Professional Documents
Culture Documents
Q. No. 1.
The following is the 10 months pre-audit income statement of STAR CYCLE Company ended on 31st
December 2010, which started its operations on March 1, 2010.
STAR CYCLE COMPANY
Income Statement
For Period Ended December 31, 2010
Sales
Tk.49,70,000
Cost of goods sold:
Completed units 50,000
Tk.40,10,000
Ending inventory 10,000
Tk.8,02,000 Tk.32,08,000
Gross profit on sales
Tk.17,62,00
Selling expenses:
Advertising
Tk.1,32,000
Miscellaneous selling expenses
Tk.6,00,000 Tk.7,32,000
General and administrative expenses:
Officers salaries
Tk.3,21,000
Miscellaneous general and administrative expenses
Tk. 33,000
Depreciation expenses
Tk.1,69,000 Tk.5,23,000 Tk.12,55,000
Income before income tax
Tk.5,07,000
During the course of the year-end audit, the auditors observed the following:
(a) Factory depreciation of Tk.1,12,000 was included in general and administrative expenses.
(b) Sales return and allowances of Tk.27,500 were not recorded.
(c) Accrued sales commission of Tk.52,300 was not recorded of December 31, 2010.
(d) Advertising expenses of Tk.1,32,000 paid on March 1, 2010, was for newspaper ads appearing
each month for the next 12 months.
(e) Income tax was charged at a 40% rate.
Required: Prepare a corrected Income Statement.
[Marks: 20]
Q. No. 2.
(a)
(b)
Page 1 of 54
Tk.1,39,45,000
Tk.97,50,000
Tk.9,00,000
Q. No. 3.
The Bank Balance as per book of M/s. Philips Bangladesh Ltd. showed a Balance of Tk.378,085 on
30.06.11. The Bank Statement as on that date showed a Balance of Tk.4,99,720. While compared the
difference in Cash Book and Bank Statement the following facts were discovered:
(a) A Customer cheque No.600312 amounting to Tk.15,000 deposited in the Bank on 26.06.11
discounted by the Customers Bank due to insufficient balance in the account.
(b) An amount of Tk. 3,500 credited by the Bank on Account of interest for the period.
(c) Cheque No. 1864 and 5038 for total amount of Tk. 8,960 entered in the cash book on 28.06.11
given to the office bearer to deposit in the Bank but erroneously kept in his pocket up to
02.07.11.
(d) Bank Account debited by an amount of Tk. 365 for bank charges on collection of cheques and
remittances.
(e) An amount of Tk. 95,000 transferred by a Customer on 29.06.11 from Rajshahi in settlement of
invoice No. R-1015 dated 25.05.11. The intimation has not been reached to the cashier as yet.
(f) The following cheques were issued by the company not yet presented to the Bank for payment.
Cheque No.
30113
Tk. 25,600
30117
Tk. 7,900
30118
Tk. 18,200
30126
Tk. 3,000
(g) As per standing order bank is paying Tk. 35,000 to Mr. Rahman on the last working day of
every month which has not been recorded by the Cashier.
(h) Cheque No. 30130 issued to M/S Habib & Sons A/C payee only for an amount of Tk. 25,000 on
28.06.2011 reported to be lost by an employee of Mr. Habib. This has been informed to the
Bank by a written statement which was finally caught by the Bank on 07.07.2011 and reported
to the police. However the depositor of the stolen cheque could not be traced yet. The case is
under investigation.
(i)
An amount Tk. 9,600 deposited to the Bank on 30.06.2011 which was credited in the bank
account correctly but cashier Mr. Anis debited the cash book erroneously for Tk. 6,900.
Required:
(i)
Prepare a Bank Reconciliation statement showing the corrected Bank balance as on 30.06.11.
(ii) Make Journal entries in order to bring the Cash Book in agreement with the Bank Balance.
[Marks: (14+6) = 20]
Page 2 of 54
Page 3 of 54
Amount
Tk.9,22,400
Tk.3,92,200
Tk.1,67,200
Tk.37,000
Tk.16,800
Tk.15,35,600
The following schedule shows the year-end receivable balance and uncollectible account
experience for the previous five years.
Year
Year-End
Receivables
0-30 days
61-90 days
91-120 days
2009
Tk.15,71,400
0.5%
1.0%
10.2%
49.1%
77.6%
2008
15,00,800
0.4
1.1
9.8
51.9
77.3
2007
13,61,800
0.7
1.2
11.0
51.7
79.0
2006
13,96,400
0.5
0.8
10.1
48.8
78.5
2005
14,39,000
0.4
0.9
8.9
49.2
77.6
The unadjusted Allowance for Doubtful Accounts balance on December 31, 2010 is Tk.61,394.
Required:
Compute the correct balance for the allowance account based on the average loss experience for the
last five years and prepare the appropriate end-of-year adjusting entry.
[Marks: (2+4+14) = 20]
= THE END =
Page 4 of 54
Page 5 of 54
= THE END =
Page 6 of 54
When A = 1
2
3
4
3
4 .
3
(b)
(c)
tan x
w.r.t.x.
x + ex
[Marks: (4+3+3) = 10]
Page 7 of 54
x
, 0 x 9000.
30
Find the (i) maximum weekly revenue, (ii) maximum weekly profit, (iii) production level at which the
maximum profit in realized, and (iv) price the company should charge for the maximum profit.
[Marks: (2.5 x 4) = 10]
Q. No. 7.
(a) Work out the following:
3 4
(i) (e + 2 ) dx, (ii)
x x
bx
(b)
x 3 + 1dx
Find the area of the region bounded by the x axis, the y - axis, the curve y = e-x and the line
x = 3.
[Marks: (6+4) = 10]
155
168
147
160
151
132
163
156
188
132
156
140
136
142
133
147
137
176
162
143
162
165
154
138
144
183
189
161
140
140
136
141
155
160
163
142
184
153
135
156
160
163
166
156
173
149
135
144
150
Taking a suitable class interval construct a frequency distribution for the above data.
[Marks: (5+5) = 10]
Q. No. 2.
(a) What do you mean by central tendency? Define arithmetic mean, median and the mode with
suitable examples.
(b) The daily salary (in Tk.) of some workers are given in the following table:
Salary (in Tk.)
100-150
150-200
200-250
250-300
300-350
350-400
# of workers
15
18
20
22
16
Page 8 of 54
25-30
30
30-35
22
35-40
27
40-45
35
45-50
21
50-55
18
[Marks: (4+6) = 10]
Q. No. 5.
(a) Define regression co-efficient (b) X on Y.
(b) Obtain the regression of y on x from the following table and estimate the blood pressure when
the age is 45 years.
Age in years
Blood Pressure
(x)
56
42
72
36
63
47
55
49
38
42
68
60
(y)
147
125
160
118
140
128
150
145
115
140
152
155
[Marks: (4+6) = 16]
Q. No. 6.
(a)
(b)
A problem statistics is given to the three students A, B and C whose chances of solving it are ,
and respectively.
What is the probability that the problem will be solved if all of them try independently?
[Marks: (4+6) = 10]
Q. No. 7.
Write short notes on the following:
(a)
(b)
(c)
Conditional probability.
(d)
Standard deviation.
