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Strategic Management Accounting - December 2010
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Started on Tuesday, 16 November 2010,

12:42 PM
Completed Tuesday, 16 November 2010,

on 01:34 PM
Time taken 52 mins 6 secs

Grade 45 out of a maximum of 100
(45%)
Grade Not Eligible
Question 1
Marks: 5
Gihan Ltd is a manufacturing company manufactures a product Gama. Following

information related to for the month of June 20X1 Standard cost per batch of
product Gama
Materials Materials kilos Price Per Kg-Rs Total Rs
X 20 5 100
Y 15 4 60
Z 10 7 70
45 230
Less:- standard 5
loss
Standard Yield 40
Labour Hours Rate Per hour Total Rs
Deparment X 5 12 60
Deparment B 3 7 21
81 81
311
Budgeted sales for the period are 5266kg at Rs 18 per kg. There were no budgeted
opening or closing inventories of product Gama. The actual materials and labour
used for 130 batches were as follows
X 2240 5.3 11872
Y 2070 3.7 7659
Z 1088 7.5 8160
5398 27691
Less:- standard 920

loss
Standard Yield 4478
Department X 750 12.7 9525
Department B 404 6.5 2626
21151 21151
39842
All of the production of Gama was sold during the period for Rs 18.85 per kilo.
What was the material yield variance ?
Choose one answer.
a. 604 Fav
b. 2309 Fav
c. 495 Adve
d. 700Fava
Incorrect
Marks for this submission: 0/5.
Question 2
Marks: 5
Which one of the following is not a cause of variances
Choose one answer.
a. Actual resource usage is different planned resource usage.
b. Budgeted prices are different from actual prices
c. Actual production volume is different from budgeted

production volume.
d. Forecast prices are different from Actual prices
Correct
Question 3
Marks: 5
ABC Limited manufactures and sells two product, X and Y. Annual sales are expected
to be in the ratio X:1, Y:3. Total annual sales are planned to be Rs. 420,000. Product
X has a contribution to sales ratio of 40 % , whereas that of product Y is 50%. Annaul
fixed costs are estimated to be Rs 120,000
The budgeted break even sales value (to the nearest Rs 1,000):
Choose one answer.
a. Rs. 196,000
b. Rs. 200,000
c. Rs. 255,000
d. Rs. 253,000
e. Cannot be determined from the

above
Incorrect
Question 4
Marks: 5
The following information has been extracted from a plastic manufacturing

company
which manufactures a plastic component
standard price : Rawmaterial M1- Rs 5 per kg
Rawmaterial M2- Rs 4 per kg
Standard Proportion M1 : 60%, M2 ,30% , M3 10% (by weight)
A standard process loss of 10% is anticipated
for the last period , the actual cost, usage and out put were as follows
used : 2450 kg of P1 , costing Rs, 12,200/=
1150 kg of P2 , costing Rs, 4700/=
425 kg of P3 costing Rs 1250/=
Output 3645 Kg of plastic component
scrap sales value is Rs. 0.90 per unit
Material Yield variance

Choose one answer.
a. 110.25FAV
b. All answers are

wrong
c. 20.5 ADV
d. 110FAV
Incorrect
Question 5
Marks: 5
Supun Ltd operates a process costing system using the first in first out method of
valuation.No losses occur in the process. The following information is was available
for the last month
Units Degree of Value

completion
Opening Work in 100 60% Rs 680

progress
Completed during 900

the month
Closing Work in 150 48%

progress
Cost per equivalent unit of production for last month Rs12/=

What was the total value of the units completed last month ?
Choose one answer.
a. Rs 12344
b. Rs 10760
c. Rs 10800
d. Rs 12000
Incorrect
Question 6
Marks: 5
XYZ Limited has recently introduced an Activity Based Costing system. It manufactures
three products,
details of which are set

out below.
Product X Product Y Product Z
Budgeted annual
100,000 100,000 50,000
production(units)
Batch size (units) 100 50 25
Machine set-ups per batch 3 4 6
Three cost pools have been idntified. Their budgeted costs for the year ending 30th June
2009
are as follows:
Machine set-ups costs Rs. 150,000
Purchasing of materials Rs.70,000
Processing Rs. 80,000

The budgeted machine set-up cost per unit of product R is
nearest to
Choose one answer.
1. 0.5
2. 6734
3. 50000
4. 6.52
Correct
Question 7
Marks: 5
The following data relates of 200kgs of material QP in inventory and needed

immediately for a contracts.
Standards Cost Rs 3220
Replacement cost Rs 3080
Realizable vale Rs 2800
Withing the firm the 200kgs of material QP can be converted in to 200kgs of

material BP at a cost of Rs 140/=
Material BP has many uses in the firm and 200kgs costs Rs 3,080.
What cost should be included for material QP when assessing the viability of the
contracts
Choose one answer.
a. Rs 3080
b. Rs 2940
c. Rs 2800
d. Rs 3220
Correct
Question 8
Marks: 5
Calipania Ltd has details two machines that could fulfil the company's
future production
plans. Only one of these will be purchased.
The'standard' model of costs Rs 50,000 and the Ordinary model Rs. 88,000, payable
immidiately.
Both machines would require the input of Rs. 10,000 working capital throughout their
working
lives, and both have no expected scrap value at the end of their expected working lives
of 4
years for the standard machine and 6 years for the Ordinary
machine.
The forecast pre- tax operating net cash flows (Rs.) associated with the two
machines are
Year Hence
Years 1 2 3 4 5
The'standard' model 20,500 22,860 24,210 23,410
The Ordinary model 32,030 26,110 25,380 25,940 38,560

