops your total cost.
- Write the profit margin formula before plugging in numbers — state 'Profit = 20% on Revenue ∴ Cost = 80% of Revenue ∴ Revenue = Cost ÷ 0.80' as a standalone line; this single sentence is what separates a 7/8 answer from a 5/8 answer on this step.
- Close with a boxed rate and units — write 'Freight rate = ₹84,53,579 ÷ 15,15,571.2 ton-km = ₹5.576 per ton-km' as your final line; examiners confirm the answer against the answer key in the last line, so units must appear there.

2Examiner-rewarded phrases

“Effective vehicles available = Total fleet × (1 − maintenance ratio)”“Total cost of the transport department / Total ton-kilometres operated during the month”“Since profit margin is 20% on selling price, cost represents 80% of the freight revenue; accordingly, freight revenue = Total cost ÷ 0.80”

3Common trap

Don't fall for this

The single biggest mark-killer here is treating 20% profit as a mark-up on cost (Cost × 1.20) instead of a margin on revenue (Cost ÷ 0.80) — that error alone gives you ₹5.38 instead of ₹5.576, wiping out the entire Step 4 mark. Also watch the workshop: almost everyone either forgets to deduct the 45% manager salary going OUT or forgets to add the ₹95,000 coming IN — do both or you'll be off by ₹28,750 on your cost base.

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Q.1(iv) 00 marks hard Loading and unloading labour cost in transport ⚡ Try this Q →
Case: EcoTrans Logistics Pvt. Ltd. is a regional goods transport company based in the industrial hub of LogiPort, providing daily freight services to and from GreenCity, located 120 kilometres away. The company operates 24 transport vehicles of varying capacities. Fleet Composition: - 6 vehicles × 10 MT - 8 vehicles × 14 MT - 6 vehicles × 18 MT - 4 vehicles × 22 MT Each vehicle operates one round trip per day. Vehicles are loaded to 85% capacity on the forward journey and 65% on the return. On average, 12% of the fleet is under maintenance at any time. The company operated for 26 days in April 202…
Calculate the total wages paid to loading and unloading labour in April 2025.
(A) ₹10,43,520
(B) ₹10,42,560
(C) ₹9,85,000
(D) ₹10,37,400
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Q.1(v) 00 marks hard Ton-kilometre calculation in transport costing ⚡ Try this Q →
Case: EcoTrans Logistics Pvt. Ltd. is a regional goods transport company based in the industrial hub of LogiPort, providing daily freight services to and from GreenCity, located 120 kilometres away. The company operates 24 transport vehicles of varying capacities. Fleet Composition: - 6 vehicles × 10 MT - 8 vehicles × 14 MT - 6 vehicles × 18 MT - 4 vehicles × 22 MT Each vehicle operates one round trip per day. Vehicles are loaded to 85% capacity on the forward journey and 65% on the return. On average, 12% of the fleet is under maintenance at any time. The company operated for 26 days in April 202…
What is the total ton-kilometers (ton-km) generated by EcoTrans Logistics in April 2025?
(A) 1,31,789 ton-km
(B) 5,49,120 ton-km
(C) 15,15,571 ton-km
(D) 26,00,000 ton-km
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Q.2(i) 00 marks hard Cost of sales per unit in cost sheet ⚡ Try this Q →
Case: In order to provide employment opportunities in rural areas of Madhya Pradesh, the State government decided to give an interest-free loan up to ₹30,00,00,000 to Khadi cloth industrialists. The loan is refundable after 20 years in lump sum. A stipulation requires that 40% of cloth production shall be supplied to the government at a nominal rate of ₹10 per metre for making uniforms of Class IV employees. Haryana cloth mill of Hissar took a loan of ₹30 crores and commenced business in Dindori, a rural district of Madhya Pradesh. Production during the year 2023-24: 40,00,000 metres of Khadi clot…
Determine cost of sales per metre of cloth produced.
