,

PCE
1

;>~

Gro~.II Paper-4
Cost Accounting And
Pinancial Management
Roll No

IPCC
GROUP.!PAPER-,
Co.STACCOUNTING

MAY20\0

,........................

AND FINANCIALMANAGEMENT

[Total No. of Printed

Total No. bf Questions-8]

Time Allowed-3

Maximum

Hours

Pages--:-15
Marks-100

FUN
Answers to questions are to be given only in English except in the case of candidates
who have opted for Hindi medium. If a candidate who has not opted for Hindi
medium, his answers in Hindi will not be valued.
Answer
Working

all questions.

notes' should form part of the answer.

Marks

5x2=10

1. Answer the following:

CD

What is Cost accounting?

(ii) Distinguish

between

Enumerate

Fixed overheads'

its important
and Variable

objectives.
overhe~ds.

(iii) Re-order quantity of material 'X' is 5,000 kg.; Maximum level 8,000 kg.; 'Minimum
usage 50 kg. per hour; minimum re-order period 4 days; daily working hours
in the factory is 8 hours, You are required to calculate the re~order level of
material 'X'.
(iv) What do you understand

by Key factor?

(v) What are the main advantages

Give two examples

of Integrated

of it.

accounts?

2. SB Constructions
Limited has entered into a big contract at an agreed price of
Rs. 1,50,00,000 subject to an escalation clause for material and labour- as spent
out on the contract and corresponding
actuals are as follows:.

Actual

Standard
Material

(E&H)

Quantity
(tonnes)

Rate per tonne

Rs.

Quantity
(tonnes)

3,000

3,400

B
C

2,400
500

1,000
800
4,000

2,300
600

100

30,000

90

FUN

Rate per tonne

Rs.
1,100
700
3,900
31,500
p.T.a.

.,

.
.J... ".

(2 )

"'."'.......

..

h. .:.

,FUN

'Marks

...

Hours

Hourly Rate
Rs.

Hours

Hourly Rate
Rs.

Ll

60,000

15

56,000

18

L2

40,000

30

38,000

35

w.\fl3UAI~.

... '<

'.. .

You are required

to :

(i) Give your analysis of admissible

contract price payable.

escalation

claim and determine

(ii) Prepare the contract account, if the all expenses

labour related to the contract are Rs. 13,45,000.
(iii) Calculate

..

the following variances

(a)

Material

cost variance

(b)

Material

price variance

(c)

Material

usage variance

other

than

the final

material

and

and verify them:

4
3

Cd) Labour cost variance

3. (a)

(e)

Labour rate variance

(f)

Labour

efficiency variance.

Pharma Limited produces product 'Glucodin' which passes through two processes
before it is completed and transferred
to finished stock. The, following data
relates to March, 2010 :

Process- I
Rs.

Process- II
Rs. '

Opening Stock

1,50,000

1,80,000

Direct materials

3,00,000

3,15,000.

Direct Wages

2,24,000

2,25,000

Factory overheads

2,10,000

'.
90,000

74,000

90,000

2,25,000

NIL

30,000

1,65,000

Closing Stock
Inter process profit included
in Opening stock
(E&H)

.FUN

Finished Stock
Rs.
4,50,000

i-

.
..,

(3 )

Marks

FUN
Output of process I is transferred
to process II at 25 percent profit on the
tn;lllsferred price, whereas output of process II is transferred to finished stock
at 20 percent on transfer price. Stock in processes are valued at prime cost.
Finished stock is valued at the price at which it is received from process II.
Sales for the month is Rs. 28,00,000.
You are required to prepare Process-I alc, Process-II
alc showing the profit element at each stage.

alc, and Finished

Stock
8

(b) A.transport company has been given a 40 kilometre long route to run 5 buses.
The cost of each bus is Rs. 6,501000. The buses will make 3. round trips per
day carrying on an average 80 percent passengers of their seating capacity.
The seating capacity of each bus is 40 passengers. The buses will run on an
average 25 days in a month. The other information for the year 2010-11 are
given below:
Garage rent
Annual repairs and maintenance
Salaries of 5 drivers

Rs.

4,000

Rs.