The discount rate for the Ordinary model is 14% per year , 2% higher than the discount rate for th
standard machine
The company is proposing to finance the purchase of either machine with a term loan at a fixed in
rate of 11% per year
Taxation at 35% is payable on operating cash flows one year in arrears, and capital allowances ar
available at 25% per year
on a reducing
balance basis.
Best option should be
Choose one answer.
a. It is recommended to purchased
the'Ordinary model
b. Cannot be determined from the above

information
c. It is recommended to purchased both the

models
d. It is recommended to purchased
the'standard' model
Incorrect
Question 9
Marks: 5
Loto Pvt Ltd mnufactures four products , A,B,C and D.The product uses a series of different machin
which causes a bottleneck.
The standard selling price and standard cost per unit for each products for the forth coming year a
A B C
Rs Rs Rs
Selling Price 2000 1500 1500
Direct Materials 410 200 300
Labour 300 200 360
Variable Overheads 250 200 300
Profit 680 600 330
Machine Y - hour Per Unit 2 1.667 1.1667
Direct materials is the only unit level manufacturing cost, using a through put accounting approac
A B C
1 3rd 1st 2nd
2 1st 4th 3rd
3 3rd 1st 4th
4 2nd 3rd 1st
Choose one answer.
a. 1
b. 2
c. 4
d. 3
Incorrect
Question 10
Marks: 5
The following data are supplied relating to two investment projects only one of which may
be selected
year Project-X Project-Y
Initial capital
50,000 50,000
expenditure
Profit(loss) 1 25,000 10,000
2 20,000 10,000
3 15,000 14,000
4 10,000 26,000
Estimated resale
4 10,000 10,000
value
The cost of
capital is 10%.
What are the Net Present values
X Y
i 45860 34142
ii 42315 35212
iii -39876 -45321
iv all answers are wrong
Choose one answer.
a. ii
b. iii
c. i
d. iv
Correct
Question 11
Marks: 5
XYZ Limited has recently introduced an Activity Based Costing system. It manufactures three prod
details of which are set out

below.
Budgeted annual
100,000 100,000 50,000
production(units)
Three cost pools have been idntified. Their budgeted costs for the year ending 30th June 2009
are as follows:
The budgeted machine set-up cost per unit of product R is nearest to
Choose one answer.

1. 0.78
2. 0.52
3. 5.67
4. 6.52
Incorrect
Question 12
Marks: 5
Kalum Plc manufactures a product KP using raw materials A and B . Budgeted

production for the period is 1000 units per batch with 10 batches. Other budgeted
data are as follows...
Raw material % quantity Price Per Kg(Rs)
A 40% 40
B 60% 60
Direct labour % of Hours Rate per hour (Rs)
male 30% 75
female 70% 40
Total labour hours 10,000 and fixed overheads for the period was Rs 65,000/=. The
variable overheads is Rs, 5/= per kg and selling price of KP is Rs, 140 per unit.
Actual results are as follows..
Raw material used Quantity-kg Price Per Kg(Rs)
A 4200 39
B 6800 62
Direct labour Hours Rate per hour (Rs)
male 3000 80
female 8500 35
11 batches of KP were produced and sold at Rs 145 per kg

Fixed overhead cost Rs 75,000
Variable overhead cost Rs 68,100
Operating Profit Varience ?
Choose one answer.
a. 69000F
b. 54000Adv
c. 46000F
d. All answers are

incorrect
Incorrect
Question 13
Marks: 5
FBP Ltd produces PPN. The standard ingredients of 1kg of

PPN are :
.65kg of A @Rs 4.00 per kg
.3kg of B @Rs 6.00 per kg
.2kg of C @Rs2.5per kg
1.15kg
Production of 4000kg of PPN was budgeted for January 2010. Since the Production of PPN is
entirely automated
Production cost s attributed to PPN production comprise only direct materials

and overheads.
Overheads were budgeted for January 2010 for PPN production

operation as follows.
Actiity Total Amount
Recept of deliveries from

Rs
suppliers
(standard delivery quantity is

4000
460 kg)
Despatch of goods to
customers
(standard despatch quantity is

8000
100kg)
12000
In January 2010 , 4200kg of PPN were produced and cost details were
as follows:
Material used,
2840kg of A
1210kg of B
860kg of C
Total cost : Rs 20,380/=
Actual overhead costs
Twelve supplier deliveries(cost Rs 4,800) were made, and 38 customer despatches (cost
Rs 7,800) were
processed.
Material usage variance
Choose one answer.
a. 151FAV
b. 190 ADV
c. All answers are

wrong
d. 100FAV
Correct
Question 14
Marks: 5
Pure Ltd has two divisions X and Y. X produces a Product X which is used in
production of Product Y at division Y. Division X also sells product X to out siders at
Rs 2000 per unit. Last month 50,000 unit of product X were sold to out siders. When
sold to outsiders product X and Product Y both gives a contribution Rs 1000 per unit
to the company. Division Y can also purchase product X at a price Rs 1500 from
outside sources. Pure Ltd proposes to transfer product X to division Y at a price of
Rs 2000 per unit. Product Y has a market demand around 100,000 units per month
If the market demand for product X is 50000 unit at this price,what is the best
course of action from the point of view of Pure Ltd as a whole given the company's
capacity limited to 150,000 of units of either X, Y or both ?
Choose one answer.
a. Either Purchase out side or transfer

internally
b. Purchase out side
c. Tranfer Internally
Incorrect

Question 15
Marks: 5
Initial cost of a new investment is Rs 43.75 million. Life time of the project is 10
years. The company is planning to produce and sell 10000 units of the products
annually at a price of Rs, 5,000/= per unit. The Variable cost of a unit is Rs 3,750/=.
Annual fixed cost inclusive of depreciation are estimated at Rs 7.5million . The
sensitivity of the project IRR if the selling price is reduced by 10%...
A). It reduces net cash flows by 5 million annually.