(A) ₹13.25
(B) ₹16.25
(C) ₹18.25
(D) ₹15.25
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Q.2(ii) 00 marks hard Loss on government supply below cost ⚡ Try this Q →
Case: In order to provide employment opportunities in rural areas of Madhya Pradesh, the State government decided to give an interest-free loan up to ₹30,00,00,000 to Khadi cloth industrialists. The loan is refundable after 20 years in lump sum. A stipulation requires that 40% of cloth production shall be supplied to the government at a nominal rate of ₹10 per metre for making uniforms of Class IV employees. Haryana cloth mill of Hissar took a loan of ₹30 crores and commenced business in Dindori, a rural district of Madhya Pradesh. Production during the year 2023-24: 40,00,000 metres of Khadi clot…
Determine the loss element per metre in government supply.
(A) ₹7.25
(B) ₹5.75
(C) ₹4.50
(D) ₹6.25
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Q.2(iii) 00 marks hard Selling price determination with profit target ⚡ Try this Q →
Case: In order to provide employment opportunities in rural areas of Madhya Pradesh, the State government decided to give an interest-free loan up to ₹30,00,00,000 to Khadi cloth industrialists. The loan is refundable after 20 years in lump sum. A stipulation requires that 40% of cloth production shall be supplied to the government at a nominal rate of ₹10 per metre for making uniforms of Class IV employees. Haryana cloth mill of Hissar took a loan of ₹30 crores and commenced business in Dindori, a rural district of Madhya Pradesh. Production during the year 2023-24: 40,00,000 metres of Khadi clot…
What will be the selling price per metre charged from general public?
(A) ₹29
(B) ₹27
(C) ₹31
(D) ₹33
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Q.2(iv) 00 marks hard Rate of return on sales in financial accounts ⚡ Try this Q →
Case: In order to provide employment opportunities in rural areas of Madhya Pradesh, the State government decided to give an interest-free loan up to ₹30,00,00,000 to Khadi cloth industrialists. The loan is refundable after 20 years in lump sum. A stipulation requires that 40% of cloth production shall be supplied to the government at a nominal rate of ₹10 per metre for making uniforms of Class IV employees. Haryana cloth mill of Hissar took a loan of ₹30 crores and commenced business in Dindori, a rural district of Madhya Pradesh. Production during the year 2023-24: 40,00,000 metres of Khadi clot…
What will be the rate of return on overall sales proceeds as per financial accounts?
(A) 22.313%
(B) 18.781%
(C) 24.387%
(D) 20.564%
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Q.2(v) 00 marks hard Impact of revised selling price on net profit ⚡ Try this Q →
Case: In order to provide employment opportunities in rural areas of Madhya Pradesh, the State government decided to give an interest-free loan up to ₹30,00,00,000 to Khadi cloth industrialists. The loan is refundable after 20 years in lump sum. A stipulation requires that 40% of cloth production shall be supplied to the government at a nominal rate of ₹10 per metre for making uniforms of Class IV employees. Haryana cloth mill of Hissar took a loan of ₹30 crores and commenced business in Dindori, a rural district of Madhya Pradesh. Production during the year 2023-24: 40,00,000 metres of Khadi clot…
What will be the net profit in financial accounts from the factory, if government fixed the price of the cloth to be sold to general public at ₹28?
(A) ₹1,67,20,000
(B) ₹1,66,00,000
(C) ₹1,66,20,000
(D) ₹1,67,00,000
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Q.3 00 marks easy Standard costing variances — material, labour, fixed overhea ⚡ Try this Q →
A manufacturing company has set the standard cost for producing one unit of its product as follows: • Direct Material: 10 kg @ ₹5/kg • Direct Labour: 4 hours @ ₹20/hour • Variable Overhead: 4 hours @ ₹5/hour • Fixed Overhead: ₹10 per unit (based on normal output of 5,000 units) During a particular month, the company produced 4,800 units. The actual results were: • Direct Material Used: 49,000 kg costing ₹2,45,000 • Direct Labour: 19,200 hours costing ₹3,84,000 • Variable Overhead Incurred: ₹95,000 • Fixed Overhead Incurred: ₹52,000 Based on this information, which of the following statements is most accurate?
