CATestSeries.

org (Since 2015)

CA Final | CA Inter | CA IPCC | CA Foundation Online Test Series

Question Paper

COST AND MANAGEMENT Duration: 180

ACCOUNTING

Details: Full Test-2 Marks: 100

Instructions:

 All the questions are compulsory

 Properly mention test number and page number on your answer sheet, Try to upload sheets
in arranged manner.
 In case of multiple choice questions, mention option number only Working notes are
compulsory wherever required in support of your solution
 Do not copy any solution from any material. Attempt as much as you know to fairly judge
your performance.

Legal: Material provided by catestseries.org is subject to copyright. No part of this

publication may be reproduced, distributed, or transmitted in any form or by any means, including
photocopying, recording, or other electronic or mechanical methods, without the prior written
permission of the publisher. For permission requests, write to the publisher, addressed “Attention:
Permissions Coordinator,” at [email protected]. If any person caught of copyright
infringement, strong legal action will be taken. For more details check legal terms on the website:
catestseries.org

CATESTSERIES.ORG
Notes: 1. Question Paper comprises two part, Part I and Part II

2. Part I is having multiple choice Questions which is compulsory

3. Part II Comprise descriptive Questions and in which Question No. 1 is Compulsory and
answer any 4 out of remaining 5 questions

4. Answer new Question on new page

Case study 1

ABC Manufacturing is a company that operates with three production departments:

Machining, Assembly, and Packing. The company follows a policy of recovering production
overheads by adopting a blanket rate based on the percentage of total factory overheads to
total factory wages. However, recent discrepancies in overhead absorption rates have
prompted a review of this method.

Background Information: Here are the relevant data for a month:

Department Direct Direct Factory Direct Direct

Materials (₹) Wages (₹) Overheads (₹) Labour Machine
Hours Hours

Budget:

Machining 6,50,000 80,000 3,60,000 20,000 80,000

Assembly 1,70,000 3,50,000 1,40,000 1,00,000 10,000

Packing 1,00,000 70,000 1,25,000 50,000 -

Actual:

Machining 7,80,000 96,000 3,90,000 24,000 96,000

Assembly 1,36,000 2,70,000 84,000 90,000 11,000

CATESTSERIES.ORG
Packing 1,20,000 90,000 1,35,000 60,000 -

The company also adds 30% on the factory cost to cover administration, selling overheads,
and profit.

Job Details: A representative job produced during the month is Job No. CW 7083, with the
following details:

Department Direct Direct Wages Direct Labour Direct Machine

Materials (₹) (₹) Hours Hours

Machining 1,200 240 60 180

Assembly 600 360 120 30

Packing 300 60 40 -

Based on the facts of the case scenario given above, choose the most appropriate answer
to Q. Nos. 1.1 to 1.5 below:-

1.1 What is the overhead absorption rate as per the current policy of the company?

a) 130%
b) 150%
c) 125%
d) 170%

1.2. What is the total under/over recovery of overheads across all three departments under
current policy?

a) ₹39,000 over recovered

b) ₹39,000 under recovered
c) ₹2,70,000 under recovered
d) ₹2,53,500 over recovered

CATESTSERIES.ORG
1.3. What is the total under/over recovery of overheads across all departments under the
Basis of overhead recovery method?

a) ₹99,000 over recovered

b) ₹99,000 under recovered
c) ₹7,08,000 over recovered
d) ₹7,08,000 under recovered

1.4. What is the total amount of overheads applied to job CW-7083 across the three
departments? If the factory cost of job CW-7083 is ₹3,838, what would be the 30% mark-up
value used to determine selling price?

a) ₹810: ₹1,151.40
b) ₹1,078: ₹4,989.40
c) ₹168: ₹3,838
d) ₹978: ₹1,152

1.5. What is the budgeted factory overhead recovery rate per machine hour for the
Machining department?

a) ₹1.40 per hour

b) ₹2.50 per hour
c) ₹4.50 per hour
d) ₹3.60 per hour

(2×5=10 MARKS)

Case study 2

Arnav Inspat Udyog Ltd. has the following expenditures for the year ended 31st March 2023:

CATESTSERIES.ORG
Sl. No. (Rs.) (Rs.)