B). IRR is less than company's cost of capital
C). The project is highly sensitive to fall in selling price
D). The project is still feasible
What are the correct statements ?
Choose one answer.
a. A,B,C and D
b. A,B and C
c. All answers are

incorrect
d. A and C
e. B and C
Correct
Question 16
Marks: 5
ABC company uses decision tree analysis in order to evaluate potential

projects.
The company has been looking at the launch of a new product which it believe has a 70%
probability of success.
The company is however ,considering undertaking an advertising campaign costing Rs, 50,000 wh
probability of success to 95%.
If successful the product would generate income of Rs, 200,000 otherwise Rs, 70,000
would be received.
What is the maximum that the company would be prepared to pay for the
advertising?
Choose one answer.
a. Rs17500
b. Rs50000
c. Rs29000
d. Rs32500
Correct
Question 17
Marks: 5
Baltex PLC is planning to invest funds in financially viable projects. The weighted average cost of
capital of the
company is 12%. Calculated IRRs of 5 projects are as follows.
Projects IRR
A 20%
B 11%
C 30%
D 14%
E 8%
What projects should be selected

Choose one answer.
a. B,E
b. E,D,B
c. A,B,C,D
d. A,B,C,D,E
e. A,C,D
Correct
Question 18
Marks: 5
The cost of capital is 12% of the company and consideing Rs 10 million investment.The expected
each of the next four years.
Net present value of this project can be

calculated by
Choose one answer.
a. By discounting real cash flows at the nominal discounting

rate.
b. By discounting real cash flows at the real discounting rate.
c. By discounting real cash flows at tax adjusted discounting

rate.
d. By discounting real cash flows at risk and time adjusted

discounting rate.
Correct
Question 19
Marks: 5
The following data are supplied relating to two investment projects only one of which may
be selected
Initial capital
50,000 50,000
expenditure
Profit(loss) 1 25,000 10,000
2 20,000 10,000
3 15,000 14,000
4 10,000 26,000
Estimated resale
4 10,000 10,000
value
The cost of
capital is 10%.
What are the Payback periods
X Y
3 Years & 7.4

i 2 Years & 4 Months
Months
ii 4 Years 4 Years
iii all answers are wrong
iv 1.5 Years 2.4 Years
Choose one answer.
a. ii
b. iii
c. iv
d. i
Incorrect
Question 20
Marks: 5
A project has an initial outflow followed by several years of inflows. What would be
the effect on the IRR of the project and its discounted pay back period of an
increase in the company's cost of capital
Answer IRR Payback
i No Change No Change
ii Increase Increase
iii Increase No Change
iv No Change Increase
Choose one answer.
a. ii
b. i
c. iii
d. iv
Incorrect
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The Institute of Chartered Accountants of Sri Lanka
ABC Ltd manufactures four products. The unit cost , selling price and bottleneck resource details per unit
are as follows
Products P Q R S
Rs Rs Rs Rs
Selling Price 56 67 89 96
Material 22 31 38 46
Labour 15 20 18 24
Variable Overhead 12 15 18 15
Fixed Overhead 4 2 8 7
Bottle neck resource time 10 10 15 15

(minutes)
Assuming that labour is a unit variable cost, if the products are ranked according to their contribution to
sales ratio, the most
profitable products is
Choose one answer.
a. R
b. S
c. p
d. Q
Incorrect
Question 2
Marks: 5
Woda Plc uses a standard absorption costing system. The absorption rate is based on labour hours. The following
January 2010.
Budget Actual
Labour hours worked 10000
Standard hours
10000
produced
Fixed overhead cost Rs 45000 Rs 46200
The fixed overhead efficiency variance to be reported for January 2010 is nearest to Rs,
Choose one answer.

a. 690ADV
b. 787 ADV
c. 730 ADV
d. 714ADV
Incorrect
Question 3
Marks: 5
DPL Ltd can choose from five mutually exclusive projects. The projects will each last for one year only and their
will b determined by the prevailing market conditions. The forcast annual cash inflows and their associated proba
below.
Market Conditions Poor Good Excellent

Probability 0.2 0.5
Rs 000 Rs 000 Rs 000
Project-A 500 470
Project-B 400 550
Project-C 450 400
Project-C 360 400
Project-D 600 500
The value of perfect information about the state of the market is

Choose one answer.
a. Rs 180,000
b. Rs 40,000
c. Rs 56,000
d. Nil
e. Rs 5,000
Incorrect
Question 4
Marks: 5
The overhead costs of XY limited have been found to be accurately represented
by the formula
y= Rs 10,000 + Rs 0.25 x
where y is the monthly cost and x represents the activity level measured in machine
in hours.
Monthly activity levels, in machine hours, may be estimated using a combined
regression analysis and time series model:
a = 100,000 + 30b
where a reperesents the de- seasonalized monthly activity level and b represents
the month number.
in month 240 , when the seasonal index value is 108, the overhead cost (to the
nearest RS. 1000) is expected to be
Choose one answer.
a. Rs.36,000
b. Rs. 35,000
c. Rs. 39,000
d. Rs. 40,000
Incorrect
Question 5
Marks: 5
The following data are supplied relating to two investment projects only one of which may be selected
Initial capital
50,000 50,000
expenditure
Profit(loss) 1 25,000 10,000
2 20,000 10,000
3 15,000 14,000
4 10,000 26,000
Estimated resale value 4 10,000 10,000
The cost of capital is
10%.