(A) The material usage variance is ₹5,000 (Favourable)
(B) The labour rate variance is ₹19,200 (Adverse)
(C) The labour rate variance is ₹19,200 (Favourable)
(D) The fixed overhead volume variance is ₹2,000 (Adverse)
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Q.4 00 marks easy Cost sheet and selling price with closing inventory ⚡ Try this Q →
A manufacturing firm has produced 10,000 units of a standard product by incurring the following expenses: Material costs: ₹80,000 Labour costs: ₹40,000 Production overhead: ₹30,000 Office overhead: 20% of factory cost Estimated selling and distribution overhead is ₹4 per unit. If the firm has no inventory at the beginning of the period and expects to maintain 20% of output as closing inventory, at what price per unit should the product be sold to earn a profit of 20% on sales?
(A) ₹27.50
(B) ₹23.00
(C) ₹26.40
(D) ₹28.75
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Q.5 00 marks easy Material cost variance ⚡ Try this Q →
Product AB has a standard cost of ₹32, ₹6 of which relates to direct materials. Budgeted production for the month was 1,600 units. During the month, 1,500 units of AB were produced and materials worth ₹9,000 were purchased. There was no opening stock of materials but closing stock, which was valued at standard cost, amounted to ₹1,500. What is the total variance for materials?
(A) ₹500 (F)
(B) ₹500 (A)
(C) ₹1,500 (F)
(D) ₹1,500 (A)
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Q.6 00 marks easy Transfer pricing with target profit ⚡ Try this Q →
Rinki Ltd. has two divisions, A and B. Target profit of A is ₹100 lakh. A has capacity to produce 20,000 units of product P but only 15,000 units are produced and sold in the market at ₹3,000 per unit. B received an order for which P would be required as input. B approaches A for purchase of 5,000 units of P. What price should A charge from B per unit of P so as to meet its target profit? (Other details of A are: Fixed cost is ₹90 lakh; Variable cost per unit of P is ₹2,000)
(A) ₹3,000
(B) ₹2,800
(C) ₹2,500
(D) ₹2,000
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Q.7 00 marks easy Raw material purchase budget ⚡ Try this Q →
A company plans to produce 44,000 units during the budget period. The company requires 4 units of raw material to produce 1 unit of finished goods. The company currently has 1,00,000 units of raw material on hand and wishes to have an inventory of 1,10,000 units of raw material on hand at the end of the budget period. The number of raw material units to be purchased during the budget period is:
(A) 1,76,000 units
(B) 1,67,000 units
(C) 1,86,000 units
(D) 1,68,000 units
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Q.8 00 marks easy Material purchase cost comparison and EOQ ⚡ Try this Q →
XYZ Enterprises manufactures different types of beverages. The monthly demand pattern is: Orange Juice: 60,000 litres; Apple Juice: 20,000 litres; Grape Juice: 5,000 litres. To produce one litre of Apple Juice, Orange Juice, and Grape Juice, 6 kg of apples, 3 kg of oranges, and 5 kg of grapes are required respectively. There is no opening or closing stock of raw materials. XYZ Enterprises can source raw materials either from local farmers (or import in case of grapes) or from wholesale suppliers. Purchasing conditions: Oranges — Wholesale Supplier: min. any qty, ₹18.00/kg, transport ₹5,000, loading ₹10/50 kg, unloading ₹2/50 kg; Farmers: min. 7,20,000 kg, ₹15.00/kg, transport ₹20,000, sorting & piling ₹1,500, loading ₹5/50 kg, unloading ₹2/50 kg. Apples — Wholesale Supplier: min. any qty, ₹12.00/kg, transport ₹11,000, loading ₹10/50 kg, unloading ₹2/50 kg; Farmers: min. 3,60,000 kg, ₹10.00/kg, transport ₹15,000, sorting & piling ₹1,200, loading ₹3/50 kg, unloading ₹2/50 kg. Grapes — Wholesale Supplier: min. any qty, ₹32.00/kg, transport ₹3,000, loading ₹10/50 kg, unloading ₹2/50 kg; Import: min. 1,50,000 kg, ₹25.00/kg, transport ₹15,000, loading ₹25/50 kg, unloading ₹2/50 kg. 8% import duty applicable on grapes (ITC not available). Transportation and sorting/piling cost is per purchase order. XYZ Enterprises pays 15% annual interest on cash credit facility and ₹1,000 per 1,000 kg warehouse rent.
