CA Inter Cost & Mgmt — Revision Test Paper (RTP) — May 2025

Case: Mr. Linde, a German national, came to India on 1st April, 2024 to start an industrial machine manufacturing business. History: In 2012, he purchased land for ₹50,00,000, constructed a building for ₹16,00,000, opened a Private Limited Company spending ₹2,80,000, employed 3 people for market survey at ₹1,50,000 in salaries. He then closed the office and returned to Germany. During the 12-year closure, a guard was paid ₹12,500/month and property tax of ₹18,000/year was paid. On reopening (April 2024): Salaries of staff ₹2,50,000/month; Electricity, water & maintenance ₹50,000/month; Security staf…

Find out an avoidable cost till the factory becomes operative. What is its value?

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Case: Mr. Linde, a German national, came to India on 1st April, 2024 to start an industrial machine manufacturing business. History: In 2012, he purchased land for ₹50,00,000, constructed a building for ₹16,00,000, opened a Private Limited Company spending ₹2,80,000, employed 3 people for market survey at ₹1,50,000 in salaries. He then closed the office and returned to Germany. During the 12-year closure, a guard was paid ₹12,500/month and property tax of ₹18,000/year was paid. On reopening (April 2024): Salaries of staff ₹2,50,000/month; Electricity, water & maintenance ₹50,000/month; Security staf…

Find out the total of Sunk and shut down cost in the given case study. Select the correct option from below.

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Case: Mr. Linde, a German national, came to India on 1st April, 2024 to start an industrial machine manufacturing business. History: In 2012, he purchased land for ₹50,00,000, constructed a building for ₹16,00,000, opened a Private Limited Company spending ₹2,80,000, employed 3 people for market survey at ₹1,50,000 in salaries. He then closed the office and returned to Germany. During the 12-year closure, a guard was paid ₹12,500/month and property tax of ₹18,000/year was paid. On reopening (April 2024): Salaries of staff ₹2,50,000/month; Electricity, water & maintenance ₹50,000/month; Security staf…

What is total out-of-pocket cost for the company in Noida branch, after factory land in Manesar is purchased, till the factory operation begins?

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Case: Mr. Linde, a German national, came to India on 1st April, 2024 to start an industrial machine manufacturing business. History: In 2012, he purchased land for ₹50,00,000, constructed a building for ₹16,00,000, opened a Private Limited Company spending ₹2,80,000, employed 3 people for market survey at ₹1,50,000 in salaries. He then closed the office and returned to Germany. During the 12-year closure, a guard was paid ₹12,500/month and property tax of ₹18,000/year was paid. On reopening (April 2024): Salaries of staff ₹2,50,000/month; Electricity, water & maintenance ₹50,000/month; Security staf…

What will be out of pocket expenses incurred in relocation of Head office to Manesar?

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Case: Mr. Linde, a German national, came to India on 1st April, 2024 to start an industrial machine manufacturing business. History: In 2012, he purchased land for ₹50,00,000, constructed a building for ₹16,00,000, opened a Private Limited Company spending ₹2,80,000, employed 3 people for market survey at ₹1,50,000 in salaries. He then closed the office and returned to Germany. During the 12-year closure, a guard was paid ₹12,500/month and property tax of ₹18,000/year was paid. On reopening (April 2024): Salaries of staff ₹2,50,000/month; Electricity, water & maintenance ₹50,000/month; Security staf…

How much is the unexpired cost of the Noida office as on 1st October, 2024, if salaries to all the employees are paid till 31st March, 2025?

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Case: HomeMart is a trending brand offering home improvement appliances. Sales tripled in the current year. The company provides after-sales phone support at Re. 1 per item sold; last year this cost enhanced to ₹49,15,200. Three product lines: Fancy fans, Home decors, Assembled furniture. Current year revenues: ₹3,80,88,000; ₹10,08,28,800; ₹5,80,75,200 respectively. Cost of goods sold: ₹2,88,00,000; ₹7,20,00,000; ₹4,32,00,000 respectively. Carrier cost for Fancy fans carton returns: ₹5,76,000 (directly allocated). Product data — Items sold: Fancy fans 12,09,600; Home decors 1,05,98,400; Assembled fu…

The total support cost and its percentage to the cost of goods sold would be:

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Case: HomeMart is a trending brand offering home improvement appliances. Sales tripled in the current year. The company provides after-sales phone support at Re. 1 per item sold; last year this cost enhanced to ₹49,15,200. Three product lines: Fancy fans, Home decors, Assembled furniture. Current year revenues: ₹3,80,88,000; ₹10,08,28,800; ₹5,80,75,200 respectively. Cost of goods sold: ₹2,88,00,000; ₹7,20,00,000; ₹4,32,00,000 respectively. Carrier cost for Fancy fans carton returns: ₹5,76,000 (directly allocated). Product data — Items sold: Fancy fans 12,09,600; Home decors 1,05,98,400; Assembled fu…

Operating income as a percentage of revenues of each product line, namely Fancy fans, Home decors, Assembled furniture, when all the support costs are allocated on the basis of cost of goods sold would be:

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Case: HomeMart is a trending brand offering home improvement appliances. Sales tripled in the current year. The company provides after-sales phone support at Re. 1 per item sold; last year this cost enhanced to ₹49,15,200. Three product lines: Fancy fans, Home decors, Assembled furniture. Current year revenues: ₹3,80,88,000; ₹10,08,28,800; ₹5,80,75,200 respectively. Cost of goods sold: ₹2,88,00,000; ₹7,20,00,000; ₹4,32,00,000 respectively. Carrier cost for Fancy fans carton returns: ₹5,76,000 (directly allocated). Product data — Items sold: Fancy fans 12,09,600; Home decors 1,05,98,400; Assembled fu…

The cost driver rate relating to Delivery, Ordering, Shelf stocking and Customer support would be:

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Case: HomeMart is a trending brand offering home improvement appliances. Sales tripled in the current year. The company provides after-sales phone support at Re. 1 per item sold; last year this cost enhanced to ₹49,15,200. Three product lines: Fancy fans, Home decors, Assembled furniture. Current year revenues: ₹3,80,88,000; ₹10,08,28,800; ₹5,80,75,200 respectively. Cost of goods sold: ₹2,88,00,000; ₹7,20,00,000; ₹4,32,00,000 respectively. Carrier cost for Fancy fans carton returns: ₹5,76,000 (directly allocated). Product data — Items sold: Fancy fans 12,09,600; Home decors 1,05,98,400; Assembled fu…

Operating income of each product line, namely Fancy fans, Home decors, Assembled furniture, when all the support costs are allocated using an activity-based costing system would be:

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Case: HomeMart is a trending brand offering home improvement appliances. Sales tripled in the current year. The company provides after-sales phone support at Re. 1 per item sold; last year this cost enhanced to ₹49,15,200. Three product lines: Fancy fans, Home decors, Assembled furniture. Current year revenues: ₹3,80,88,000; ₹10,08,28,800; ₹5,80,75,200 respectively. Cost of goods sold: ₹2,88,00,000; ₹7,20,00,000; ₹4,32,00,000 respectively. Carrier cost for Fancy fans carton returns: ₹5,76,000 (directly allocated). Product data — Items sold: Fancy fans 12,09,600; Home decors 1,05,98,400; Assembled fu…

Operating income as a percentage of revenues of each product line, namely Fancy fans, Home decors, Assembled furniture, when all the support costs are allocated using an activity-based costing system would be:

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Mr. A works in a manufacturing company where he is paid bonus according to the Halsey 50% plan, besides the normal wages. The relevant data is: Time Rate (per hour) ₹100; Time allowed 10 hours; Time taken 5 hours; Time saved 5 hours. Mr. A believes that his bonus under Halsey system is getting reduced by 50%, thus intending to shift towards Rowan Premium Plan. You are required to CALCULATE the total earnings of Mr. A as per Halsey plan and Rowan Premium plan & ENUMERATE the reason for difference in both the earnings.

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WHICH of the following is the correct journal entry as would appear in the cost books when Material (Direct) is issued to production?

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A product passes through two processes. The output of Process-I is treated as the raw material of Process-II. The cost incurred at Process-II is as follows: Transferred from Process-I A/c ₹27,85,700; Materials issued ₹10,00,000; Labour ₹2,00,000; Manufacturing overhead ₹5,00,000. The output of each process is: Process-I — 48,750 units output, 2% normal loss; Process-II — 47,000 units output, 5% normal loss. No stock of materials or work-in-process was left at the end. You are required to CALCULATE the value of Abnormal Gain/Loss in Process-II A/c.

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Sterling Industries manages various manufacturing processes. In process I, joint products P1 and P2 are produced in the ratio of 6:4 in units from the raw material input. A normal loss of 2% of the raw material input is expected, with losses having a realizable value of ₹12.5 per kg. Joint costs are apportioned using the physical measure basis. Following information relates to process I for last month: Raw materials input 75,000 kg at cost of ₹4,76,250; Direct labour ₹2,25,000; Direct expenses ₹67,500; Production Overheads 110% of direct labour cost; Abnormal gain 1,250 kg. You are required to CALCULATE the number of units and value of the Normal loss, Abnormal gain and joint products P1 & P2.