X Y
i 45860 34142
ii 42315 35212
iii -39876 -45321
Choose one answer.

a. iv
b. i
c. iii
d. ii
Correct
Question 6
Marks: 5
A Ltd is planning to obtain a term loan to invest in a project. Loan amount is Rs 2,000,000/= at a fixed interest ra
annum
and should repay in end of every year by five equal annual installments with
interest.
Value of an installment should be,

Choose one answer.
a. 640,000
b. 554,785
c. 456,789
d. 400,000
e. 678,340
Correct
Question 7
Marks: 5
H Ltd makes leather purses.It has drawn up the following budget for its next financial period.
Selling price per unit Rs. 11.60
Variable production cost per unit Rs.3.40
Sales commission 5% of selling price
Fixed production cost Rs. 430,500
Fixed selling and administration costs Rs 198,150
Sales 90,000 units
The margin of safty

represents
Choose one answer.
a. 8.3% of budgeted sales
b. 11.6% of budgeted sales
c. 5.6% of budgeted sales
d. 16.8% of budgeted sales
Incorrect
Question 8
Marks: 5
projects.
The company has been looking at the launch of a new product which it believe has a 70% probability of
success.
The company is however ,considering undertaking an advertising campaign costing Rs, 50,000 which would incr
success to 95%.
If successful the product would generate income of Rs, 200,000 otherwise Rs, 70,000 would be
received.
What is the maximum that the company would be prepared to pay for the advertising?
Choose one answer.
a. Rs29000
b. Rs50000
c. Rs17500
d. Rs32500
Correct
Question 9
Marks: 5
XYZ Limited has recently introduced an Activity Based Costing system. It manufactures three
products,
below.

Budgeted annual
100,000 100,000 50,000
production(units)
are as follows:
Choose one answer.

a. 0.78
b. 0.52
c. 5.67
d. 6.52
Incorrect
Question 10
Marks: 5
Apsolt Plc has two division A and B. One of the products manufactured by the A division is intermedia
This intermediate product for which there is no external market and it is transferred to B division wher
for sale in the external market. One unit of the intermediate product is used in the production of the fin
The expected units of the final products which the B division estimates ,it can sell at various selling pri
Net selling Price Quantity sold Unit

Rs
100 1000
90 2000
80 3000
70 4000
60 5000
50 6000
30 7000
The cost of each division are as follows :

A division
Variable cost per unit(Rs) 11

Fixed cost Attributable to the products(Rs) 60,000
The transfer price of the intermediate product has been set at 35/= based on a full cost plus a mark-up
Apsolt Plc maximises the profit at an out put level of ,
Choose one answer.

a. 4,000
b. 7,000
c. 3,000
d. 5,000
Incorrect
Question 11
Marks: 5
ABC Limited makes a product which has variable production cost and sales costs
per unit of Rs. 8 and Rs. 2 respectively. Fixed costs are Rs. 40,000/= per annum ,the
sales price is Rs.18 per unit and the current volume of output/sales is 6,000 units per
annum.
The company is considering whether it should acquir a new machine for production.
A annual hire costs of the machine would be Rs. 10,000/= and it is expected that variable
production costs per unit would drop to Rs.6/=.
What is the minimum quantity should be made and sold by the ABC Ltd to accept the
aquiring of the new machine
Choose one answer.

a. 4,000
b. 6,000
c. 5,000
d. 5,800
Incorrect
Question 12
Marks: 5
Calipania Ltd has details two machines that could fulfil the company's future
production
The'standard' model of costs Rs 50,000 and the Ordinary model Rs. 88,000, payable immidiately.
Both machines would require the input of Rs. 10,000 working capital throughout their working
lives, and both have no expected scrap value at the end of their expected working lives of 4
years for the standard machine and 6 years for the Ordinary machine.
The forecast pre- tax operating net cash flows (Rs.) associated with the two machines
are
Year Hence
Years 1 2 3 4
The discount rate for the Ordinary model is 14% per year , 2% higher than the discount rate for the standard mac
The company is proposing to finance the purchase of either machine with a term loan at a fixed interest rate of 11
year
Taxation at 35% is payable on operating cash flows one year in arrears, and capital allowances are available at 25
year
on a reducing balance
basis.
Choose one answer.

a. It is recommended to purchased the'Ordinary model
b. Cannot be determined from the above information
c. It is recommended to purchased both the models
d. It is recommended to purchased the'standard' model
Incorrect
Question 13
Marks: 5
FBP Ltd produces PPN. The standard ingredients of 1kg of PPN
are :
1.15kg
Production of 4000kg of PPN was budgeted for January 2010. Since the Production of PPN is entirely automated
Production cost s attributed to PPN production comprise only direct materials and overheads.
Overheads were budgeted for January 2010 for PPN production operation as
follows.

Recept of deliveries from suppliers Rs
(standard delivery quantity is 460
4000
kg)
Despatch of goods to customers

8000
100kg)
12000
In January 2010 , 4200kg of PPN were produced and cost details were as follows:
Material used,
2840kg of A
1210kg of B
860kg of C

Twelve supplier deliveries(cost Rs 4,800) were made, and 38 customer despatches (cost Rs 7,800)
were
processed.
Choose one answer.

a. 341 ADV
b. 457 FAV
c. 235 ADV
d. 190ADV
Incorrect
Question 14
Marks: 5
company


Material mix variance
Choose one answer.

a. 112.5FAV
b. 12.5 ADV
c. All answers are wrong
d. 110.25FAV
Incorrect
Question 15
Marks: 5
Halibon PLC has three products Soft, Hard , Thick. Currently sales, cost and selling price details and processing
time requirments are as follows.
Products Soft, Hard ,