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Q.9 00 marks easy Employee cost — overtime, holiday pay, effective wage rate ⚡ Try this Q →
Tommy HL Ltd. pays the following to a skilled worker engaged in production works: (a) Basic salary per day: ₹1,000 (b) Dearness allowance (DA): 20% of basic salary (c) House rent allowance: 16% of basic salary (d) Transport allowance: ₹50 per day of actual work (e) Overtime: Twice the hourly rate (considers basic and DA), only if works more than 9 hours a day; overtime considered after 8th hour. (f) Work on holiday and Sunday: Double of per day basic rate, provided works at least 4 hours; eligible for all allowances and statutory deductions. (h) Earned leave & Casual leave: Paid leave. (h) Employer's contribution to Provident fund: 12% of basic and DA. (i) Employer's contribution to Pension fund: 7% of basic and DA. The company normally works 8 hours a day and 26 days in a month with a 30-minute lunch break. During August 2025, Mr. Shyam works for 23 days including 15th August (holiday) and a Sunday, and applied for 3 days of casual leave. On 15th August and Sunday he worked for 5 and 6 hours respectively without lunch break. On 5th and 13th August he worked for 10 and 9 hours respectively. During the month Mr. Shyam worked for 100 hours on Job no. AB100. You are required to CALCULATE:
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Q.10 00 marks easy Overhead allocation and apportionment — primary and secondar ⚡ Try this Q →
BrightTech Appliances Ltd. is a leading manufacturer of smart home devices (SmartCool AC, PowerLite Inverter, and EcoDry Dryer). The company operates through four departments: Production, Administration, Sales & Distribution, and General Management. Budget extract for the next financial year: Raw Material Cost: ₹5,75,00,000 (consumed 3:4:3 for three products) Indirect Material Cost: ₹12,50,000 (Manufacturing ₹7,20,000, Stores ₹25,000, General admin ₹3,80,000, Personnel ₹95,000, Sales ₹30,000) Salary & Wages: ₹4,20,00,000 (includes direct wages ₹1,60,00,000) Rent & Property Tax: ₹1,20,000 (Warehouse Rent ₹90,000, Property Tax ₹30,000) Depreciation on Non-Current Assets: ₹25,00,000 (Factory/office building ₹10,50,000, ACs ₹2,00,000, Machinery ₹12,50,000) Power & Fuel: ₹4,90,000 (₹4,70,000 manufacturing, ₹20,000 delivery vans) Machinery Insurance Premium: ₹5,00,000 (at 4% of WDV of machinery) Group Employee Insurance: ₹3,10,000 (based on gross salary, excluding direct workers and top management) Printing & Stationery: ₹8,20,000 (Manufacturing ₹21,000, Finance ₹5,50,000, Legal ₹28,000, Sales ₹2,21,000) Audit Fees: ₹1,40,000 Electricity Expense: ₹4,00,000 (Metered: Production 5,600, Admin 10,000, Sales & Distribution 4,000, General Management 1,600 units) Telephone & Mobile: ₹4,95,000 (Production ₹1,25,000, Personnel ₹50,000, General Mgmt ₹30,000, Sales ₹75,000, Customer Support ₹2,15,000) Travelling Expenses: ₹24,00,000 (Production ₹5,50,000, General Mgmt ₹12,00,000, Sales ₹6,50,000) Meal Coupon Subsidy: ₹2,25,000 (₹3,000 per employee on roll) Software License Renewals: ₹16,50,000 (Stores Management ₹8,50,000, Finance ₹1,50,000, Stores ₹30,000, Customer Support ₹6,20,000) Miscellaneous Expenditures: ₹9,50,000 (allocated based on direct expenses) Additional Information: • Employee Count: Production 22, Admin 20, Sales & Distribution 28 • Average Gross Salary: Production ₹6,30,000, Admin ₹4,20,000, Sales & Distribution ₹3,50,000, General Mgmt ₹2,80,000 • Floor Area: Production 9,900 m², Admin 3,600 m², Sales & Distribution 2,700 m², General Mgmt 1,800 m² • AC Tonnage: Production 6,000 RT, Admin 3,000 RT, S&D 3,000 RT, General Mgmt 1,500 RT • Depreciation Rates: Building 5%, AC 15%, Machinery 10% • Department Roles: General Mgmt: 70% Sales strategy, 20% Production/Marketing, 10% Admin; Admin: 50% Production, 50% Sales