[Marks: (2.5 x 4) = 10]
= THE END =
Page 9 of 54
Sales in quantity
of X No.
15,000
30,000
Page 10 of 54
Calculate average cost, marginal cost, marginal revenue, average revenue and profit from the
following information:
Units of Output
1
2
3
4
5
6
7
8
Total Cost
300
350
400
450
550
610
670
750
Variable Cost
200
250
300
350
450
510
570
650
Fixed Cost
100
100
100
100
100
100
100
100
Total Revenue
150
250
400
500
600
650
700
760
(d) Identify the Break Even Output Level and Profit maximizing Output level from c as above.
[Marks: (6+5+5+4) = 20]
GROUP-B: INTERNATIONAL BUSINESS
Q. No. 6.
(a) What is the usual procedure of exports from Bangladesh?
(b) What are the potential products for export development in Bangladesh? Justify your answer.
(c) What are the comparative advantages of Bangladesh in international trade?
(d) What are the main barriers of export expansion in case of Bangladesh?
[Marks: (6+4+5+5) = 20]
Q. No. 7.
(a) What are the infant industry arguments? How far these arguments are valid for development of
Bangladesh? Illustrate your answer.
(b) What are the positive and negative economic impacts of giving transit to India by Bangladesh?
Illustrate your answer.
[Marks: (10+10) = 20]
Q. No. 8.
Write short notes on any five (5) of the following:
(a) Currency Depreciation.
(b) Theory of Comparative advantage.
(c) Ways of Poverty Alleviation in Bangladesh.
(d) Disguised Unemployment.
(e) Board of Investment (BOI).
(f) WTO.
(g) PSI (Pre-shipment Inspection).
(h) FDI (Foreign Direct Investment).
[Marks: (4 x 5) = 20]
= THE END =
Page 11 of 54
Q. No. 1.
(a) Why is it necessary to convert accrual-based net income to a cash basis when preparing a
statement of cash flows?
(b) From the following information, prepare a cash flow statement for Texaco Company:
Texaco Company
Balance Sheet as at December 31, 2010
Particulars
31.12.2010
Assets:
(Taka)
Cash
900,000
Account Receivable
450,000
Notes Receivable
150,000
Inventories
750,000
Building
1,000,000
Plant and Equipment
900,000
Accumulated Depreciation
(350,000)
Land
380,000
Total
4,180,000
Liabilities and stockholders equity:
Accounts Payable
800,000
Salaries Payable
100,000
Expense Payable
50,000
Bonds Payable 12%
1,080,000
Common stock
600,000
Additional paid in Capital
300,000
Retained earnings
1,250,000
Total
4,180,000
31.12.2009
(Taka)
500,000
550,000
150,000
1,000,000
1,000,000
1,000,000
(400,000)
300,000
4,100,000
700,000
50,000
50,000
1,100,000
800,000
400,000
1,000,000
4,100,000
Texaco Company
Income Statement for the year ended December 31, 2010
Particulars
(Taka)
2,500,000
(1,200,000)
(250,000)
(400,000)
(100,000)
100,000
650,000
Revenues
Cost of goods sold
Depreciation Expense
Salaries Expense
Interest Expense
Gain on sale of Equipment
Net Income
Additional Information:
(i)
A piece of machinery with an original cost of Tk.500,000 and accumulated depreciation of
Tk.300,000 was sold for Tk.300,000.
(ii) Common stock originally issued for Tk.300,000 was acquired for Tk.350,000 and retired. The
difference of Tk.50,000 was deleted to retained earnings.
(iii) The total dividends declared and paid during 2010 was Tk.350,000.
[Marks: (5+15) = 20]
Page 12 of 54
Page 13 of 54
Stock splits and stock dividends may be used by a company to change the number of shares of
its stock outstanding.
(i)
What is stock dividend? Describe the accounting entry for a stock dividend, if any?
(ii) What is stock split? Describe the accounting entry for a stock split, if any?
(iii) How should a stock dividend that has been declared but not yet issued be classified in a
statement of financial position? Why?
(b)
The following transactions occurred during 2010. Assume that depreciation of 10% per year is
charged on all machineries and 5% per year on buildings, on a straight line basis, with no
estimated salvage value. Depreciation charged for a full year on all fixed assets acquired during
the year, and no depreciation is charged on fixed assets disposed of during the year.
January 25 A building that cost Tk 1,320,000 in 1993 is torn down to make room for a new
building. The wrecking contractor was paid Tk 51,000 and was permitted to
keep all materials salvaged.
March 10
Machinery that was purchased in 2003 for Tk 160,000 is sold for Tk 29,000
cash, FOB purchasers plant freight of Tk 3,000 is paid on this machinery.
May 18
A special base installed for a machine in 2004 when the machine was purchased
has to be replaced at a cost of Tk 55,000 because of defective workmanship on
the original base. The cost of the machinery was Tk 142,000 in 2004. The cost
of the base was Tk 35,000, and this amount was charged to the machinery
account in 2004.
June 23
One of the buildings is repainted at a cost of Tk 69,000. It had not been painted
since it was constructed in 2006.
Write short note of Perpetual Inventory System and Periodic Inventory System.
M/s. Monyem Ltd. has the following items as inventory as of June 30, 2011. What is the value
of inventory by applying Lower of Cost or Market?
Item
Units
Cost (Tk.)
Current Replacement Cost (Tk.)
Estimated Selling Price (Tk.)
Completion & Disposal Cost (Tk.)
AB
500
65.00
68.00
80.00
3.00
BC
300
80.00
72.00
102.00
8.00
CD
400
90.00
105.00
112.00
10.00
DE
700
38.00
42.00
40.00
4.00
EF
900
20.00
21.00
30.00
2.00
FG
600
55.00
45.00
67.00
2.00
Keya & Co. is a manufacturing company which prepares financial statements to 30 June each
year. Before the draft financial statements for the year ended 30 June 2011 can be finalized and
approved by the directors, the following points need to be addressed. Draft net assets at 30 June
2011 were Tk 2 million.
(i)
Keya & Co. has renewed the unlimited guarantee given in respect of the bank overdraft of
a company (Vass Ltd) in which it holds a significant investment. Vass Ltd.'s overdraft
amounted to Tk 300,000 at 30 June 2011 and it has net assets of Tk 1 million.
(ii) A former director, who was dismissed from the companys service on 1 June 2011 for
acting outside his authority, has given notice of his intention to claim substantial damages
for loss of office. On 1 November 2011 a claim was received for Tk 150,000. The
companys legal advisers have been negotiating with the former director and believe that
the claim will probably be settled at Tk 100,000.
Page 14 of 54
An overseas division of Keya & Co. was nationalized in July 2011. The overseas
authorities have refused to pay any compensation. The net assets of the division have
been valued at Tk 200,000 at the year end.
Required:
Prepare extracts from the statement of financial position of Keya & Co. as at 30 June 2011,
including any relevant notes to the financial statements.
[Marks: (4+8+8) = 20]
Q. No. 5.
You are going to be a professional accountant. As a professional you have to know each and every
related terms as well as techniques of cost and management accounting and overall financial and
business matters. Can you explain the following terms in brief?
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
= THE END =
Page 15 of 54
Q. No. 1.
(a) Distinguish between unavoidable spoilage and avoidable spoilage. How both should be reported
for management purpose.