(i) Raw materials purchased 10,00,00,000

GST paid on the above purchases @18% (eligible

(ii) 1,80,00,000
for input tax credit)

(iii) Freight inwards 11,20,600

(iv) Wages paid to factory workers 29,20,000

(v) Contribution made towards employees’ PF & ESIS 3,60,000

(vi) Production bonus paid to factory workers 2,90,000

(vii) Royalty paid for production 1,72,600

(viii) Amount paid for power & fuel 4,62,000

Amount paid for purchase of moulds and

(ix) patterns (life is equivalent to two years 8,96,000
production)

(x) Job charges paid to job workers 8,12,000

(xi) Stores and spares consumed 1,12,000

(xii) Depreciation on:

Factory building 84,000

CATESTSERIES.ORG
 Office building 56,000

Plant & Machinery 1,26,000

Delivery vehicles 86,000 3,52,000

(xiii) Salary paid to supervisors 1,26,000

Repairs & Maintenance paid for: Plant &

(xiv) 48,000
Machinery

Sales office building 18,000

Vehicles used by directors 19,600 85,600

(xv) Insurance premium paid for:

Plant & Machinery 31,200

Factory building 18,100

Stock of raw materials & WIP 36,000 85,300

(xvi) Expenses paid for quality control check activities 19,600

(xvii) Salary paid to quality control staffs 96,200

Research & development cost paid for

(xviii) 18,200
improvement in production process

(xix) Expenses paid for pollution control and 26,600

CATESTSERIES.ORG
 engineering & maintenance

(xx) Expenses paid for administration of factory work 1,18,600

(xxi) Salary paid to functional mangers:

Production control 9,60,000

Finance & Accounts 9,18,000

Sales & Marketing 10,12,000 28,90,000

(xxii) Salary paid to General Manager 12,56,000

(xxiii) Packing cost paid for:

Primary packing necessary to maintain quality 96,000

For re-distribution of finished goods 1,12,000 2,08,000

Interest and finance charges paid (for usage of

(xxiv) 7,20,000
non- equity fund)

(xxv) Fee paid to auditors 1,80,000

(xxvi) Fee paid to legal advisors 1,20,000

(xxvii) Fee paid to independent directors 2,20,000

(xxviii) Performance bonus paid to sales staffs 1,80,000

(xxix) Value of stock as on 1st April, 2022:

CATESTSERIES.ORG
 Raw materials 18,00,000

Work-in-process 9,20,000

Finished goods 11,00,000

38,20,000

(xxx) Value of stock as on 31st March, 2023:

Raw materials 9,60,000

Work-in-process 8,70,000

Finished goods 18,00,000 36,30,000

Amount realized by selling of scrap and waste generated during manufacturing process – Rs.
86,000/-

Based on the facts of the case scenario given above, choose the most appropriate answer
to Q. Nos. 2.1 to 2.5 below:-

2.1 What is the prime cost for Arnav Ispat Udyog Ltd.?

a) ₹10,54,64,600
b) ₹10,74,25,200
c) ₹10,55,30,600
d) ₹10,38,55,200

CATESTSERIES.ORG
2.2 What is the factory cost for Arnav Ispat Udyog Ltd.?

a) ₹10,80,83,100
b) ₹10,80,33,100
c) ₹10,89,53,100
d) ₹10,74,25,200

2.3 What is the cost of production for Arnav Ispat Udyog Ltd.?

a) ₹10,92,95,700
b) ₹10,92,09,700
c) ₹10,93,05,700
d) ₹10,80,83,100

2.4 What is the cost of goods sold for Arnav Ispat Udyog Ltd.?

a) ₹10,86,05,700
b) ₹10,93,05,700
c) ₹10,7,05,700
d) ₹11,04,05,700

2.5 What is the cost of sales for Arnav Ispat Udyog Ltd.?

a) ₹11,25,85,300
b) ₹11,35,03,300
c) ₹11,33,05,300
d) ₹11,27,83,300

(2×5=10 MARKS)

GENERAL MCQS

CATESTSERIES.ORG
1. What is the production units' difference between July and August?