22,500

Rs.

3,000

each per month

Wages of 5 conductors

Rs.

1,200

each per month

Manager's

Rs.

7,500

per month

Rs.

5,000

for a quarter

2,000
33

per month

Cost of diesel per litre

Rs.
Rs.

Kilometre

6 kilometres

salary

Road tax, permit

fee, etc.

Office expenses

Annual
Annual

run per litre for each bus

.,

per month
each bus

15% of cost

depreciation.
Insurance

3% of cost

You are required to calculate the bus fare to be charged frome~ch passenger
per kilometre, if the company wants to earn a profits of 331f3 percent on

taking (total receipts from passengers).

4.

':.

Answer of the following:

(i) Following
Limited:

informations

are available

for the year

2008

Year

(E&H)

2008 and 2009 of PIX

2009

Sales

Rs. 32,00,000

Rs. 57,00,000

Profit/(Loss)

(Rs. 3,00,000)

Rs.

FUN

7,00,000

P.T.O.

.
"....

~
(4 )

Marks

FUN

Calculate-(a)
PN ratio, (b) Total fixed cost, and (c) Sales required
Profit of Rs. 12,00,000.
(ii) Explain the treatment
accounting.

of over and under

absorption

to earn a

of Overheads

&

in Cost

(iii) Which is better plan out of Halsey 50 percent bonus scheme and Rowan bonus
scheme for an efficient worker?
In which situation the worker get same
bonus in both schemes?

5x2=10

5. Answer of the following:

(i) What do y~u understand
structure?

by Capital structure?

How does it differ from Financial

(ii) Explain

briefly the accounts

receivable

systems.

(iii) Briefly discuss the concept of seed capital

(iv) Enumerate
a business

the various
organisation.

assistance.

forms of bank credit in financing

working

capital

(v) Ascertain
the compound value and compound interest
of an amount
Rs. 75,000 at 8 percent compounded semiannually
for 5 years.

6. The following figures and ratios are related to a company:

(i) Sales for the year (all credit)

Rs. 30,00,000

(ii) Gross Profit ratio

(iii) Fixed assets

25 percent

turnover

(iv) Stock turnover

(basis on cost of goods sold)

(basis on cost of goods sold)

(vii) Debtors
(viii) Reserve
(ix) Capital

(E&H)

1.5 : 1

ratio
collection

gearing

2 months

period

and surplus

(x) Fixed assets

6
1 : 1

(v) Liquid ratio

(vi) Current

1.5

to Share capital

0.6 : 1
0.5

ratio

1.20 : 1

to net worth
FUN

of

of

>!

~
(5 )

Marks

FUN

You are required

to prepare:

(a)

Balance

Sheet of the company

(b)

The statement showing Working capital requirement,

to make a provision for contingencies @ 10 percent
including such provision.

11

on the basis of above details.

if the company wants
of net working ca-pital

44
.,

7. (a) The management

of P Limited is considering to select a machine out of the

two mutually exclusive machines. The company's cost of capital is 12 percent
and corporate tax rate for the company is 30 percent. Details of the machines
are as follows:

Cost of machine
Expected
Annual

Machine-l

Machine- II

Rs. 10,00,000

Rs. 15,00,000

5 years

6 years

life
income before tax and

Rs. 3,45,000

depreciation
Depreciation

is to be charged

You are required

on straight

line basis.

to :

(i) Calculate the discounted pay-back period, net present

rate of return for each machine.
(ii) Advise the management
take up.
The present

(E&H)

. Rs. 4,55,000

of P Limited

value and internal.

as to which machine

they should

value factors of Re. 1 are as follows:

Year

At 12%

.893

.7fi)7

.712

.636

.567

.507

At 13%

.885

.783

.693

.613

.543

.480

At 14%

.877

.769

.675

.592

.519

.456

At 15%

.870

.756

.658

.572

.497

.432

At 16%

.862

.743

.641

.552

.476

.410

FUN

P.T.O.

~
I'"-"

(6 )
FUN

(b)

The following details

are. forecasted

utilisation and management

(i) Estimated

Marks

by a company for the purpose of effective

of cash:

sales and manufacturing

'... .