(b) As an internal auditor you have found the following information in attempting to verify the
costing of the December 31, 2011 inventory of Work-in-progress and finished goods recorded
on Hasikhusi corporations books.
Finished goods
2,00,000 units
Tk. 10,09,80
Work-in-progress 3,00,000 units (50% complete)
as to labour and Factory overhead) Tk. 6,60,960
The company uses average costing. Materials are added to production at the beginning of the
manufacturing process and factory overhead is applied at the rate of 60% of direct labour cost.
Inventory cost records disclosed zero finished goods on January 1, 2011 and the following additional
information for 2011 is as follows:
Units
Material cost
Labour cost
W/I/P, January 1 (80% complete as
2,00,000
Tk. 2,00,000
Tk. 3,15,000
to labour and factory O/H)
Units started in production
10,00,000
Materials
Tk. 13,00,000
Labour
Tk. 19,95,000
Units completed
9,00,000
Required:
(i)
Compute the equivalent cost of production.
(ii) Compute the unit production costs of materials, labour and factory overhead.
(iii) Compute cost of the ending finished goods and W/I/P inventories and compare to book
balances.
(iv) Prepare the necessary Journal Entry to correctly state the finished goods and work in progress
ending inventories.
[Marks: {5+(4+4+4+3) = 20]
Q. No. 2.
Tipu Builders (TB) provides skilled labor to the building trade. They have recently been asked to bid
for a kitchen fitting contract for a new development of 600 identical apartments. This company has
not worked for this builder before. Cost information for the new contract is as follow:
Labor for the contract is available. TB expects that the first kitchen will take 24 man-hours to fit but
thereafter the time taken will be subject to a 95% learning rate. After 200 kitchens are fitted the
learning rate will stop and the time taken for the 200th kitchen will be the time taken for all the
remaining kitchens. Labor cost Tk. 15.00 per hour.
Overheads are absorbed on a labor hour basis. TB has gathered the following overhead related
information for the last four months:
Month
Hours
Cost (Tk.)
1
9,300
1,15,000
2
9,200
1,13,600
3
9,400
1,16,000
4
9,600
1,16,800
Page 16 of 54
Page 17 of 54
Special
Total
Units produced
49,800
200
50,000
Direct material cost per unit
20
120
Direct labor cost (Tk.)
22, 00,000
3, 00,000
25, 00,000
Machine hours
11,000
960
11,960
Machine set ups
20
40
60
Engineering charges
400
600
1,000
Overhead cost:
Machine set ups related
2, 40,000
Engineering related
8, 36,400
Others
19, 13,600
Total Overhead
29, 90,000
Required:
(i)
Using the current costing system, determine the total and unit cost for each product line.
(ii) Using the ABC costing system, determine the total and unit cost for each product line.
(iii) Reconcile the total and unit costs reported for Special by the two costing system.
(iv) What percentage of Merlins total overhead did the two costing system treat differently?
By what percentage did the cost of Special changes as a result of the changes in the
system? Calculate each answer to the nearest whole percentage.
[Marks: {5+(5+5+3+2) = 20]
= THE END =
Page 18 of 54
Page 19 of 54
= THE END =
Page 20 of 54
Full Marks: 80
Q. No. 1.
(a)
Difference between:
(i)
Update and Upgrade;
(ii) Search Engine and Browser;
(iii) WiFi and Bluetooth;
(iv) WAP and internet;
(v) Upload and download.
(b)
Outline some factors are depend on a successful ERP software implementation with Merits and
Demerits of such software.
[Marks: {(5x2)+10)} = 20]
Q. No. 2.
(a)
(b)
(c)
(d)
Q. No. 3.
(a)
(b)
(c)
(d)
Q. No. 4.
Write short notes on the followings:
(a)
(b)
(c)
(d)
(e)
Digital Market.
Virtual Drive.
Web based Solution.
Volatile Memory.
Digital Signature.
[Marks: (5 x 4) = 20]
= THE END =
Page 21 of 54
Q. No. 1.
(a) What are the two general criteria that must be satisfied before a company can recognize revenue?
(b) Describe a consignment sale. When does a consignor recognize revenue for a consignment sale?
(c) Salam, Kalam and Kamal undertake to erect a five-storied mansion for Dhaka City Corporation.
The contract price is agreed at Tk.25,00,000, to be paid in cash Tk.22,00,000 by four equal
installments and the balance amount in 8% notes payable of the corporation. They agree to
share equally the profit or loss. They open a joint banking account with cash contributed as
stated below:
Salam Tk.3,00,000, Kalam Tk.3,75,000 and Kamal Tk.2,00,000.
Salam arranges the preparation of building plans, etc. and pays Tk.32,000 as architects fees.
Kalam brings a concrete mixture and other implements valued Tk.80,000 and Kamal brings a
motor lorry valued Tk.75,000.
They pay in cash for the followings:
Taka
Materials
12,26,800
Wages
7,33,200
Sundry expenses
20,000
Plant
60,000
On completion of the venture concrete mixture is sold for Tk.50,000 and plant and other
implements are sold as scrap for Tk.10,000. Kamal takes back motor lorry at Tk.40,000.
Subsequently Salam takes over the notes payables issued by the corporation at a valuation of
Tk.2,00,000.
Required: Necessary ledger accounts for the joint venture.
[Marks: (2+3+15) = 20]
Q. No. 2.
(a) Briefly explain the Substance over the form rule.
(b) What disclosures are to be made by Lessee and Lessor for finance lease and operating lease
as per IAS-17?
(c) In a sales type lease what entries are to be passed at the inception of the lease and at the close of
the lease (showing the difference with imaginary figures, in case of guaranteed residual value
and unguaranteed residual value).
(d) On January 01, 2010 Auto Ltd. sells a Truck to Easy Finance Co. Ltd. for Tk. 13,60,000 and
immediately leases the Truck back. The relevant information is as follows:
(i)
The Truck was carried on Auto Ltds books at a value of Tk. 12,00,000.
(ii) The term of the now cancelable lease is 10 years title will transfer to Auto Ltd.
(iii) The lease agreement requires equal annual rental payments of Tk. 2,21,332.62 at the end
of each year.
(iv) The incremental borrowing rate of Auto Ltd. is 12%, Auto Ltd. is aware that Easy
Finance Co. Ltd. set the annual rental to ensure a rate of return of 10%.
(v) The Truck has a fair value of Tk. 60,000 on June 2010.
(vi) Auto Ltd. pays the executory costs of Tk. 18,000 per year.
Instruction:
Prepare the journal entries for both the leasee and the lessor for 2020 to reflect the sale and lease back
agreement. No uncertainties exist and collectively is reasonably certain.
[Marks: (2+4+4+10) = 20]
Page 22 of 54
Cr.
Tk.
2,500
2,30,000
13,100
_______
2,45,600
Accounts payable
Rent expenses
Office charges
Drawings
Page 23 of 54
Tk.
2,20,000
12,000
3,600
10,000
2,45,600
Page 24 of 54
Q. No. 1.
(a) Explain how CVP analysis can be used for managerial planning?