Production Units Semi-variable expenses

July 300 560

August 400 680

(a) 50 (b) 100

(c) 150 (d) 200

2. Which document is typically used to formalize the materials procurement process and
contains details such as item descriptions, quantities, agreed prices, and delivery terms?

a) Purchase requisition b) Invoice

c) Stock audit report d) Materials inspection

report

3. Calculate the earnings of a worker under Halsey System. Who has a Time Rate (per hour)
of Rs 60, Time allowed 8 hours, Time taken 6 hours, Time saved 2 hours

a) Rs 420 b) Rs 360

c) Rs 410 d) Rs 320

4. When idle capacity costs are due to unavoidable reasons such as repairs, maintenance, or
job changeover, which method is typically used to recover these costs?

A) Charging the costs to the Costing Profit and Loss Account

CATESTSERIES.ORG
B) Charging the costs to the cost of production by inflating overhead rates

C) Using a supplementary overhead rate and charging the costs to the production capacity
utilized

D) Treating the costs as a fixed expense and absorbing them into the product cost

5. Company X invested in advanced machinery that requires regular maintenance to ensure

optimal performance on the production floor. What category do the maintenance costs of
this machinery fall under in terms of cost classification?

A) Works Overheads B) Quality Control Cost

C) Direct Expenses D) Administration Overheads

6. M/s. KBC Bearings Ltd. is committed to supply 48,000 bearings per annum to M/s. KMR
Fans on a steady daily basis. It is estimated that it costs Rs 1 as inventory holding cost per
bearing per month and that the set up cost per run of bearing manufacture is Rs 3,200. Find
out the minimum inventory holding cost.

a) Rs 30,360 b) Rs 48,000

c) Rs 30,300 d) Rs 40,300

7. XYZ Company uses a job order costing system. In the month of March, the company
worked on Job No. 1234, which involved the following costs:

Direct materials: Rs 10,000

Direct labor: Rs 5,000

Overhead: Rs 2,000

CATESTSERIES.ORG
The company applies overhead to jobs based on a predetermined overhead rate of 100% of
direct labor costs. What is the total cost of Job No. 1234?

(A) Rs 17,000 (B) Rs 15,000

(C) Rs 12,000 (D) Rs 10,000

8. During a painting process at "Artisan Strokes Studio," a certain amount of paint is lost due
to the absorption of the canvas and the nature of pigments. This type of loss is predictable
and accepted as part of the artistic process. How should the cost of this loss be treated in
cost accounts?

A) Charged to the Abnormal Loss Account

B) Included in the Direct Expenses Account

C) Absorbed by the completed artwork's cost

D) Credited to the Process Account

9. In case of joint products, the main objective of accounting of the cost is to apportion the
joint costs incurred up to the split off point. For cost apportionment one company has
chosen Physical Quantity Method. Three joint products ‘A’, ‘B’ and ‘C’ are produced in the
same process. Up to the point of split off the total production of A, B and C is 60,000 kg, out
of which ‘A’ produces 30,000 kg and joint costs are Rs. 3,60,000. Joint costs allocated to
product A is (using Physical Quantity Method)

(a) Rs. 1,20,000 (b) Rs. 60,000

(c) Rs. 1,80,000 (d) None of the these

10. A lorry starts with a load of 20 MT of goods from Station ‘A’. It unloads 8 MT in Station
‘B’ and balance goods in Station ‘C’. On return trip, it reaches Station ‘A’ with a load of 16

CATESTSERIES.ORG
MT, loaded at Station ‘C’. The distance between A to B, B to C and C to A are 80 Kms, 120
Kms and 160 Kms, respectively. COMPUTE Weighted Average “Absolute MT-Kilometer” (MT
= Metric Ton or Ton).