7
~

costs:

Year and month

2010

Sales
Rs.

Materials
Rs.

Wages
Rs.

Overheads
Rs.

April

4,20,000

2,00,000

1,60,000

45,000

May

4,50,000

2,10,000

1,60,000

40,000

June

5,00,000

2,60,000

1,65,000

38,000

July

4,90,000

2,82,000

1,65,000

37,500

August

5,40,000

2,80,000

1,65,000

60,800

September

6,10,000

3,10,000

1,70,000

52,000

(ii) Credit terms:

-

Sales-20
percent sales are on cash, 50 percent of the credit sales are
collected next month and the balance in the following month.
Credit allowed by suppliers is 2 months.
Delay in payment
is 1 (one) month.

(iii) Interest

of wages is 1/2 (one-half)

on 12 percent debentures

in June and December.

(iv) Dividends on investments

rece~ved in June, 2010.
(v) A new machinery
whi~h is payable
(vi) Advance

month and of overheads

of Rs. 5,00,000 is to be paid half-yearly

amounting

to Rs. 25,000 are expected

to be

will be installed in June, 2010 at a cost of Rs. 4,00,000

in 20 monthly instalments
from JulYI 2010 onwards.

income-tax

to be paid in August,

2010 is Rs. 15,000.

(vii) Cash balance on 1st June, 2010 is expected to be Rs. 45,000 and the
company wants to keep it at the end of every month around this
figure, the excess cash (in multiple of thousand rupees) being put in fixed
deposit.
(E&H)

FUN

,
..

~
(

7)

FUN
You are required to prepare monthly
information for four months,beginning

Marks
Cash budget on the basis
from June, 2010.

of above

8. Answer of the following:

~

(i) SK Limited has obtained funds from the following sources,

are also given against them:
Amount
Rs.

Cost of ,Ca"pital

30,00,000

15 percent

shares

8,00,000

8 percent

earnings

12,00,000

11 percent

10,00,000

9 percent

Source

of funds

Equity

shares

Preference
Retained
Debentures

You are required to calculate weighted

Corporate tax rate is 30 percent.
(ii) State the role of a Chief Financial
(iii) Distinguish

(E&H)

the specific-cost

between

average

cost of capital.

3'

(before tax)
Assume

that

Officer.

Fund Flow Statement

FUN

3
3

and Cash Flow Statement.

P.T.O.

..

..

"--"

(8 )
FUN

(Hindi
~

Marks

Version)

11ft&:rTf$jfCfiT ~I~ct;~ r'"1'i?I'~fRT 11T'I:Zfli

~

t m

iI1 ~

~~

Cffi11ft&TTm
~
fRT 11T'I:Zfli ~ %, ~ fRT if ~
~
err ~
fRT if fGit -rp) ~
CfiT~iS-<.j
ict;-1 m m-rn
I

if it ~

%I
~

%,
..

~~mil1~~1
cwf rc.U.jrul~i(Working Notes) ~

1. r-1~r<:1r~d iI1 ~
.
.
(i) 'ffiTRf

(ii)

~ ~ ict; -1
dY~~~I'

YKCld-1~n<:1dYK~~I'

CfiT<fmar % I ~

CfJRCI1(Key

(v) ~ct;I~d ~

2. ~.m.

~CFffi:r

iI1 ~

+jQ\'=I't ur

iI1 ";f]11 ~
if

l1f5IT5,000 ~.m.

~;

"Tf: ~

writ
factor)

~'q

'X' CfiT"Tf:
it

3m

cp:fT

~ ~~

~? ~

(E&I

(E&H)

eft dC\IQ~UI.~

1:R~

Wi iI1 ~~

-ail1if

~.

if

3ffi ~

~1~i~l.

cj 11 rCl ct;

lfBTT

.lfBTT
.

(if)

31

3,000

1,000

3,400

1,100

2,400

800

2,300

700

"B

500

4,000

600

3,900

G:

100

30,000

90

31,500

FUN

CfiT

d~ClIC\1

1Jl1r1

(if)

~
8,000 ~.m.; ~
ct;1~~I~ if ~rdrG-18 ~

cp:fT~ ?