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Q.11 00 marks easy Customer profitability analysis — Activity Based Costing ⚡ Try this Q →
Edward Ltd. manufactures weighing machines of standard size and sells its products to two industrial customers — MT Ltd. and KG Ltd. — and to a dealer MG Bros. having shops in different cities. The maximum retail price per unit is ₹11,000 and per unit average cost of production is ₹5,500 (40% is general fixed overhead cost). Additional overhead information: Delivery costs: ₹200 per kilometre Emergency delivery cost (in addition to delivery cost): ₹21,000 per delivery Order processing cost: ₹6,000 per order Specific discount and sales commission: as per negotiation Product advertisement cost: actual cost Customer data: MT Ltd. KG Ltd. MG Bros. Sales (units) 2,000 1,000 800 Total delivery km 1,000 800 900 No. of emergency del. 2 1 0 No. of orders 4 2 8 Specific Discount 25% 20% 15% Sales commission 15% 10% 5% Advertisement costs ₹8,75,000 ₹6,15,000 ₹4,30,000 You are required to analyse the profitability for each customer and identify which customer is the most profitable.
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Q.12 00 marks easy Costing P&L, overhead control accounts, profit reconciliatio ⚡ Try this Q →
XYZ Limited manufactures a standard product. Discrepancies were observed between financial and cost profits. The following is the Trading and Profit & Loss Account of XYZ Limited: Dr. side: Raw Materials ₹32,50,000; Direct Wages ₹21,75,000; Production Overheads ₹11,20,000; Administration Overheads ₹6,25,000; Selling & Distribution Overheads ₹4,60,000; Preliminary Expenses Written Off ₹30,000; Goodwill Written Off ₹55,000; Fines ₹10,000; Interest on Term Loan ₹18,000; Loss on Sale of Equipment ₹20,000; Tax ₹2,25,000; Net Profit ₹23,79,500. Total: ₹1,03,67,500. Cr. side: Sales (40,000 units) ₹92,00,000; Closing Finished Goods (2,000 units) ₹3,90,000; Work-in-Progress: Materials ₹72,000, Wages ₹34,000, Production Overheads ₹26,500 (total WIP ₹1,32,500); Dividend Received ₹5,25,000; Interest from Bank Deposits ₹1,20,000. Total: ₹1,03,67,500. Cost Accounting records show: 1. Production Overheads absorbed at 25% on Prime Cost. 2. Administration Overheads charged at ₹14.75 per unit of finished goods produced. 3. Selling and Distribution Overheads charged at ₹11.50 per unit sold. 4. Under- or over-absorption of overheads has not been adjusted in the Costing Profit & Loss Account. You are required to:
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Q.13 00 marks easy Job costing — cost sheet and price quotation ⚡ Try this Q →
A manufacturing company follows a job costing system. The following data is extracted from its books for the year ended 31st March, 2025: Direct Materials: ₹12,50,000 Direct Wages: ₹9,80,000 Selling & Distribution Overheads (Variable: 60%, Fixed: 40%): ₹6,30,000 Administration Overheads (Fixed): ₹5,40,000 Factory Overheads (70% Fixed, 30% Variable): ₹5,75,000 Profit: ₹8,25,000 Overhead Recovery: — Factory overheads absorbed as a % of Direct Wages. — Selling & Distribution and Administration overheads recovered as a % of Cost of Production. In 2025-26, the company received a new job order. Estimated direct materials: ₹3,20,000; direct labour: ₹2,10,000. Additional Information for 2025-26: • Selling & Distribution overheads have increased by 20% (with variable portion now being 65%). • Factory overheads have decreased by 10% due to efficiency improvements. • The company wants to maintain the same profit % on sales as in the previous year. (Assume relevant cost rates are based on previous year's data unless specified otherwise.)