(b) Bengal Travel Agency specializes in flights between Dhaka and London. It books passengers on
United Airlines at Tk. 90,000 per round-trip ticket. Until last month, United paid Bengal a
commission of 10% of the ticket price paid by each passenger. This commission was Bengals
only source of revenues. Bengals fixed cost are Tk. 14,00,000 per month (for salaries, rent etc)
and its variable costs are Tk. 2,000 per ticket purchased for a passenger. This Tk. 2,000 includes
a Tk. 1,500 per ticket delivery fee paid to DHL. Assume each round trip ticket purchased is
delivered in a separate package. Thus, the Tk. 1,500 delivery fee applies to each ticket.
United Airlines has just announced a revised payment schedule for travel agents. It will now
pay travel agents a 10% commission per ticket up to a maximum of Tk. 5,000. Any ticket
costing more than Tk. 500,000 generates only a Tk. 5,000 commission, regardless of the ticket
price.
Required:
(i)
Under the old 10% commission structure, how many round-trip tickets must Bengal sell each
month (a) to break even and (b) to earn an operating income of Tk. 700,000?
(ii) How does Uniteds revised payment schedule affect your answer to (a) and (b) in requirement?
[Marks: {5+(10+5)} = 20]
Q. No. 2.
(a) Sunk cost is irrelevant cost. Elaborate this statement with a hypothetical example.
(b) Smart Company on January 1, 2008 decides to contract with another company to preassemble a
large percentage of the component of its telescopes. The revised manufacturing cost structure
during the 2008 to 2010 period is:
Variable manufacturing cost per unit produced:
Direct material cost
Tk. 30.50
Direct manufacturing labour cost
2.00
Indirect manufacturing cost
1.00
Total variable manufacturing cost per unit produced
Tk. 33.50
Total fixed manufacturing cost (all indirect)
Tk. 1,200
Under the revised cost structure, a large percentage of SMARTs manufacturing costs are
variable with respect to units produced. The denominator level of production used to calculate
budgeted fixed manufacturing cost per unit in 2008, 2009 and 2010 is 800 units. Summary
information pertaining to absorption costing operating income and variable costing operating
income with this revised cost structure is given below:
Particulars
2008
2009
2010
Absorption-costing operating income
Tk. 16,800
Tk. 18,650
Tk. 24,000
Variable-costing operating income
16,500
18,875
23,625
Difference
300
(225)
375
Beginning Inventory
200 units
50 units
Ending Inventory
200 units
50 units
300 units
Page 25 of 54
Standard
cost per unit
Tk. 50.00
9500
Tk. 551,000
Tk. 12.00
Tk. 7.0
Tk. 2.00
Tk. 5.00
Tk. 26.00
Tk. 24.00
Tk. 50,000
20,000
Tk. 70,000
Tk. 55,000
24,000
79,000
Tk. 177,100
In preparing the master budget for October 2010 the firm had several expected changes from the
standard cost sheet. The sales price would increase by 8%. Its suppliers notified the form that material
prices would increase by 5% starting October 1. The labour contract that started on October 1
increased wages and benefits by 10%. Fixed manufacturing costs would increase Tk. 5,000 for
insurance, property taxes and salaries. For fixed selling and administrative expenses there would be a
Tk. 2,000 increase in managers salaries.
Furthermore, the firm plans to spend an additional Tk. 2,000 for advertising during October 2010. The
unit sales for October 2010 were expected to be 10,000 units. Haq Fabrications uses JIT systems in all
of its operations including materials acquisitions and product manufacturing.
Required:
(i)
Prepare the master budget and flexible budget at 9,500 units and at 11,000 units for October
2010.
(ii) Compute the sales volume operating income variances, flexible budget operating variance, sales
price variance and flexible budget variable cost variance for October 2010.
(iii) Determine the direct material price variance, direct material usage variance, direct labour rate
variance and direct labour efficiency variance.
[Marks: (8+6+6) = 20]
Q. No. 4.
(a) Mr. Din Mohammad is a traveling inspector for the Environmental protection Agency. He uses
his own car and the agency reimburses him at Tk.18.00 per kilometer. Mr. Din Mohammad
claims that he needs Tk.22.00 per kilometer just to break-even. A scrutiny of his expenses by
agency reveals the following:
Oil charge for every 4,800 km
Tk.1,200
Maintenance (other than oil) every 9,600 km
Tk.18,000
Yearly insurance (comprehensive with accident benefits)
Tk.40,000
Cost of car with an average residual value of Tk.6,00,000 and with a useful
Tk.10,80,000
life of 3 years.
Page 26 of 54
(b)
Petrol cost is Tk.50 a liter and Din Mohammad gets 8 km per liter in his car. When Din
Mohammad is on the road, he averages 192 km a day. He works 5 days a week, his 10 days
vacation in a year, besides 6 holidays, and spends 15 working days a month in the office.
Required:
(1) An equitable rate of reimbursement on the basis of the schedule he presently follows.
(2) The number of kilometers a year he would have to travel, to break-even at the current rate
of reimbursement.
A practicing Cost Accountant now spends Tk.9 per km on taxi fares for his clients work. He is
considering two other alternatives, the purchase of a new small car or an old bigger car.
New small car (Tk.) Old big car (Tk.)
Purchase Price
3,50,000
2,00,000
Sale price after five years
1,90,000
1,20,000
Repairs & Servicing per annum
10,000
12,000
Taxes & Insurance per annum
17,000
7,000
Diesel consumption per liter to run
10 kms
07 kms
Diesel Price, per liter
Tk.35
Tk.35
He estimates that he can run 1,00,000 kms annually.
Required:
(1)
(2)
(3)
Q. No. 5.
(a) Financial planning models guide managers through the budget process so that managers do not
really need to understand budgeting Do you agree? Explain.
(b) If a product line is generating a loss, then thats pretty good evidence that the product line
should be discontinued. Do you agree? Explain.
(c) The New Age Industries produces three products. The budgeted operations of coming year are
given as follows:
Sales
Variable costs
Profit contribution
Avoidable fixed costs
Profit contribution after avoidable fixed cost
Investments in receivables and inventories
A (Tk.)
9,00,000
4,00,000
5,00,000
2,00,000
3,00,000
7,00,000
Products
B (Tk.)
6,40,000
3,60,000
2,80,000
1,00,000
1,80,000
6,00,000
C (Tk.)
3,60,000
2,40,000
1,20,000
90,000
30,000
5,00,000
Unallocated joint costs total Tk.2,50,000. The firm is considering a proposal to drop product
line C. If the firm does so, it can recover the investment in receivables and inventories related to
the line and pay off debts of Tk.5,00,000 that bears 15% interest.
Required: Determine whether the firm should drop the product line or not.
[Marks: (5+5+10) = 20]
= THE END =
Page 27 of 54
Page 28 of 54
= THE END =
Page 29 of 54
Q. No. 1.
(a) Write short notes on the following:
(i)
Capital assets;
(ii) Double taxation relief; and
(iii) Truncated value addition.
(b) Government mainly focuses on revenue maximization through the annual Finance Acts. Do you
agree? Explain with reference to the Finance Act, 2011.
(c) Discuss the provisions of exemption of newly established physical infrastructure facility set up
between the period of July 2011 and June 2013 under section 46C of the Income Tax Ordinance
(ITO) 1984.
(d) What is the special tax treatment in respect of investment in the purchase of Bangladesh
Government Treasury Bond under section 19D of the ITO 1984?