"[Q:1,50,00,000~. iI1w:f~

%; 31f~
W:Tf~ 4 ~i

r<:1r+j~~
~ -ail11:RClp:f~ ml1ift

ClI1rClct;Clp:f r1~rC1r~d

ml1ift :

5x2=10

%? ~

(iii) ml1ift 'X' qft "Tf:

(iv)

m~

cp:fT

."3l1~ 50 ~.m.

iI1 'qpT

,
';:'

~
(9)

FUN
:

.w:r

Marks

-qul

-qul

m~~

.
60,000

15

56,000

18

40,000

30

38,000

35

Ll
L2

3Nf8;N% :
(i) ~lcnl~

(ii) <ifu:

~.

~ ~

COT

.w:r

rcj~~~ul

3fu:

~ ~

iI1 3irdRm :jp:J Wffif ~

~ ~

COTRmrur ~I

~ 13,45,000 ~.

~ ~~

if,

m~~~1
rcj..:j",ul'~

(Hi) r1I-1r~r~d

(31) ~

"ffiTRfrcj..:j",ul

CiS{)~

(~) ~

l1BIT(~)

G~ ~

~~1'-I1

~ m~

Rfl:fu 11WfiI1 ~

%I~,

2010'~ ~~

rcj..:j'"
UI
~

( G) .w:r "ffiTRf~
:f) Wi ~

rcj..:j'"
UI

CO Wi cnl~~~I~dl rcj..:j",UII
'3.

(31) ~

r~rli~~ '~~cnlr-51'

if Q~I~Rd

r1I-1r~r~d

~:

COTdr'-ll<:\1

GJ ~*.~

~
-I
.

>TR1l:'qCf)
~
~~~

~~~
cnl"'~111

d'-lRcx.j~

~~

3,15,000

2,24,000

2,25,000
I,

'

90,000

74,000

90,000

2,25,000

30,000

1,65,000

FUN

'.

4,50,000

1,80,000

2,10,000

>TR1l:'qCf)
~
if 7fflf1:IB
~:
~
'ffi'q
(E&H)

'Rfltr ~
~.

-II

1,50,000
3,00,000

P.T.O.

'.
~

( 10 )

Marks

FUN

~.I

Cf)Td~IC\1

\iffifT~ I

Q~I~n.d ~

~
~

"ffilrn

t ~
.

"tR 20

~-H

~-II

"tR

~
ern-

\iffifT

~-II

"tR "ffi~ mq CfiT ~

~ ~

"ffi~ ~

Rf1::rnl1TB ~ ~

~ I ~31T

\iffifT

t I Rf1fu ~ ~ ~
~ '5mJ g3TI ~ I lW

"tR 25

Cf)T d~I~1

"ffi~ '31'I~~{ Q~I~n.d

CfiT~~I~(UI

Cf)T

Cfft

~-I

~~

~,

Cf)T

28,00,000

~.

~-II

CfiT~~I~(UI

if ~

Ict>1 ~

"tR

.~~ict>1
\iffifT

~,

.,

Rf1fu

~~~~~fl

(Gf-)~

~ldl~ld

~ ~I ~
~ ~
8;1tffiT

CfiT.40 r<fJ~~lG{ w<sfi

Cfft "ffilrn 6,50,000 ~.

~ I 31tRt ~

~ ~ ~rdr~1~ ~ 3lR ~ (fA ~

~ I ~ ~ lW if ~
25 R;:r ~

~ l1f1f"tR 5 ~

Cfitrftl~'

Cfft

80

4,000 ~. m ~

~~~~UUT

22,500~. m ~

Cf)T

3,000~. m ~

'5 ~1~ct>I. Cf)T~

5 ct>u.s~{"r Cfft
~~

Cf)T

ct>1~r~~

1,200~.m

ir6 ~cm,~

<:nfWffCfiT

3Flr

Cfft

~~11.:t

ift\3f

eft

40 GfT3ft
~

~i(

Icr:f 2010-11 ~

M~~~d~:

m ~

ct>u.s~~m lW

7,500 ~'. m lW

~,

2,000 ~. vfu ~

'CXJCJ

Cfft "ffilrn '!lfu

iFi ~

5,000~. ~.~

33 ~.