(a) 5,600 MT – Kilometer

(b) 5,500 MT - Kilometer

(c) 5,806 MT – Kilometer

(d) 5,760 MT – Kilometer

(1×10=10 MARKS)

Descriptive Questions

1. (a) EPS is a Public School having 25 buses each plying in different directions for the
Transport of its school students. In view of large number of students availing of the bus
service, the buses work two shifts daily both in the morning and in the afternoon. The buses
are garaged in the school. The workload of the students has been so arranged that in the
morning, the first trip picks up senior students and the second trip plying an hour later picks
up junior students. Similarly, in the afternoon, the first trip takes the junior students and an
hour later the second trip takes the senior students home.

The distance traveled by each bus, one way is 16 km. The school works 24 days in a month
and remains closed for vacation in May and June. The bus fee, however, is payable by the
students for all the 12 months in a year. The details of expenses for the year 2003-2004 are
as under:

Driver's salary – payable for all the 12 in months Rs. 5,000 per month per driver

Cleaner's salary payable for all the 12 months (one Rs. 3,000 per month per cleaner
cleaner has been employed for every five buses).

CATESTSERIES.ORG
Licence Fees, Taxes etc. Rs. 2,300 per bus per annum

Insurance Premium Rs. 15,600 per bus per annum

Repairs and Maintenance Rs. 16,400 per bus per annum

Purchase price of the bus Rs. 16,50,000 each

Life of the bus 16 years

Scrap value Rs. 1,50,000

Diesel Cost Rs. 18.50 per litre

Each bus gives an average of 10 km. per litre of diesel. The seating capacity of each bus is 60
students. The seating capacity is fully occupied during the whole year.

The school follows differential bus fees based on distance traveled as under:

Students picked up and Bus fee Percentage of students

dropped within the range of availing this facility

distance from the school

4 km. 25% of Full 15%

8 km. 50% of Full 30%

16 km Full 55%

Ignore interest. Since the bus fees has to be based on average cost, you are required to

(i) Prepare a statement showing the expenses of operating a single bus and the fleet of 25
buses for a year.

(ii) Work out average cost per student per month in respect of:

(a) Students coming from a distance of upto 4 km. from the school.

CATESTSERIES.ORG
(b) Students coming from a distance of upto 8 km. from the school; and

(c) Students coming from a distance of upto 16 km. from the school.

(7 Marks)

(b) Duff Co manufactures three products, X, Y and Z. Demand for products X and Y is
relatively elastic whilst demand for product Z is relatively inelastic. Each product uses the
same materials and the same type of direct labour but in different quantities. For many
years, the company has been using full absorption costing and absorbing overheads on the
basis of direct labour hours. Selling prices are then determined using cost plus pricing. This is
common within this industry, with most competitors applying a standard mark-up.

Budgeted production and sales volumes for X, Y and Z for the next year are 20,000 units,
16,000 units and 22,000 units respectively.

The budgeted direct costs of the three products are shown below:

Product X Y Z

Per unit (Rs.) Per unit (Rs.) Per unit (Rs.)