(e) Differentiate between tax deducted at sources and tax collected at sources. How is the concept
of advance tax related to these source taxes?
[Marks: (3+4+5+3+5) = 20]
Q. No. 2.
Asha, Pasha and Rasha are three equal partners of a firm, Asha, Pasha & Rasha Associates. For the
income year ended June 30, 2011, the firm produces the following information for the purpose of
computing total income and tax liability of the firm as well as its partners.
(a) The firm owns a commercial building partly (one half) occupied by the firm to operate its own
business and partly (another half) let out at a monthly rent of Tk.35,000. Municipal taxes are
paid on the municipal value of Tk.800,000 (deemed annual rental value). During the year, the
firm has also earned Tk.40,000 as advance and Tk.10,000 as first years rent from a joint stock
company by letting its top floor to set up its hoarding of commercial advertisement.
(b) The firm is engaged with trading of garments supplies which resulted following gross margin
amount for the year:
Particulars
Amount (Tk.)
Amount (Tk.)
Sales
5,000,000
Less: Cost of Goods Sold:
Beginning Inventory
800,000
Add: Purchase
4,200,000
Cost of Goods Available for Sale
5,000,000
Less: Ending Inventory
1,000,000
Cost of Goods Sold
4,000,000
Gross Margin
1,000,000
(c) Other relevant information is given below:
Inventories are always valued at 2% above cost. Analysis also reveals that purchase figure was
overstated by Tk.200,000 for the year. Total operating expenses charged during the period
amounted to Tk.450,000 which included following items among other things:
(i)
Maintenance to Building:
Amount (Tk.)
8,000
20,000
Amount (Tk.)
28,000
Page 30 of 54
Municipal taxes to the extent borne by the company: Total amount of municipal taxes
paid for the year was Tk.40,000 out of which the tenant bore Tk.10,000.
(iii) Annual contribution to Cotton Dealers Association, a trade association, amounted to
Tk.10,000.
(iv) All of the partners were active and took part in running business. Salaries paid to the
partners were Tk.40,000 to Asha, Tk.50,000 to Pasha and Tk.30,000 to Rasha.
(v) Legal charges amounted to a total of Tk.50,000 including a fine of Tk.10,000 charged due
to its involvement with illegal form of business.
(vi) The firm charged Tk.15,000 as provision for bad debt against receivable.
(vii) The firm deducted a loss of Tk.50,000 incurred from speculative business.
(viii) Accounting depreciation charged was Tk.38,000 which was Tk.3,000 higher than tax
depreciation.
(d)
(e)
Asha had no other income during the year; however, Pasha and Rasha were also partners of
another firm. The respective incomes of Pasha and Rasha from the firm for the year ended 30th
June 2011 were as under:
(f)
(g)
Partners
Salary
Interest Profit/(Loss)
Pasha
Tk.40,000
Tk.10,000
Tk.(50,000)
Rasha
Tk.60,000
Tk.20,000
Tk.20,000
Asha had income from a house property at London amounting to Tk.425,000 (after deduction of
15% tax at source and remitted to Bangladesh through proper banking channel).
Rasha had income from interest on Pratiraksha Sanchay Patra of Tk.30,000. Bank charged
Tk.300 as collection fee and Tk.3,000 as interest on borrowing taken from the bank for
investment in the securities.
Required:
(1) Compute tax liability of Asha, Pasha & Rasha Associates for the year as per the Finance Act
2011 and total income in the hands of individual partners from all sources.
(2) State the principles governing the basis of taxability of total income of Asha, Pasha and Rasha
as individuals having share of income from partnership firm.
[Marks: (15+5) = 20]
Q. No. 3.
(a)
Mr. Khoda Box reports the following incomes for the income year ended on June 30, 2011.
Income form Business or Profession
Tk. 400,000
Income from House Property
90,000
Capital Gains
70,000
Income from Speculation Business
100,000
Share of Profit from Firm
40,000
However, he has claimed some losses carried forward from earlier years with the following details:
Particulars
Amount of Losses c/f to
Income Year of
Income Year 2010-11
Origination
Income from Business or Profession
Tk. (70,000)
2007-2008
(except unabsorbed depreciation)
Capital Gains
(80,000)
2002-2003
Income from Speculation Business
(50,000)
2004-2005
Unabsorbed depreciation on business assets
(30,000)
2001-2002
Page 31 of 54
(b)
Compute the amount of total income relating to income year 2010-11 after adjusting the past
losses.
Saint Zavier Ltd. sold on 15 July, 2010 a piece of old equipment used in the business for Tk.20
million. In relation to the sale, it incurred advertisement cost of Tk. 80,000 and paid Tk.300,000
brokerage commission. It bought the equipment 6 years back at a cost of Tk.3,490,000. On 30
November, 2010 it has bought another new equipment at a cost of Tk.25 million inclusive of
incidental costs. The Company has duly informed the DCT about its intention to roll over the
capital gain to new equipment purchased.
Required:
Compute the amount of capital gain and comment on the implication of income tax thereon.
[Marks: (10+10) = 20]
Q. No. 4.
Mr. Jashim Ahmed has reported the following incomes for the income year ended on 30th June, 2011:
Income from Salary:
Mr. Jashim Ahmed received basic salary of Tk.18,500 in the month of June, 2011 as per the scale of
17,0001,500x220,000. He has joined the company on 1st April, 2010. Besides basic salary, he
received the following: Dearness allowance @ 15% of basic salary; Entertainment allowance and
Medical allowance @ 20% and @ 10% of basic salary respectively; Annual bonus and fees
Tk.36,000; House rent allowance Tk. 11,000 per month; Conveyance allowance Tk.1,250 per month.
He contributes 10% of basic salary to a recognized provident fund (RPF) and his employer also
contributes the same in the fund. During the year he received Tk.15,000 as interest on provident fund
and the rate of interest was 15%. He contributes to an approved superannuation fund @ 5% of basic
salary.
Income form Interest on Securities:
He enchased in June 2011 Defense Savings Certificate, which was purchased earlier at Tk.300,000,
and obtained Tk.332,400 in cash after deduction of tax of Tk.3,600 @10% at source under section
52D. He obtained Tk.50,000 from interest on debenture issued by a listed company and no tax was
deducted at source under section 51. He financed Tk.1,00,000 by taking a 8% loan to purchase those
securities and interest was paid for the whole year. Bank charged Tk.2,415 as collection fee for these
interest incomes.
Income from Business or Profession:
Due to the economic problem and huge competition, his business resulted a loss of Tk.80,000 during
the last year (2010-11).
Capital Gains:
He has sold a machine at a price of Tk.150,000 at fair market value before the expiry of 5 years from
the date of acquisition, when it was purchased at a price of Tk.80,000 for the purpose of his business.
Another Tk.30,000 was spent to improve the machine. At the time of sale, the machine had
accumulated depreciation amounting to Tk.53,680. He has no intention to purchase such machine in
future and not purchased such machine over last two years.
Mr. Ahmed made and incurred the following investments and expenses during the said year:
(i)
Life insurance premium Tk.6,000; value of the policy worth Tk.70,000.
(ii) Purchase of books Tk.6,000 and purchase of scientific instruments Tk.10,000.