Annual sales(units) 6000
selling Price Rs 20
Unit cost 18
Processing Time 1
required per unit(hour)
The factory is working at full capacity(13500 Processing hours per year). Fixed manufacturing overheads are
absorbed in to unit costs by a charge of 200% of variable cost. This procedure fully absorbs the fixed manufactur
Assuming that
i) Processing time can be switched from one product line to another,
ii)The demand at current selling price is ,
Soft, Hard ,
11000 8000
and
Selling prices are not to be altered.
The best production programme for the next operating period should be ?
Soft, Hard , Thick
1 11000 8000 2000
2 1500 8000 2000
3 6000 6000 750
4 11000 500 1500
5 11000 0 1250
Choose one answer.

a. 2
b. 1
c. 4
d. 3
e. 5
Incorrect
Question 16
Marks: 5
The following information has been extracted from a plastic manufacturing company


Choose one answer.

a. All answers are wrong
b. 20.5 ADV
c. 110.25FAV
d. 110FAV
Incorrect
Question 17
Marks: 5
Baltex PLC is planning to invest funds in financially viable projects. The weighted average cost of capital of the
Projects IRR
A 20%
B 11%
C 30%
D 14%
E 8%

Choose one answer.
a. B,E
b. A,C,D
c. A,B,C,D,E
d. A,B,C,D
e. E,D,B
Correct
Question 18
Marks: 5
AB plc has recently developed a new product.
The nature of AB Plc 's work is
repetitives, and it is usual for there to be an
80% learning effect when a new
The time taken for the the first unit was 22 minutes.
product is developed.
Assuming
that an 80 % learning effect applies, the time
to be taken for the fourth unit is
nearest to
Choose one answer.
a. 15.45 minutes
b. 14.08 minutes
c. 10.91 minutes
d. 9.97 minutes
e. 16.60 minutes
Correct
Question 19
Marks: 5
annum.
If the machine is acquired how many unit must be made and sold to maintain the profit at its
existing level
Choose one answer.

a. 48,000 units
b. 6,000units
c. 5,000 units
d. 5,800 units
Incorrect
Question 20
Marks: 5
ABC Ltd manufactures four products. The unit cost , selling price and bottleneck resource details per unit are as
follows
Products P Q R S
Rs Rs Rs Rs
Labour 15 20 18 24

(minutes)
If the company adopted throughput accounting and the products were ranked according to product return per min
be
Choose one answer.

a. Q
b. S
c. R
d. P
Toyo Ltd manufactures components for the vehicle industry. The following annual information
regarding
three of its key customer is
available:
ROSI SOSI TOSI
Gross
1100000 1750000 1200000
Margin (Rs)
General
dministration cost 40000 80000 30000
(Rs)
Unit sold 1750 2000 1500
Orders placed 1000 1000 1500
Sales Visits 110 100 170
Invoices Raised 900 1200 1500
The company uses an activity based costing system and the analysis of customer related costs is
as follows
Sales visits Rs 500 per visit

Rs 100 per order
Order Processing
placed
Rs 100 per order
Dispatch Costs
placed
Billing and Rs 175 per invoice
Collections raised
Using customer profitability analysis, the ranking of the customers would be:
ROSI SOSI TOSI

1 1 st 2 nd 3 rd
2 2 nd 1 st 3 rd
3 3 rd 1 st 2 nd
4 3 rd 2 nd 1 st
Choose one answer.
a. 1
b. 4
c. 3
d. 2
Incorrect
Question 2
Marks: 5
The expected inflation will be 6% in each of the next five years.
Net present value of a project can be calculated by
Choose one answer.
a. By discounting nominal cash flows at the nominal discounting rate.
b. By discounting nominal cash flows at the real discounting rate.
c. By discounting real cash flows at risk and time adjusted discounting rate.
d. By discounting real cash flows at tax adjusted discounting rate.
Correct
Question 3
Marks: 5
XYZ Company manufactures and sells two poducts P and Q . Forcast data for a year are:
Product P Product Q
Sales(units) 80,000 20,000
Sales Price(per unit) Rs. 12 Rs. 8
Variable Cost (per unit) Rs.8 Rs.3
Annual fixed cost are estimated
at Rs 273,000.
What is the break even point in sales revenue with the current sales mix
Choose one answer.
a. Rs. 570,000
b. Rs. 679,467
c. Rs. 728,000
d. Rs. 606,667
Incorrect
Question 4
Marks: 5
Ahindas plc is cosidering investing in a manufacturing project that would have a three year life span. The investm
an immediate cash outflow of Rs50,000 and have a zero residual value. In each of the three years, 4000 unit wou
sold
The contribution per unit , based on current prices is Rs 5/=. The company has an annual cost of capital of 8%. It
rate
will be 3% in each of the next three years.
If the annual inflation rate is now projected to be 4%, the maximum monetory cost of capital for this project
to remain viable, is (to the nearest 0.5%)
Choose one answer.

a. 14.0%
b. 12.0%
c. 14.5%
d. 13.5%
e. 16.0%
Incorrect
Question 5
Marks: 5
January 2010.
Budget Actual
Standard hours
10000
produced
Choose one answer.

a. 730 ADV
b. 714ADV
c. 690ADV
d. 787 ADV
Correct
Question 6
Marks: 5
FBP Ltd produces PPN. The standard ingredients of 1kg of PPN are :
1.15kg
Overheads were budgeted for January 2010 for PPN production operation as follows.

(standard delivery quantity is 460 kg) 4000

(standard despatch quantity is 100kg) 8000
12000
Material used,
2840kg of A
1210kg of B
860kg of C

Twelve supplier deliveries(cost Rs 4,800) were made, and 38 customer despatches (cost Rs 7,800) were
processed.
Overhead Expenditure variance
Choose one answer.

a. 600ADV
b. 190ADV
c. 300FAV
d. 400 ADV
Incorrect
Question 7
Marks: 5
are :
1.15kg
follows.