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PR Ltd. sells two types of pen, ball pen and gel pen. Currently, the company is expecting to sell 6,000 units of ball pen along with 3,600 units of gel pen in the coming month. Other information: Ball pen — Selling price ₹150/unit, Variable cost ₹90/unit, Contribution ₹60/unit; Gel pen — Selling price ₹100/unit, Variable cost ₹60/unit, Contribution ₹40/unit; Fixed Costs ₹3,36,000. You are required to CALCULATE the Composite Break-even Batch and individual break-even of the pens (in units).

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Catalist Ltd. is a distributor of industrial chemicals, providing the chemical in drum packaging. Each drum costs ₹200 from a supplier and is sold for ₹240. Annual demand is estimated at 2,50,000 drums. Cost of delivery is ₹100 per order and annual variable holding cost per drum is ₹180 plus 10% of purchase cost. The managing director calculates EOQ as the basis for purchasing decisions. The purchasing manager states that the managing director has ignored his bonus of 10% of the amount by which total annual inventory holding and order costs (before such remuneration) are below ₹2,00,000. The supplier also offers quantity discounts: for order size 1,000 drums or above, price per drum is ₹199.60 (compared to ₹200 for orders between 500 and 999 drums).

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Pi and Qu are part of a manufacturing team that handles multiple jobs within the production process. Standard working hours for the month are 210. Overtime is compensated at twice the sum of basic wages and dearness allowance. The employer's contributions to State Insurance and Provident Fund are equal to the employees' contributions. Details: Pi — Basic Wages ₹12,000, DA 50%, PF contribution 10% on basic wages, ESI 1.75% on basic wages, Overtime 8 hours; Qu — Basic Wages ₹15,000, DA 50%, PF contribution 10% on basic wages, ESI 1.75% on basic wages, Overtime nil. Job allocation ratios — Jobs A:S:D — Worker Pi: 30%:30%:40%; Worker Qu: 30%:50%:20%. Overtime was done on job S. You are required to CALCULATE the earnings of Pi and Qu and allocate the employee cost to each job A, S, and D.

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X Corp. produces two products, X and Y. The production division has two manufacturing departments P1 and P2 and two support departments S1 and S2. Pre-determined overhead rates are applied: Department P1 based on direct machine hours, Department P2 based on direct labour hours. Service department apportionment: S1 allocated to P1 and P2 in ratio 3:3 (equally); S2 allocated to P1 and P2 in ratio 30:15 (i.e., 2:1). Budgeted factory overheads: P1 ₹2,80,50,000; P2 ₹2,39,25,000; S1 ₹66,00,000; S2 ₹49,50,000. Products X and Y — Budgeted output: 1,00,000 and 60,000 units; Raw material cost per unit (all used in Dept. P1): ₹660 and ₹825; Budgeted time per unit: P1 — 1.5 machine hrs and 1.0 machine hr; P2 — 2 direct labour hrs and 2.5 direct labour hrs; Average wage rate in Dept. P2: ₹396/hr and ₹412.50/hr. Actual data for December 2024 — Actual output: 8,000 and 6,000 units; Actual hours P1: 12,200 and 8,300 machine hrs; Actual hours P2: 16,400 and 14,800 direct labour hrs; Raw materials cost: ₹53,79,000 and ₹50,16,000; Wages paid: ₹65,10,900 and ₹60,72,000. Actual factory overheads: P1 ₹25,41,000; P2 ₹22,44,000; S1 ₹6,60,000; S2 ₹5,28,000.