Direct Materials 25 28 22

Direct labour (Rs. 12 per hour) 30 36 24

In the next year, Duff Co also expects to incur indirect production costs of Rs.1,377,400,
which are analyzed as follows:

Cost pools Rs. Cost drivers

Machine set up costs 280,000 Number of batches

Material ordering costs 316,000 Number of purchase orders

Machine running costs 420,000 Number of machine hours

CATESTSERIES.ORG
General facility costs 361,000 Number of machines hours

Total 1,377,400

The following additional data relate to each product:

Product X Y Z

Batch size (units) 500 800 400

No of purchase orders per batch 4 5 4

Machine hours per unit 1.5 1.25 1.4

Duff Co wants to boost sales revenue in order to increase profits but its capacity to do this is
limited because of its use of cost plus pricing and the application of the standard mark-up.
The finance director has suggested using activity based costing (ABC) instead of full
absorption costing, since this will alter the cost of the products and may therefore enable a
different price to be charged.

Required:

(a) Calculate the budgeted full production cost per unit of each product using Duff Co’s
current method of absorption costing. All workings should be to two decimal places.

(b) Calculate the budgeted full production cost per unit of each product using activity based
costing. All workings should be to two decimal places.

(c) Discuss the impact on the selling prices and the sales volumes OF EACH PRODUCT which
a change to activity based costing would be expected to bring about.

(7 Marks)

2. (a) The following information is available from the financial books of a company having a
normal production capacity of 60,000 units for the year ended 31st March, 2020:

CATESTSERIES.ORG
(i) Sales Rs. 10,00,000 (50,000 units).

(ii) There was no opening and closing stock of finished units.

(iii) Direct material and direct wages cost were Rs. 5,00,000 and Rs. 2,50,000 respectively.

(iv) Actual factory expenses were Rs. 1,50,000 of which 60% are fixed.

(v) Actual administrative expenses related with production activities were Rs. 45,000 which
are completely fixed.

(vi) Actual selling and distribution expenses were Rs. 30,000 of which 40% are fixed.

(vii) Interest and dividends received Rs. 15,000.

You are required to:

(a) FIND OUT profit as per financial books for the year ended 31st March, 2020;

(b) PREPARE the cost sheet and ascertain the profit as per cost accounts for the year ended
31st March, 2020 assuming that the indirect expenses are absorbed on the basis of normal
production capacity; and

(c) PREPARE a statement reconciling profits shown by financial and cost books.

(7 Marks)

(b) T Ltd manufactures and sells a single product and has estimated sales revenue of
₹1,51,20,000 during the year based on 20% profit on selling price. Each unit of product
requires 6 kg of material A and 3 kg of material B and processing time of 4 hours in machine
shop and 2 hours in assembly shop. Factory overheads are absorbed at a blanket rate of
20% of direct labour. Variable selling & distribution overheads are ₹30 per unit sold and
fixed selling & distribution overheads are estimated to be ₹34,56,000.

The other relevant details are as under:

CATESTSERIES.ORG
Purchase Price: Material A ₹80 per kg

Materials B ₹50 per kg

Labour Rate: Machine Shop ₹70 per hour

Assembly Shop ₹35 per hour

Finished Stock: Material A Material A

- Opening Stock 2,500 units 7,500 kg 4,000 kg

- Closing Stock 3,000 units 8,000 kg 5,500 kg

Required

(i) CALCULATE number of units of product proposed to be sold and selling price per unit,

(ii) PREPARE Production Budget in units and

(iii) PREPARE Material Purchase Budget in units.

(7 Marks)

3. (a)

The following data are available in respect of Process-I for January 2024:

(1) Opening stock of work in process: 600 units at a total cost of Rs. 4,200.

(2) Degree of completion of opening work in process:

Material 100%

Labour 60%

Overheads 60%

CATESTSERIES.ORG
(3) Input of materials at a total cost of Rs. 55,200 for 9,200 units.

(4) Direct wages incurred Rs. 18,600

(5) Overheads Rs. 8,630.

(6) Units scrapped 200 units. The stage of completion of these units was:

Materials 100%

Labour 80%

Overheads 80%

(7) Closing work in process; 700 units. The stage of completion of these units was:

Material 100%

Labour 70%

Overheads 70%

(8) 8,900 units were completed and transferred to the next process.