4000
kg)

8000
100kg)
12000
Material used,
2840kg of A
1210kg of B
860kg of C
were
processed.
Choose one answer.

a. 341 ADV
b. 457 FAV
c. 190ADV
d. 235 ADV
Correct
Question 8
Marks: 5
Baltex PLC is planning to invest funds in financially viable projects. The
weighted average cost of capital of the
Projects IRR
20
A
%
11
B
%
30
C
%
14
D
%
E 8%

Choose one answer.
a. A,B,C,D
b. E,D,B
c. A,B,C,D,E
d. B,E
e. A,C,D
Correct
Question 9
Marks: 5
Nazdaz Ltd regularly uses material K and currently has in stock 600kg , for which it paid Rs 1500 two month ego
If this were to be sold as raw material it could be sold today for Rs 2 per kg and 5% trade discount also approved
You are aware that the material can be bought on the open market for Rs 3.25 per kg but it must be purchased in
What is the relevent cost of 600kg of material K to be used in a job for a customer.
Choose one answer.
a. 1200
b. 3250
c. 1140
d. 1950
e. 1325
Correct
Question 10
Marks: 5
Calipania Ltd has details two machines that could fulfil the company's future production
The forecast pre- tax operating net cash flows (Rs.) associated with the two machines are
Year Hence
Years 1 2
The'standard' model 20,500 22,860 24,210
The Ordinary model 32,030 26,110 25,380
on a reducing balance basis.
Payback periods should be approximately years
The'standard' model The Ordinary model
i 2 4
ii 4 3
iii 3 4
iv 3 3
Choose one answer.

a. iv
b. i
c. ii
d. iii
Incorrect
Question 11
Marks: 5
A company P sells 3 products P,Q and R. Sales information for May 2009 was as
follows
Budeted Sales Budgeted Price Actual Sales Actual Price

Units per unit-Rs units per unit-Rs
P 100 100 108 104
Q 150 50 165 47
R 250 35 221 37
The expected size of the market for May 2009 was 2500 units.The actual market size was 2650 units.
Sales Mix Variance
Choose one answer.

a. 1690 Fav
b. 850Fav
c. 850 Adv
d. 1690 Adv
Correct
Question 12
Marks: 5
KMN PLC is about to launch a new product. Facilities will allow the company to produce up to 20 unit per week
The
marketing department has estimated that at a price of Rs 8000/= no unit will be sold, but for each Rs 150 reductio
additional
unit per week will be sold. Fixed costs associated with manufacture are expected to be Rs 12000/= per week.
Variable costs are expected to beRs, 4000/= per unit for each of the first 10 units
thereafter each unit will cost Rs 400/= more than preceeing one
The most profitable level of output per week for the new product is
Choose one answer.
a. 13 Units
b. 14Units
c. 20 Unit
d. 11 Units
e. 10 Units
Incorrect
Question 13
Marks: 5
Initial capital
50,000 50,000
expenditure
Profit(loss) 1 25,000 10,000
2 20,000 10,000
3 15,000 14,000
4 10,000 26,000
10%.
What is the best project

Choose one answer.
a. X
b. X & Y Both are best
c. Y
d. None is best
Incorrect
Question 14
Marks: 5
A Plc makes a single product which it sells for Rs. 16 per unit. Fixed costs are Rs. 76,800 per
month and the product has a contribution to sales ratio of 40%.
In a period when actual sales were Rs. 224,000. A Plc's margin of saftey , in units was
Choose one answer.
a. 2000
b. 14000
c. 12000
d. 6000
e. 8000
Incorrect
Question 15
Marks: 5
X Plc operates a single retail outlet selling direct to the public. Profit statements for
October and
November are as follows:
October November
Rs Rs
Sales 80,000 90,000
Cost of sales 50,000 55,000
Gross profit 30,000 35,000
Less:
Selling and distribution 8,000 9,000
Administration 15,000 15,000
Net Profit 7,000 11,000
If the selling price is increased by 10% in December, monthly break even sales should be
Choose one answer.

a. 55,000
b. 110,000
c. 62,500
d. 50,000
Correct
Question 16
Marks: 5

Rs
100 1000
90 2000
80 3000
70 4000
60 5000
50 6000
30 7000

A division

What is the maximum profit of B division?
Choose one answer.
a. Rs,123500
b. Rs,24000
c. Rs,26000
d. Rs,22000
Correct
Question 17
Marks: 5
A product is being considered which has the following details
(a) Capital outlay Rs. 3,000,000
(b) Annual sales 500 units
(c) Salling price Rs. 2,200 per unit
(d) Variable cost Rs. 400 per unit
(e) Fixed cost Rs. 250,000 per year
The project life is 10 years and the cost of capital is 14%.
If there is a 10% adverse variance in each of the above five elements (a) to (e)
What is the new NPV
Choose one answer.
a. (819,670)
b. (1,119,670)
c. (587,375)
d. 187,576
Incorrect
Question 18
Marks: 5

Rs
100 1000
90 2000
80 3000
70 4000
60 5000
50 6000
30 7000
A division

The A division maximises the profit at an out put level of ,
Choose one answer.
a. 6,000
b. 3,000
c. 7,000
d. 5,000
Incorrect
Question 19
Marks: 5
Y plc currently sells products " P","Q" and "R" in equal quantities and at the same selling
price per unit. The contribution to sales ratio for product P is 40%: for product Q it is
50% and the total is 48%. If fixed costs are unaffected by mix and currently 20% of sales, the
effect of changing the product mix to:
P 40%
Q 25%
R 35%
is that the total contribution /total sales ratio change to