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Q.14 00 marks easy Process costing — weighted average method, missing figures ⚡ Try this Q →
Following data are available for a product for the month of April 2025: Process-I: Direct materials ₹6,00,000; Labour ₹1,20,000; Factory overheads ₹2,40,000; Units received in process 40,000; Completed and transferred 36,000; Closing WIP 2,000; Normal loss 2,000. Process-II: Labour ₹1,60,000; Factory overheads ₹2,00,000; Units received in process 36,000; Completed and transferred 32,000; Closing WIP = ?; Normal loss 1,500. (There has been no abnormal loss in Process-II.) WIP valuation: Materials 100%, Labour 50%, Overheads 50%. The company follows the weighted average method for valuing inventory. Prepare Process Accounts after working out the missing figures and with detailed workings.
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Q.15 00 marks easy Joint products — apportionment, further processing decision ⚡ Try this Q →
A company processes a raw material in its Department 1 to produce three products P, Q and C at the same split-off stage. During a period, 1,80,000 kgs of raw materials were processed at a total cost of ₹12,88,000 and the resultant output was: P = 18,000 kgs, Q = 10,000 kgs, C = 54,000 kgs. P and Q were further processed in Department 2 at costs of ₹1,80,000 and ₹1,50,000 respectively. C was further processed in Department 3 at a cost of ₹1,08,000. No waste in further processing. Sales during the period: P: 17,000 kgs sold at ₹12,24,000 Q: 5,000 kgs sold at ₹2,50,000 C: 44,000 kgs sold at ₹7,92,000 There were no opening stocks. If sold at split-off stage, selling prices would be: P = ₹50/kg, Q = ₹40/kg, C = ₹10/kg.
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Q.16 00 marks easy Standard costing — material mix, yield, usage and price vari ⚡ Try this Q →
A company produces product X using raw materials A and B. The standard mix of A and B is 1:1 and the standard loss is 10% of input. You are required to COMPUTE the MISSING INFORMATION indicated by '?' based on the data given below: A B Total Std. price (₹/kg) 24 30 Actual input (kg) ? 70 Actual output (kg) ? Actual price (₹/kg) 30 ? Std. input qty (kg) ? ? Yield variance ? ? 270 (A) Mix variance ? ? ? Usage variance ? ? ? Price variance ? ? ? Cost variance 0 ? 1,300 (A)
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Q.17 00 marks easy Marginal costing — make or buy decision ⚡ Try this Q →
Jupiter Ltd, an FMCG company, intends to diversify its product line by developing a new product 'EXE'. 'EXE' is packed in cans of 100 ml and sold to wholesalers in cartons of 24 cans at ₹120 per carton. No additional fixed expenses will be incurred as spare capacity is used. However, ₹1,12,500 per month is allocated as fixed expenses. Estimated production and sale: 1,50,000 cans per month. Cost estimates per carton: Direct Materials: ₹54; Direct Wages: ₹36; All Overheads: ₹27; Total Costs: ₹117. Production can be increased to 1,75,000 cans/month and ultimately 2,25,000 cans/month. The company has capacity to manufacture 1,50,000 empty cans. Cost of empty cans if purchased outside results in saving of 20% in direct material, 10% in direct wages, and 10% in variable overhead costs of 'EXE'. Outside price of empty can: ₹0.675 per can. For empty cans in excess of 1,50,000, a machine involving additional fixed overhead of ₹7,500 per month must be installed.
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Q.18 00 marks easy Budgetary control — material purchases and wages budget ⚡ Try this Q →
SIAM Ltd. manufactures two products using one type of material and one grade of labour. Particulars: Product A Product B Budgeted Sales (Units): 1,800 2,400 Budgeted Material Consumption 5 kg 3 kg per product (₹12/kg) Standard Hours Allowed: 5 hrs 4 hrs (Budgeted Wage Rate ₹8/hr) Overtime premium is 50%, payable if a worker works for more than 40 hours a week. There are 45 direct workers. Target productivity ratio (efficiency ratio) for productive hours is 80%; non-productive downtime is budgeted at 20% of productive hours worked. There are twelve 5-day weeks in the budget period; sales and production occur evenly throughout. Opening stocks: Product A 510 units; Product B 1,200 units; Raw material 2,150 kg. Target closing stocks: Product A 15 days' sales; Product B 20 days' sales; Raw material 10 days' consumption. Required:
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