~~if~~JI'U~Cfft~~

(E&H)

rct>ctI~lG(if

6 rct1~.il~lG(

~~

"ffilrn Cf)T15 vfumf

~~

"ffilrn Cf)T3.

FUN

I
I
'II
,

~,

4J'

( 11 )

Marks

FUN

m <IDIT-rct1~I~Ic.~
~ ~

~ m CfR'ft'f
4. r1~r~r,(gd

m: ~

(i) 1ft.~.~.

mftr:IT1R

33'/3

cm1T.
~
"ffi'q

~-(

31) "ffi'q-"t1BIT
~

m ~

(iii) ~ ~-~

r~~r~r~t1

57 ,00,000

(3,00,000

.)

7 ,00,000

"ffiTTij
1;Ci(~)

12,00,000 ~. Cf1T
"ffi'q

~ ~

31f~ "ffi~

2009

31f~~cj~il~ul~ "ffiTTij
~~ict11 if ~

~-q11~ ~

32,00,000

(~) 'f ~

3ilcj~~ct1

2008

(ii) <:S'"I~oq~I'
~ ~

mI
4

r~r~~-S qff cpf 2008 q 2009 ~

m ~

.,

"ffi'q/(mf.;r)

~ ~

%,

cpf

~ ~

7~

50 ~

M~ 1;Ci00 ~

Cht1-m W-Tfu

q1) ~~~I~"!,I

M~ if "itCht1-

Gf;IT~m

if ~

q1)

-mJ m-r %7

5. r1~r~r~d m: ~ ~

5x2=10

(i)~~"it3m~~~?~~"it~~WfiRf~t7
(ii) ~

(iii) ~

(iv) ct1I4~n~

~ fcffi ~~

q1) -Ba.{qif ~~~I~"!,I

31Cf~

-Ba.{qif rcj~-q11~

if ~

cx-Hcj~lr~ct1
Wr&r ~

~ M~

~q1)~1
(v) ~-cnf1:fq;-

-qstl~ro& 31T'tW:1R 75,000 ~. Cf1T8

1;Ci -qstl~ro& ~

(E&JI)

Cf1TR~

~ 1R 5 cpf Cf1T-qstl~ro&~

~I

FUN

P.T.D.

'(
-,"-

~.

( 12 )
FUN

(i) crtf CfiT~

(~

6. r14-1r~r~q

Marks

cnPFitit ~~

:
30,00,000

~~)

~.
~

25~

'ffi"'T ~

(ii) ~

(iii) ~

w:qfu 31fCRf(~

(iv) ~..'I::f 31fCRf(~

(v).(ffi'f ~

(vi) ~

lW: ~

CIft~

1.5

in 3iT~ 1R)

1R 3iTmfur)

1-: 1
1.5 : 1

(viii) ~

(ix) ~

2~

'31Cff~

31Tf~ CfiT~

0.6 : 1

i~ it ~

0.5

~-q1~1 (Gearing) ~

(x) ~~.CfiT~~

(~)

1.20 : 1

it ~

crm Cf1Br~ :

~
( 31)

CIft~

(vii)

lW:~

(~) ~

in

3iT~

1R cnPFit Cf)[

cnPFit 3i1~r~~ql3:ff in ~

~1~r~~dl3:ff ~

~ ~ ~

~ ~

.~

11

en)~
~

~m,

~ I cnPFit

~I~~n~ ~

~ ~

q) ~14~n~ i~

cn1

cWt~.

12 ~

~ 'ij~

~.

cn1 ~lcI~~~ql

cnPFit

in ~

in ~

FUN

(E&H)

1R 10

~I

7. (31) ft. r~p'lt-s CfiT~..'I::f eft 1ffi=IR~I.JCj~~ l1W1T if it

wr

=.;:"'

1R

CR:

CR:c6t ~

,-

<2J

( 13 )

Marks

FUN

~ ~

30 -srft:pmr I

if fcrcn:"urf;P-11j,~I(

~~

~:

~-I
~

Cfft""ffi1Rf

~8;m

10,00,000

mm {~lrC4r~ ~ ~

.,

15,00,000 ~.