Choose one answer.
a. 47.4%
b. 45.3%
c. 48.4%
d. 68.4%
e. 27.4%
Incorrect
Question 20
Marks: 5
A fertiliser is made by mixing and processing three ingredients, A, B,and C, the standard cost data
are as follows
Standard standard
ingredient
Proportion cost Rs
P 50% 20
N 40% 25
Q 10% 42
A standard process loss of 5%

is anticipated
For the last 3month the out put was 93.1 tonnes and input were as follows:
Actual
Actual
ingredient Price
Usage
Rs
16 per
P 49 tonnes
tonne
27 per
N 43tonnes
tonne
48 per
Q 8 tonnes
tonne
Choose one answer.

a. 29 FAV
b. 24.2 FAV
c. 48.4 ADV
d. 122.75 ADV
A fertiliser is made by mixing and processing three ingredients, A, B,and C, the standard cost data are as follows
ingredient Standard Proportion s

P 50%
N 40%
Q 10%

ingredient Actual Usage A

P 49 tonnes 1
N 43tonnes 2
Q 8 tonnes 4
Material price variance
Choose one answer.

a. 24.2 FAV
b. 19.4 FAV
c. 42.6 ADV
d. 62 FAV
Incorrect
Question 2
Marks: 5
Rambo Ltd manufactures three products ,the selling price and cost details of which are given below:
Products DA DB DC
Selling price per unit 75 95 95
Direct material(Rs 5 per
2Kg 1 kg 3 kg
kg)
Normal loss-Input material 30% 20% 5%
Direct labour (Rs 4 per 16 24 20
hour)
Variable overhead 8 12 10
Fixed Overhead 24 36 30
In a period when direct materials are restricted in supply, the most and the least profitable uses of direct materials
Most Profitable Least Profitable

i DB DA
ii DB DC
iii DC DA
iv DC DB
v DA DB
Choose one answer.
a. iii
b. i
c. iv
d. v
e. ii
Correct
Question 3
Marks: 5

Probability 0.2 0.5
Rs 000 Rs 000 Rs 000
Project-A 500 470
Project-B 400 550
Project-C 450 400
Project-C 360 400
Project-D 600 500
Choose one answer.

a. Rs 5,000
b. Rs 56,000
c. Rs 180,000
d. Rs 40,000
e. Nil
Correct
Question 4
Marks: 5
The following information has been extracted from the record of NYK chemical
company
which manuactures product "H"
standard price : Rawmaterial P- Rs 2 per kg

Rawmaterial Q- Rs 10 per kg
standard Mix : P : 75%, Q 25% (by weight)
standard Yield : 90%
for the last month , the actual cost, usage and out put were as follows
used : 2200 kg of P , costing Rs, 4,650/=

800 kg of Q , costing Rs, 7,850/=
Output 2850 kg of H
Choose one answer.

a. 400ADV
b. All answers are wrong
c. 667FAV
d. 267FAV
Incorrect
Question 5
Marks: 5
The following information has been extracted from a local biscuite
company
which manufactures high protein biscuite
standard price : Rawmaterial P1- Rs 5 per kg

Rawmaterial P2- Rs 4 per kg
standard Mix : P1 : 60%, P2 ,30% , P3 10% (by weight)

Output 3600kg of high protein biscuite
Choose one answer.

a. 25 ADV
b. 125 ADV
c. 50FAV
d. 150 ADV
Correct
Question 6
Marks: 5
ADB plc is organised on a divisional basis. Two of the divisions are the Components division and the Product
division
The Components division produces components P, Q, R. The Components are sold to a wide variety of customer
including
Product division at the same price. The Product division uses one unit of component P,Q,and R respectively in pr
K,L and M.
Recently Product division has been force to work below capacity because of limits in the supply of components
from Component division. ADB's Managing Director has therefore directed component divisions to sell all its ou
product division.
Price , Cost and output data for Components division are as follows
Componant P Q R
Rs Rs Rs
Unit Selling Price 20 20 30
Unit variable cost 7 12 10
Period Fixed Cost 50000 100000 75000
Components division has a maximum out put capacity 50,000 of which each component must number at least
10,000.
Price , Cost and output data for Products division are as follows
Products K L M
Rs Rs Rs
Period Fixed Cost 100,000 100,000 200,000
product division has been forced to operate at 20,000 units below capacity because of lack of components
coming
from Component division. Product division is able to sell all the out put it can produce at the current selling
price.
Assuming all components are supplied to Product division, What is the different component and product output m
that would maximise the profit of :Products division
P/K Q/L R/M

1 30,000 10,000 10,000
2 10,000 30,000 10,000
3 10,000 10,000 30,000
4 all answers are wrong
Choose one answer.
a. 1
b. 3
c. 4
d. 2
Incorrect
Question 7
Marks: 5
Year Hence
Years 1 2
Net present value should be

i 1425 1285
ii 6632 6312
iii 5412 5673
iv 5136 5510
Choose one answer.

a. ii
b. i
c. iv
d. iii
Incorrect
Question 8
Marks: 5
products,
below.