(9) Normal loss is 4% of the total input (opening stock plus units put in)

(10) Scrap value is Rs. 6 per unit.

You are required to:

(i) PREPARE using FIFO method, Statement of equivalent production,

(ii) PREPARE Statement of cost,

(iii) CALCULATE cost of closing WIP,

(iv) CALCULATE the cost of the units to be transferred to the next process.

(7 Marks)

CATESTSERIES.ORG
(b) The following account balances and distribution of indirect charges are taken from the
accounts of a manufacturing concern for the year ending on 31st March, 2015.

Items Total Production Departments Service Departments

Amount

(Rs.) X (Rs.) Y (Rs.) Z (Rs.) A (Rs.) B (Rs.)

Indirect 1,25,000 20,000 30,000 45,000 25,000 5,000

material

Indirect labour 2,60,000 45,000 50,000 70,000 60,000 35,000

Superintendent 96,000 - - 96,000 - -

salary

Fuel & heat 15,000

Power 1,80,000

Rent & rates 1,50,000

Insurance 18,000

Meal charges 60,000

Depreciation 2,70,000

The following department data are also available:

Production Departments Service Departments

X (Rs.) Y (Rs.) Z (Rs.) A (Rs.) B (Rs.)

Area (Sq. ft) 4,400 4,000 3,000 2,400 1,200

CATESTSERIES.ORG
Capital value of assets 4,00,000 6,00,000 5,00,000 1,00,000 2,00,000

Kilowatt hours 3,500 4,000 3,000 1.500 -

Radiator sections 20 40 60 50 30

No. of employees 60 70 120 30 20

Expenses charged to the service depts. are to be distributed to other departments in the
following percentages:

X Y Z A B

Department A 30 30 20 - 20

Department B 25 40 25 10 -

Prepare an overhead distribution statement to show the total overheads of production

departments after reapportioning service departments’ overhead by using simultaneous
equation method. Show all the calculations to the nearest rupee.

(7 Marks)

4. (a) The following are the balances existed in the books of JPG Ltd. for the year ended, 31st
March, 2019:

particulars Dr. (Rs.) Cr. (Rs.)

Store Ledger control A/c 30,00,000

WIP control A/c 15,00,000

Finished Goods control A/c 25,00,000

Manufacturing Overheads control A/c 1,50,000

CATESTSERIES.ORG
Cost Ledger control A/c 68,50,000

During the year 2019-20, the following transactions took place:

Particulars Amount (Rs.)

Finished product (at cost) 22,50,000

Manufacturing Overhead incurred 8,50,000

Raw material purchased 12,50,000

Factory wages 4,00,000

Indirect labour 2,00,000

Cost of sales 17,50,000

Materials issued to production 13,50,000

Sales returned (at cost) 90,000

Material returned to suppliers 1,30,000

Manufacturing overhead charged to production 8,50,000

Required:

PREPARE the following control accounts and Trial balance at the end of the year: Cost
Ledger, Stores Ledger, Work-in-process, Finished Stock, Manufacturing Overhead, Wages
and Cost of Sales.

(8 Marks)

(b) BTL LLP. Manufactures glass bottles for HDL Ltd., a pharmaceutical company, which is in
ayurvedic medicines business.

CATESTSERIES.ORG
BTL can produce 2,00,000 bottles in a month. Set-up cost of each production run is Rs. 5,200
and the cost of holding one bottle for a year is Rs. 1.50.

As per an estimate HDL Ltd. can order as much as 19,00,000 bottles in a year spreading
evenly throughout the year.

At present the BTL manufactures 1,60,000 bottles in a batch.

Required:

(i) COMPUTE the Economic Batch Quantity for bottle production.

(ii) COMPUTE the annual cost saving to BTL by adopting the EBQ of a production.

(3 Marks)

(c) Mega Company has just completed its first year of operations. The unit costs on a normal
costing basis are as under:

(Rs.)