~.

5c;p:f

6c;p:f

3,45,000 ~.

4,55,000 ~.

'311C41cf11<:1

~q~~~Cfft~3Wf
~

~-II

~I

fcn<:rT
~

~8;m~:

(i)

3.jI-tr~r~d

31Cff~,~

~,

3i1~Rcf1

~ Cfft lTURf

~~~~I
(ii) tft. r~r~~-5~ ~~
1

CfiT ~

fCfi'W ctR-m ~

r1r<:1rd

~ I

c;p:ffG{

12%

.893

.797

.712

.636

.567

13%

.885

.783

.693

.613

.543

.480

14%

.877

.769

.675

.592

.519

.456

15%

.870

.756

.658

.572

.497

.432

16%

.862

.743

.641

.552

.476

.410

'

.507

"
(~)

~ '!J~ ~

WTJ7n~ :

~~

~ ~

~ ~

~ r1~r~r~d fcrcn:"ur
COT
3fTTR
0'.

(E&H)

FUN

p.T.a.

.".

0,

( 14)

Marks

FUN

(i)

3ij,~-lIr1d~

r1~lun "RfTRf:

m1Hft

crCfl'f

2010

LJ n.

cx.j

<!oj

"

\1ff

3llffi'f

rdk4(

(ii) ~'i:TR~
,

1,60,000

45,000

4,50,000

2,10,000

1,60,000

40,000

5,00,000

2,60,000

1,65,000

38000

4,90,000

2,82,000

1,65,000

37,500

5,40,000

2,80,000

1,65,000

60,800

6,10,000

3,10,QOO

1,70,000

52,000

'TfCfR

wffi ~

#1

50%

cnr

~I

~'i:TR ~I~d

3TIit~

~'i:TR

~ am:~ ~ ~

'i(fct>dl3if&m ~ ~

2,00,000

: ~-20%

wffi ~ 1f if ~

4,20,000

cnr ~

o~ ~LJRcx.j<!ojI'
~ 'TfCfR,# ~

~mm~1
(iii) 5,00,000~. ~ 12% ~UILJ?lI'
'R 3i4ctlftfct>3TI'i:TR
'R ~
~~I
(iv) \1ff, 2010 # rctr1<!oj1~~'
'R 25,000 ~. "ffi~

-srrfu

\1ff am: r~~k4( # ~

~I

~~

(v) \1ff, 2010 # 4,00,000 ~. "RfTRf~

~,

2010"fr ~

(vi) 15,000 ~.

~ 3fu

(vii) 1 \1ff, 2010'C!1T

3Rf

cnr 'TfdR

3ij,~1f1d 45,000 ~.

~ m ~ 00 ~ ~
~ ~ ~ # ~ c!t ~

~I

3TI'i:TR
'R \1ff, 2010 "fr ~'q

FUN

~,

r"l~ct>1'TfCfR

~~

# ~ ~I

3lTffif, 2010 #,~

~I
(E&H)

20 l1Tfucn~

W1~

#) ~

~~ ~

~, 3irdn.\b~

4 ~

~ ~
C'""RRm'

cnr l1Tfucn

~ lJUTCfI

,..:

@
( 15 )

Marks

FUN

8. f.p'-1r~r(!;Ad
(i) ~.~.

"3"W

r~r~2.-5
~ r-1~r~r(!;Ad
mm- ~ CfiTt5f
]"ffi~ W

fucitg{ ~

~I~

"ffiTRf

~ ~

~q)T~

~Tfu

~CfiT"ffiTRf

~.

~~
31f~

30,00,000

15~

8,00,000

8~

12,00,000

11~

mmfur 3T\5R

'fVJT- -q?f

FrP=r~
~~~I
(ii) ~~~
(Hi ) CfiTt5f~

10,00,000
CfiT~ 30 ~

31f~CfiT
fcmuT

~ ~

(~

CfiT'mfuf 3fhrn "ffiTRf~

~
~

"<tt)

CfiT

~~I
fcmuT if ~

.'

(E&H)

FUN

3RR ~

,3