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The figures listed below are derived from the Trial Balance of EVS & Co. as of 31st March. Opening Inventories: Finished Stock ₹10,96,000; Raw Materials ₹19,18,000; Work-in-Process ₹27,40,000. Office Appliances ₹2,38,380; Plant & Machinery ₹63,08,850; Building ₹27,40,000; Sales ₹1,35,21,600; Sales Return and Rebates ₹1,91,800; Cash discount allowed on sales ₹1,17,820; Materials Purchased ₹43,84,000; Freight on Materials ₹2,19,200; Purchase Returns ₹65,760; Direct employee cost ₹21,92,000; Indirect employee cost ₹2,46,600; Drawing and Designing cost ₹1,37,000; Repairs and maintenance of factory ₹1,91,800; Heat, Light and Power expenses ₹8,90,500; Pollution Control Expenses ₹2,56,190; Sales Commission ₹4,60,320; Sales Promotion ₹3,08,250; Distribution Deptt. Salaries and Expenses ₹2,46,600; Office Salaries and Expenses ₹1,17,820; Packing Cost to make the product marketable ₹3,15,100; Printing and Stationery expenses ₹89,050; Bank Charges paid ₹8,220. Further details: (i) Closing Inventories: Finished Goods ₹15,75,500; Raw Materials ₹24,66,000; Work-in-Process ₹26,30,400. (ii) Outstanding direct employee cost ₹1,09,600. (iii) Depreciation to be provided on: Office Appliances 15%, Plant and Machinery 40%, Buildings 10%. (iv) 70% of Heat, Light and Power is related to Factory; remaining 30% equally shared between Office and Selling Department. Depreciation on Buildings is to be distributed at a similar percentage as Heat, Light and Power between Factory, Office and Selling Department. With the help of the above information, you are required to PREPARE a condensed Profit and Loss Statement of EVS & Co. for the year ended 31st March along with the following schedules:

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Amy Ltd. uses a batch costing system that is fully integrated with its financial accounts. Opening balances: Stores Ledger Control Account ₹4,83,250; Work-in-Process Control Account ₹3,86,600; Finished Goods Control Account ₹6,76,550. Other information: Materials purchased during the period ₹14,49,750; Materials issued to production ₹5,79,900; Total wages paid (1/6th being indirect) ₹5,79,900; Direct wages charged to batches ₹3,86,600; Payment for non-productive time of direct workers — 1/5th of direct wages paid; Production Overheads incurred ₹2,31,960; Sales ₹19,33,000; Cost of Finished Goods Sold ₹15,46,400; Cost of Goods completed and transferred into finished goods ₹12,56,450; Physical value of Work-in-Process at end of period ₹7,73,200; Production overhead absorption rate — 130% of direct wages charged to Work-in-Process. You are required to PREPARE the following accounts:

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X Ltd. provides the following cost details for calculating the selling price of Job No. X2X: Materials ₹1,330; Direct wages 18 hours @ ₹47.50 = ₹855 (Deptt. X: 8 hrs; Deptt. Y: 6 hrs; Deptt. Z: 4 hrs); Chargeable expenses ₹95; Prime cost ₹2,280; Add 1/3rd for expenses cost ₹760; Total ₹3,040. Analysis of the Profit/Loss Account for current financial year: Materials used ₹28,50,000; Direct wages — Deptt. X ₹1,90,000, Deptt. Y ₹2,28,000, Deptt. Z ₹1,52,000 (Total ₹5,70,000); Special stores items ₹76,000; Overheads — Deptt. X ₹95,000, Deptt. Y ₹1,71,000, Deptt. Z ₹38,000 (Total ₹3,04,000); Works cost ₹38,00,000; Gross profit ₹9,50,000; Sales ₹47,50,000; Selling expenses ₹3,80,000; Net profit ₹5,70,000. Average hourly rates for Departments X, Y and Z are similar. You are required to prepare a job cost sheet to DETERMINE the selling price by calculating the entire revised cost using above figures as the base and adding 20% to the total cost.

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Following data are available for a product for the month of July, 2024: Process-I — Direct materials ₹6,00,000; Labour ₹1,20,000; Factory overheads ₹2,40,000; Units received in process 40,000; Units completed and transferred 36,000; Closing work-in-progress 2,000; Normal loss in process 2,000. Process-II — Labour ₹1,60,000; Factory overheads ₹2,00,000; Units received in process 36,000; Units completed and transferred 32,000; Closing work-in-progress (missing figure); Normal loss in process 1,500. Opening work-in-progress is nil for both processes. Production remaining in process is to be valued as: Materials 100%, Labour 50%, Overheads 50%. There has been no abnormal loss in Process-II. 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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JB Ltd. manufactures three chemical products, XR, YS, and ZT. Input material is processed in common plant facility to generate two intermediate products X and Y in 4:1 proportion after a normal loss of 1/12th of input material. There is no market for these intermediate products. X is processed further through finishing process R to yield XR; Y is converted into YS by process S. Process S also produces waste material Z (no market value), which is converted into saleable by-product ZT through process T. 11,40,000 kg of common input material processed each month. Output after all finishing processes: XR 7,60,000 kg at market price ₹38.80/kg; YS 1,90,000 kg at ₹72.00/kg; ZT 19,000 kg at ₹24.00/kg. Material and processing costs — Common plant: Direct material ₹97,28,000; Direct labour ₹45,60,000; Factory overhead ₹24,32,000; Total ₹1,67,20,000. Process R: ₹33,44,000 + ₹68,40,000 + ₹22,80,000 = ₹1,24,64,000. Process S: ₹4,56,000 + ₹27,36,000 + ₹9,12,000 = ₹41,04,000. Process T: ₹30,400 + ₹1,67,200 + ₹1,06,400 = ₹3,04,000. You are required to CALCULATE the cost per unit and total operating profit/loss attributed to both the products XR and YS considering all joint costs are allocated based on net realisable value method.