Direct material 4 kg @ Rs.4 16.00

Direct Labour 3 hrs @ Rs.18 54.00

Variable Overhead 3 hrs @ Rs.4 12.00

Fixed Overhead 3 hrs @ Rs.6 18.00

100.00

Selling And Administrative Costs:

Variable Rs.20 per unit

Fixed Rs.7,60,000

CATESTSERIES.ORG
During the year the company has the following activity:

Units produced = 24,000

Unit sold = 21,500

Unit Selling Price = Rs.168

Direct Labour Hours worked = 72,000

Actual fixed overhead was Rs.48,000 less than the budgeted fixed overhead. Budgeted
variable overhead was Rs.20,000 less than the actual variable overhead. The company used
an expected actual activity level of Rs.72,000 direct hours to compute the predetermine
overhead rates. Required:

(i) Compute the unit cost and total income under:

(a) Absorption Costing

(b) Marginal Costing

(ii) Under or over absorption of overhead.

(iii) Reconcile the difference between the total income under Absorption and Marginal
Costing.

(3 Marks)

5. (a) A company operates a chemical process which produces four products K, L, M & N
from a basic raw material. The company’s budget for a month is as under:

Amount

Raw Materials consumption 17,520

Initial Processing Wages 16,240

CATESTSERIES.ORG
Initial Processing Overheads 16,240

Product Production (Rs.) Sales (Rs.) Additional Processing Costs After split-
off(Rs.)

K 16,000 1,09,600 28,800

L 200 5,600 -------

M 2,000 30,000 16,000

N 360 21,600 6,600

The Company presently intends to sell product L at the point of split off without further
processing. The remaining products, K, L, M & N are to be further processed and sold.
However, the management has been advised that it would be possible to sell all the four
product at the split-off point without further processing and if this course was adopted, the
selling prices would be as under:

Product K L M N

Selling Price (Rs. Per kg.) 4.00 28.00 8.00 40.00

The joint costs are to be apportioned on the basis of the sales value realisation at the point
of split-off. Required:

(i) Prepare the statement showing the apportionment of joint costs

(ii) Present a statement showing the product wise and total budgeted profit or loss based on
the proposal to sell product L at the split-off point & products K, M and N after further
processing.

(iii) Prepare a statement to show the product wise and total profit or loss if the alternative
strategy to sell all the products at split-off stage was adopted.

CATESTSERIES.ORG
(iv) Recommend any other alternative which in your opinion can increase the total profit
further. Calculate the total profit as also the product wise profit or loss, based on your
recommendation.

(8 Marks)

(b) A worker takes 12 hours to complete a. job on daily wages and 9 hours on a scheme of
payment by results. His day rate is Rs. 4 per hour. The material cost of the product is Rs. 6
and the overheads are recovered at 150% of total direct wages. Calculate Factory cost of the
product under.

a) Piece Work Plan, b) Rowan Plan, c) Halsey Plan.

(3 Marks)

(c) For making 10 kg. of CEMCO, the standard material requirements is:

Material Quantity Rate per kg. (Rs.)

A 8 kg 6.00

B 4 kg 4.00

During April, 1,000 kg of CEMCO were produced. The actual consumption of materials is as
under:

Material Quantity Rate per kg. (Rs.)

A 750 7.00

B 500 5.00

CATESTSERIES.ORG
CALCULATE (A) Material Cost Variance; (b) Material Price Variance; (c) Material usage
Variance.

(3 Marks)

6. (a) STATE what is Activity based costing? How are product costs determined in ABC?

(3 Marks)

(b) STATE what is blanket overhead rate? In which situations, blanket rate is to be used and
why?

(3 Marks)

(c) DISTINGUISH between Job Costing & Process Costing?

(3 Marks)

(d) DISCUSS the treatment of by-product cost in Cost Accounting.

(3 Marks)

(e) Explain the Scope of cost accounting?

(2 Marks)

CATESTSERIES.ORG