(iii) Purchase of primary shares of a Public Limited Company Tk. 48,000.
Page 32 of 54
(x)
Required:
Ascertain his total income and tax to be paid in the assessment year of 20112012.
[Marks: 20]
Q. No. 5.
(a)
What is the use of Baggage Rules? Who will fall under the Baggage Rules? Mention some
penalties for failing to abide by the Baggage Rules.
(b)
Who is responsible to pay Foreign Travel Tax and to whom? Discuss the mode of levy of such
tax on travel by Air, Land and Sea.
(c)
What are the provisions to get input tax credit under section 9 of the Value Added Tax Act
1991?
(d)
Briefly discuss the provisions of Certificate of Deductions at Source as per the Value Added
Tax Rules, 1991.
[Marks: (5+5+6+4) = 20]
= THE END =
Page 33 of 54
Q. No. 1.
(a) Explain how an acquirer is determined in a business combination.
(b) A Ltd. acquired the assets (except cash) and assured the liabilities of B Ltd. on January 01,
2010. B Ltds. December 31, 2009, Balance Sheet, reflecting both book values and fair
values, showed :
Book Value (Tk.)
Fair Value (Tk.)
Accounts Receivable
70,000
65,000
Inventory
90,000
1,00,000
Land
1,10,000
1,60,000
Building
3,70,000
4,50,000
2,99,000
Equipment
2,35,000
Total
8,75,000
10,74,000
Accounts Payable
85,000
85,000
Notes Payable
1,80,000
1,80,000
Ordinary Share Capital
1,53,000
Tk. 2 face value
Share Premium
2,29,000
Retained Earnings
2,28,000
Total
8,75,000
Instructions:
(i)
Record the journal entries on the books of A Ltd. to record the acquisition on January 01,
2010. Assume that the purchase consideration is Tk. 8,50,000. Follow IFRS-3.
(ii) Now assume that the purchase consideration is Tk. 7,20,000. Give journal entries on As books
to record the acquisition on January 01, 2010. Make necessary assumptions in line with IFRS-3.
(iii) Refer to requirement (i) above. Now assume that A Ltd. agreed to pay the former shareholders
of B Ltd. Tk. 1,35,000 cash if the post combination earnings of the combined company(A)
reached certain levels during 2010 and 2011. How would you journal entries to give effect to
this contingent consideration in line with the requirements of IFRS-3?
[Marks: 5+ (5+5+5) = 20]
Q. No. 2.
The summarised balance sheets of A Ltd. and B Ltd. as at 31 December 2010 were as follows:
A Ltd.
B Ltd.
Tk.
Tk.
Tk.
Tk.
ASSETS
Non-current assets:
Property, plant and equipment
80,000
58,200
Investments
84,000
0
164,000
58,200
Current assets:
Inventories
18,000
12,000
Trade and other receivable
62,700
21,100
Investments
0
2,500
Cash and cash equivalents
10,000
3,000
Page 34 of 54
35,000
2,700
3,200
90,700
254,700
41,800
100,000
120,000
18,000
23,000
56,000
217,000
60,000
0
16,000
13,000
89,000
11,000
0
37,700
11,000
Total equity and liabilities
254,700
100,000
The following information are relevant:
(1) On 1 January 2008 A Ltd. acquired 48,000 shares in B Ltd. for Tk. 84,000 cash when the
retained earnings of B Ltd. were Tk. 8,000 and the balance on the revaluation reserve was Tk.
16,000.
(2) The inventories of A Ltd. include Tk. 4,000 of goods from B Ltd. invoiced to A Ltd at cost plus
25%.
(3) A cheque for Tk. 500 from A Ltd to B Ltd., sent before 31 December 2009, was not received by
the latter company until January 2011.
(4) A n impairment review at 31 December 2010 revealed that goodwill in respect of B Ltd had
fallen in value over the year by Tk. 500. By 1 January 2010 this goodwill had already suffered
impairments totaling Tk. 1,700.
Required:
(i)
Prepare the consolidated balance sheet of A Ltd. and its subsidiary B Ltd. as at 31 December
2010.
(ii) Explain the adjustments necessary in respect of intra-group sales when preparing the
consolidated balance sheet of the A Ltd. group.
[Marks: (16+4) = 20]
Q. No. 3.
The Chairman of DEXIMCO Group has flown the statement prepared to present in a board meeting to
be held tomorrow to discuss the group financial position. Following his review of the profit and loss
account and balance sheet, he has called into your consultancy office with a draft copy of the group
cash flow statement, as shown below. He has left the remaining cash flow statement notes on the aero
plane and cannot obtain a replacement set at short notice. He has raised certain questions with you.
DEXIMCO Group Cash Flow Statement
For the year ended 31st December. 2010.
Taka
Taka
CASH FLOWS FROM OPERATING ACTIVITIES:
Net profit before tax and extra ordinary items
88,000
Adjustments for:
Depreciation
12,000
Loss on sale of tangible fixed asset
10,000
Increase in creditors
16,000
Page 35 of 54
(10,000)
(5,000)
(35,000)
76,000
12,000
(62,000)
(30,000)
11,000
25,000
(44,000)
10,000
(15,000)
(25,000)
(30,000)
2,000
Page 36 of 54
Amount in Tk.
35,000
(1,500)
(7,500)
(1,500)
(30)
(5)
1,000
30
Page 37 of 54
Q. No. 1.
(a) Prime Oceanic Water (POW) desalinates and bottles sea water. The desalinated water is in high
demand from a large group of environmentally conscious people on the west coast of the
Country. During March, POW processes 1,000 gallons of sea water and obtains 800 gallons of
drinking water and 50 pounds of sea salt (the rest of the sea water evaporates in the
desalinization process). Processing the 1,000 gallons of water costs POW Tk.1,500. POW sells
600 gallons of the desalinated water in 2 gallon containers for Tk.8 per container. In addition
POW sells 40 pounds of sea salt for Tk.1.20 per pound. Due to the relatively small proportion
of sea salt, POW has decided to treat it as a byproduct.
Required
1. Assuming POW accounts for the byproduct using the production method, what is the
inventoriable cost for each product and POWs gross margin?
2. Assuming POW accounts for the byproduct using the sales method, what is the
inventoriable cost for each product and POWs gross margin?
3. Discuss the difference between the two methods of accounting for byproducts.
(b) Padma Sawmill Inc. (PSI), purchases logs from independent timber contractors and processes
the logs into three types of lumber products:
Studs for residential buildings (walls, ceilings)
Decorative pieces (fireplace mantels, beams for cathedral ceilings)
Posts used as support braces (mine support braces, braces for exterior fences on ranch
properties)
These products are the result of a joint sawmill process that involves removal of bark from the
logs, cutting the logs into a workable size (ranging from 8 to 16 feet in length), and then cutting
the individual products from the logs.
The joint process results in the following costs of products for a typical month:
Direct materials (rough timber togs)
Tk. 500,000
Debarking (labor and overhead)
50,000
Sizing (labor and overhead)
200,000
Product cutting (labor and overhead)
250,000
Total joint costs
Tk.1,000,000
Product yields and average sales values on a per-unit basis from the joint process are as follows:
Monthly Output of Materials at
Split off Point
Fully processed Selling Price
Studs
75,000 units
Tk. 8
Decorative pieces
5,000 units
100
Posts
20,000 units
20
The studs are sold as rough-cut lumber after emerging from the sawmill operation without
further processing by PSI. Also, the posts require no further processing beyond the split off
point. The decorative pieces must be planed and further sized after emerging from the sawmill.