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Mr. Intell newly sets up a Home Stay in Hanle, Ladakh offering two types of room — single and double. Expected occupancy: Single rooms (20 rooms) 100%; Double rooms (10 rooms) 80%. Annual forecasted expenses: Staff salaries ₹30,20,000; Food and beverage costs ₹20,16,000; Lighting and power ₹8,60,000; Repairs and renovation ₹4,94,000; Laundry charges ₹3,22,000; Building rent ₹14,40,000; Miscellaneous expenses ₹6,12,000. Room attendants paid @ ₹125 per room day. Emergency power backup is charged separately @ ₹200 per room if requested. The rent of the double room is to be fixed at 1.5 times the single room rent. Profit is required @ 25% on total taking. In June, Mr. Matrix with family booked a double bedroom for one night and also requested emergency power backup. You are required to CALCULATE the rent to be charged from Mr. Matrix. (Assume 360 days in a year.)

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COMPUTE the missing data indicated by the question marks from the following: Material A — Standard Price/unit ₹12, Actual Price/unit ₹15, Standard Input 50 kgs., Actual Input (?), Material Price Variance (?), Material Usage Variance (?), Material Cost Variance (?). Material B — Standard Price/unit ₹15, Actual Price/unit ₹20, Standard Input (?), Actual Input 70 kgs., Material Price Variance (?), Material Usage Variance ₹300 Adverse, Material Cost Variance (?). Material mix variance for both products together was ₹45 Adverse.

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Gourmet Food Products is a new entrant in the market for chocolates. It has introduced a new product — Sweetee, a small rectangular chocolate bar wrapped in aluminium foil and packed in cartons of 50 bars. A carton is the basic sales unit. Income Statements for the last two quarters: First Quarter — Sales 50,000 × ₹24 = ₹12,00,000; Cost of Goods Sold ₹7,00,000; Gross Margin ₹5,00,000; Selling and Administration ₹6,50,000; Net Loss before Tax ₹(1,50,000); Tax (40%) ₹(60,000); Net Loss ₹(90,000). Second Quarter — Sales 70,000 × ₹24 = ₹16,80,000; Cost of Goods Sold ₹8,80,000; Gross Margin ₹8,00,000; Selling and Administration ₹6,90,000; Net Income before Tax ₹1,10,000; Tax (40%) ₹44,000; Net Income ₹66,000. There were virtually no inventories at end of each quarter. The firm's overall marginal and average income tax rate is 40%.

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The budgets for activity and cost of PQR Ltd. for the first three quarters of operation are shown below (all costs in ₹'000): Q-I: Sales 9,000 units, Production 10,000 units; Q-II: Sales 17,000 units, Production 20,000 units; Q-III: Sales 15,000 units, Production 15,000 units. Costs — Direct Material A: Q-I ₹60, Q-II ₹120, Q-III ₹90 (thousands); Direct Material B: Q-I ₹50, Q-II ₹100, Q-III ₹75; Production Labour: Q-I ₹180, Q-II ₹285, Q-III ₹230; Manufacturing Overheads (excl. depreciation): Q-I ₹90, Q-II ₹120, Q-III ₹105; Depreciation of Production Machinery: ₹20 each quarter; Administration Expenses: ₹25 each quarter; Selling & Distribution Expenses: Q-I ₹38, Q-II ₹54, Q-III ₹50. Features: (i) Fixed element is independent of activity levels. (ii) Variable element is linear with activity, except variable labour cost becomes 50% higher for activity exceeding 19,000 units/quarter due to overtime. (iii) Variable element of selling and distribution is a function of sales; all other variable costs are a function of production volume. In Quarter IV: Production = Sales (range 15,000–21,000 units, most likely 18,000 units). Cost structure changes for Q-IV: (i) Labour cost will rise by 12.5%; (ii) Variable labour input per unit will decrease to 80% of previous input per unit due to learning curve effect; overtime threshold remains at 19,000 units; (iii) Fixed factory overheads and fixed element of selling & distribution costs will each rise by 20%; variable element of selling & distribution costs unchanged.

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Answer the following:

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