This additional processing costs Tk.100,000 per month and normally results in a loss of 10% of
the units entering the process. Without this planning and sizing process, there is still an active
intermediate market for the unfinished decorative pieces in which the selling price averages
Tk.60 per unit.
Product
Page 38 of 54
Page 39 of 54
Page 40 of 54
(b)
How a company is dissolved? What are the preferential claims at the time of dissolution
of a company?
[Marks: (10+10) = 20]
= THE END =
Page 41 of 54
Page 42 of 54
(b)
How a company is dissolved? What are the preferential claims at the time of dissolution
of a company?
[Marks: (10+10) = 20]
= THE END =
Page 43 of 54
Q. No. 1.
You are the finance director of Xylo Phone Ltd. a Bangladeshi Company that imports mainly from
Europe and export to the US. Xylo Phone is partly financed by a Taka loan and usually hedges its
foreign currency exposure by using the forward or money markets. Most customers are allowed 3
months credit. The company has recently sold equipment to a customer in the US for $ 2 million.
The following information are available:
$/Tk.
/Tk.
Exchange rates Spot rate
1.9600
1.4600
1 month forward rate
1.9580
1.4579
Bangladesh
USA
Europe
Central bank base rate per annum
5.5%
4.25%
3.75%
A recent economic fore-cast suggested that annual inflation over the next 12 month in Europe is
expected to be 1% while in the USA it is expected to be 2.7%.
Required:
Comment on the interest rate parity and the purchasing power parity methods for estimating future
exchange rates and answer each of the following questions including appropriate calculations, where
relevant to aid your discussion.
(i)
As interest rates are higher in Bangladesh than Europe, should the euro be depreciating against
the Taka, hence trading at a discount?
(ii) What 3 months dollar forward rate of exchange is implied by the information given, and
therefore what Taka receipts can the Company expect in 3 months time from the US customer?
(iii) If the Company buys euros on the spot market as and when needed to pay for their imports
rather than taking out forward contracts would it save them money?
(iv) Would a sensible policy be to buy euros on the spot market now and place them on deposit until
Xylo Phone needs them?
(v) Would it be in Xylo Phones interests to borrow euros and pay off their Taka loan? Would this
save money on interest payments?
[Marks: (4 x 5) = 20]
Q. No. 2.
ABC Corporation plans to expand assets by 50%: to finance the expansion, it is choosing between a
straight 12 per cent debt issue and ordinary shares. Its balance sheet and income statement are shown
below:
ABC Corporation
Balance Sheet as on 31 December 2010
Liabilities
11% Debentures
Ordinary Share Capital
(10,00,000 shares of Tk. 10
each)
Retained
Tk.
Assets
40,00,000 Total Assets
1,00,00,000
60,00,000
2,00,00,000
Page 44 of 54
Tk.
2,00,00,000
2,00,00,0000
Details
Tk.
6,00,00,000
5,40,00,000
60,00,000
4,40,000
55,60,000
27,80,000
27,80,000
Tk. 2.78
7.5 times
Tk. 20.85
If ABC Corporation finances Tk. 1 crore expansion with debt, the rate of the incremental debt will be
12 per cent and the price/earning ratio of the ordinary shares will be 5 times. If the expansion is
financed by equity, the new shares can be sold at Tk. 12 per share and the price/earnings ratio will
remain at 7.5 times.
Required:
(a) Assuming that net income before interest and taxes (EBIT) is 10% of sales, calculate earnings
per share at sales levels of Tk 4 crores, when financing is with (i) ordinary shares, and (ii) debt.
(b) At what level of earnings before interest and taxes(EBIT), after the new capital is acquired,
would earnings per share (EPS) be the same whether new funds are raised by issuing ordinary
shares or raising debt?
(c) Using the p/e ratio, calculate the market value per share for each sales level for both the debt
and equity financing.
[Marks: 20]
Q. No. 3.
The following statement and operating results of AB Ltd. revealed the following position as on 31
December, 2009:
1
Equity Share Capital (Tk. 100 per share fully paid)
Tk. 200,000
2
Working Capital
1,56,000
3
Bank Overdraft
24,000
4
Current Ratio
2.5
5
Quick Ratio
1.5
6
Proprietary Ratio (Fixed Assets to Equity)
0.6
7
Gross Profit Ratio
20%
8
Stock Velocity
5 times
9
Debtors Velocity
1 month
10
Net Profit to Sales
10%
Expenses included depreciation Tk. 26,000. Closing stock was 25% higher than the opening stock.
There were also free reserves brought forward from earlier years. Current assets included Stock,
Debtors and Cash at Bank only. Current liabilities consisted of Bank Overdraft and Creditors. There
were no Fictitious Assets. The following information was gathered from the books and records for the
year ended 31 December, 2010:
Page 45 of 54
From 1st January 2010 the sales price was enhanced by 5%. Further, sales for the year were 10%
higher in volume as compared to the previous year.
(2)
Stock level was raised to Tk. 1,80,000 from January and maintained at that level through out the
year.
(3)
(4)
Depreciation on fixed assets to be provided at 10% on written down value method. Full years
depreciation is to be provided on additions.
(5)
(6)
(7)
(8)
2012
2013
2014
2015 - 7
750
950
1,400
2,100
The project will have no residual value as the specialized machinery cannot be used elsewhere or sold
at the end of the project. The net after tax cash flows can be assumed to arise at the end of the year to
which they relate.
Financing the project
The proposed investment is in a development region of the country and the local government is
offering subsidized borrowing for 40% of the initial capital investment at an annual interest rate of 1%
to encourage investment.
A further 20% of the capital required will be raised by bank borrowing, at an annual interest rate of
6%, which is the same as CIPs pre-tax cost of debt.
The duration of the borrowings will match the duration of the investment with the full amount of the
borrowings repayable at the end of the six year term. The corporate income tax rate is 30% and tax is
payable or recoverable at the end of the year to which it relates. There are sufficient taxable profits
within CIP to benefit in full from the tax relief available on interest payments. CIP has sufficient cash
to fund the remaining 40% of the capital expenditure.
Page 46 of 54
(b)
Super Sets Inc. sells goods only on credit, terms being 2/10n 30. Assume that 70% of customers
take discounts and pay on day 10, while the other 30% pays on day 30. Find out the companys
average collection period. Also find out the receivables if the annual sales are 200,000 units at a
price of Tk.198 per unit.
(c)
From the following information determine the cash flow from operation; Net income
Tk.500,000; depreciation Tk.60,000; loss on sale of land and building Tk.130,000; increases in
accounts receivable Tk.45,000; decrease in accounts payable Tk.20,000.
(d)
From the following calculate the market to book ratio and explain its importance and
significance. Long-term assets Tk.2,000,000; Working capital Tk.80,000; long-term debit
Tk.800,000; shares outstanding 1,000,000; market share price, July Tk.12 and November Tk.18.
[Marks: (4+6+5+5) = 20]
= THE END =
Page 47 of 54
Q. No. 1.
Sonangol Limited currently subsidizes cafeteria services at its corporate head office at Banani for its
200 employees. Sonangol is in the process of reviewing the cafeteria services as cost cutting measures
are needed throughout the organization to keep the prices of its products competitive. Two
alternatives are being evaluated: (i) downsizing the cafeteria staff and offer a reduced menu or (ii)
contract with an outside vendor.
The current cafeteria operation has four employees with a combined base annual salary of BDT
110,000 plus additional employees benefits at 25% of salary. The cafeteria operates 250 days each
year, and the cost for utilities and equipment maintenance average BDT 30,000 annually. The daily
sales include 100 entres at BDT 4.00 each, 80 sandwiches or salads at an average price of BDT 3.00
each, plus an additional BDT 200 for beverages and desserts. The cost of all cafeteria supplies is 60%
of revenue.
The plan for downsizing the current operations envisions retaining two of the current employees
whose combined base annual salaries total BDT 65,000. An entre would no longer be offered, and
price of the remaining items would be increased slightly. Under this arrangement, Sonangol expects
daily sales of 150 sandwiches or salads at a higher average price of BDT 3.60 each. The additional
revenue of beverage and desserts is expected to increase to BDT 230 each day. Because of the
elimination of the entre, the cost of all cafeteria supplies is expected to decline to 50% of revenues.
All other conditions of operation would remain the same. Sonangol is willing to continue to subsidize
this reduced operation but will not spend more than 20% of the current subsidy.
A proposal has been received from Bongos Foods, an outside vendor who is willing to supply
cafeteria services. Bongos has proposed to pay Sonangol BDT 1,000 per month for the use of the
cafeteria and utilities. Sonangol would be expected to cover equipment repair costs. In addition,
Bongos would pay Sonangol 4% of all revenue received above the breakeven point. This payment
would be made at the end of the year. All other costs incurred by Bongos to supply the cafeteria
services are variable and equal 75% of revenues. Bongos plans to charge BDT 5.00 for an entre and
the average price of sandwiches or salads would be BDT 4.00. All other daily sales are expected to
average BDT 300. Bongos expects daily sales of 66 entres and 94 sandwiches or salads.
Required:
(i)
Determine whether the plan for downsizing the current cafeteria operation would be acceptable
to Sonangol Limited. Please show your calculation.
(ii) Is the Bongos Foods proposal more advantages to Sonangol Limited than the downsizing plan?
Please show your calculation.
[Marks: (12+13) = 25]
Q. No. 2.
Taliesin Ltd manufactures a range of ice-cream based confectionery products, which it sells to
national supermarket chains which market the products under their own brand labels. The board of
directors is committed to a policy of achieving growth. However because the company is a relatively
small player within the industry the board of directors is focused solely upon internal development as
opposed to growth by acquisition and has further agreed that it wishes to confine operations to the
home market.
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2011
Tk.000
42,000
24,000
66,000
10,000
56,000
2010
Tk.000
40,000
12,000
52,000
-------52,000
30,000
26,000
56,000
30,000
22,000
52,000
2011
Tk.000
33,300
14,700
2010
Tk.000
26,000
14,000
2011
Tk.000
9,360
4,620
14,820
28,800
2010
Tk.000
7,800
4,200
12,000
24,000
2011
2010
204
288
5
6
200
240
6
5
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Temporary employees are hired on a full-time basis between 1 June and 30 November in each
year. They were paid at the same rate as permanent employees.
**
Six new product lines were launched during the year ended 31 May 2011. The manufacture of
each new product line required an investment in capital equipment of Tk.1 million.
Required:
(a)
Using the above information, appraise the performance of Taliesin Ltd during the year ended 31
May 2011 and evaluate the extent to which the objective of growth has been achieved.
(b) Explain the major benefits of pursuing a policy of internal development.
(c) Explain how the use of activity-based techniques may benefit Taliesin Ltd.
[Marks: (10+8+7) = 25]
Q. No. 3.
Latent Company operates a number of call centers. The company is structured into three divisions,
based on the type of service provided. All of the services are highly specialized and require staff to be
highly trained. Once trained, staff can work in any of the divisions. The board of directors is
considering the operational plan for the year to 30 September 2011, based on the following projected
information:
Division
Revenue per call
Total revenue
Staff costs Note 1
Other costs Note 2
Profit/ (Loss)
A
Tk
B
Tk
C
Tk
15
6,220,800
2,846,560
4,423,143
(1,048,903)
22
5,702,400
1,773,600
3,037,881
890,919
19
9,357,120
3,383,040
5,538,977
435,103
Note 1: Staff costs include call handling staff and supervisory staff. Each call handling employee
deals with six calls per hour. Projected staff costs are based on the assumption that call
handling staff are operational for 32 hours per week and for 45 weeks per year. Supervisory
staffs are directly employed by each division and the related costs are fixed costs.
Note 2: These are fixed costs. The total for each division includes both directly attributable costs and
an apportionment of central costs. Total central costs are Tk35 million, and are apportioned
to divisions in proportion to revenue generated (the proportion being in percentage up to two
decimals).
In advance of the next meeting, the Managing Director has circulated the memo shown below:
It has been suggested that as division A is loss making, it should be closed. This may be a
simplistic analysis. There may be arguments for retaining all of the divisions.
The human resource director has advised me that if we close the division, we will have to pay
Tk100,000 to staff in severance costs.
We also need to ensure that we have contingency plans in place. Our projections are based on the
assumption that we can obtain sufficient staff. However, it is possible that the supply of call handling
staff will be in short supply in the short term, and could be 10% less than included in our projections.
We can easily transfer call handling staff between divisions, so we should ensure that these employees
are deployed to maximize profit. Another possibility is to use an agency to provide additional staff in
the short term. I am advised that we can obtain additional staff for up to 14,400 hours at a cost of
Tk40 per hour. If we decide to take up this option, we will be required to sign a contract for a
specified number of hours in advance.
Page 50 of 54
= THE END =
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Q. No. 8.
(a) Explain how organizational behavior affects managerial performance?
(b) Discuss the role of leadership on O. B. (Organizational Behaviour).
(c) What techniques a manager can apply to avoid undesirable workers movement for wage increase?
[Marks: (6+7+7) = 20]
Q. No. 9.
(a) What are the factors that determine personality?
(b) How it is typically measured?
(c) Narrate the big five personality traits that predict work behavior.
[Marks: (6+7+7) = 20]
= THE END =
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(b)
A publicly listed company seems going towards sickness due to mismanagement. The Board
of Director appointed you as Management Auditor. How would you evaluate an in-depth study
of the factors responsible for sickness?
[Marks: (4+12) = 16]
Q. No. 7.
(a)
How many audits are performed for Software Configuration Management Audit (SCM)?
Discuss.
(b)
In process SCM audits are typically focused on either SCM processes or SCM baselines.
Illustrate an example of a checklist for a baseline-focused in-process SCM audit and list
possible objective evidence gathering techniques for each item.
[Marks: (4 + 8) = 12]
Q. No. 8.
You have been appointed as a Management Consultant of a large manufacturing company. You are
asked to establish internal control system of the organization. Prepare a checklist along with a
description how you would implement the internal control system for the following:
(i)
(ii)
= THE END =
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