Budgeted annual
100,000 100,000 50,000
production(units)
are as follows:

Choose one answer.
a. 6.52
b. 6734
c. 50000
d. 0.5
Incorrect
Question 9
Marks: 5
A company is considering investing in a new project that would have a five year life span. The invest ment value
expected annual net inflow is Rs 1.5 million in every year end.The expected inflation will be 5% in each of the n
years.
the cost of capital of the company is
10%.
The real discount rate should be

Choose one answer.
a. 4.76%
b. 15.00%
c. 10.00%
d. 6.85%
Incorrect
Question 10
Marks: 5
annum.
Choose one answer.

a. 5,800
b. 5,000
c. 4,000
d. 6,000
Correct
Question 11
Marks: 5
The
additional
Choose one answer.
a. 20 Unit
b. 11 Units
c. 14Units
d. 13 Units
e. 10 Units
Incorrect
Question 12
Marks: 5
by the formula
y= Rs 10,000 + Rs 0.25 x
in hours.
a = 100,000 + 30b
the month number.
Choose one answer.
a. Rs. 39,000
b. Rs. 35,000
c. Rs.36,000
d. Rs. 40,000
Incorrect
Question 13
Marks: 5
Choose one answer.
a. Rs. 255,000
b. Rs. 196,000
c. Cannot be determined from the above
d. Rs. 200,000
e. Rs. 253,000
Incorrect
Question 14
Marks: 5

Choose one answer.

b. 20.5 ADV
c. 110.25FAV
d. 110FAV
Incorrect
Question 15
Marks: 5
P Ltd has 3 division the information for the year ended December 2009 is as follows
Rs (000)
Division A B C
Sales 350 420 150
Variable Costs 280 210 120
Total fixed cost is Rs 262,500/= . General fixed overhead are allocated to each division on the basis of sales reve
60% of the total fixed costs incurred by the company are specific to each division been split equally between them
Using relevent costing techniques, which divisions should remain open if P Ltd wishes to maximise profits?
Choose one answer.
a. A and B only
b. B only
c. A, B and c
d. B and C only
Incorrect
Question 16
Marks: 5
P 40%
Q 25%
R 35%

Choose one answer.
a. 47.4%
b. 27.4%
c. 68.4%
d. 48.4%
e. 45.3%
Incorrect
Question 17
Marks: 5
below.

Probability 0.2 0.5
Rs 000 Rs 000 Rs 000
Project-A 500 470
Project-B 400 550
Project-C 450 400
Project-C 360 400
Project-D 600 500
Choose one answer.

a. Rs 56,000
b. Rs 5,000
c. Rs 180,000
d. Rs 40,000
e. Nil
Correct
Question 18
Marks: 5
Product P Product Q
Sales(units) 80,000 20,000
at Rs 273,000.
Choose one answer.
a. Rs. 606,667
b. Rs. 570,000
c. Rs. 728,000
d. Rs. 679,467
Incorrect
Question 19
Marks: 5
Taxi Service is trying to determine the optimal replacement policy for its fleet of hiring vehicles. The total
purchase price of the fleet is Rs 220,000,million. The running cost and scrap values of the fleet at the end of each
Year 1 2 3 4 5
Running cost (Rs Million) 110000 132000 154000 165000 176000
Scrap value(Rs Million) 121000 88000 66000 55000 25000
The cost of capital is 12% per annum
The Taxi Service should replace its fleet of vehicles at the end of
Choose one answer.
a. Year-1
b. Year-4
c. Year-2
d. Year-3
e. Year-5
Correct
Question 20
Marks: 5
production
are
Year Hence
Years 1 2 3 4
year
year
basis.
Choose one answer.

a. It is recommended to purchased both the models
b. It is recommended to purchased the'standard' model
c. It is recommended to purchased the'Ordinary model
d. Cannot be determined from the above information
Apsolt Plc has two division A and B. One of the products manufactured by the A division is intermediate produc
This intermediate product for which there is no external market and it is transferred to B division where it is cove
for sale in the external market. One unit of the intermediate product is used in the production of the final product
The expected units of the final products which the B division estimates ,it can sell at various selling prices are as

Rs
100 1000
90 2000
80 3000
70 4000
60 5000
50 6000
30 7000

A division
The B division maximises the profit at an out put level of ,
Choose one answer.

a. 6,000
b. 7,000
c. 2,000
d. 3,000
Incorrect
Question 2
Marks: 5
Year Hence
Years 1 2

i 1425 1285
ii 6632 6312
iii 5412 5673
iv 5136 5510
Choose one answer.

a. iv
b. i
c. ii
d. iii
Correct
Question 3
Marks: 5
The cost of capital is 12% of the company and consideing Rs 10 million investment.The expected inflation will b
years.
Net present value of this project can be calculated

by
Choose one answer.
a. By discounting real cash flows at tax adjusted discounting rate.
b. By discounting real cash flows at risk and time adjusted discounting rate.
c. By discounting real cash flows at the real discounting rate.
d. By discounting real cash flows at the nominal discounting rate.
Incorrect
Question 4
Marks: 5


Choose one answer.

b. 112.5FAV
c. 97.75 FAV
d. 100FAV
Correct
Question 5
Marks: 5
P Limited used an incremental budgeting approch to setting its budgets for the
year ending 30 June 2009.
The budget for the company's power costs was determined by analysing the past
relationship between cost and activity levels and then adjusting for
inflation of 6%.
The relationship between monthly cost and activity levels, before adjusting for the
6% inflation, was found to be:
Y = Rs(14,000 + 0.0025x2 )
where Y = total cost; and
x = machine hours
In April 2009, the number of machine hours was 1525 and the actual cost incurred
was Rs. 16,423. The total power cost variance to be reported in nearest to
Choose one answer.
a. Rs.3740 (F)
b. Rs. 4580 (F)
c. Rs.4391(A)
d. Rs.3691(F)
Incorrect
Question 6
Marks: 5
projects.
success.
success to 95%.
received.
Choose one answer.
a. Rs50000
b. Rs17500
c. Rs32500
d. Rs29000
Correct
Question 7
Marks: 5
1.15kg

12000
Material used,
2840kg of A
1210kg of B
860kg of C

processed.
Overhead Capacity variance
Choose one answer.

a. 1108 FAV
b. 508FAV
d. 600 FAV
Incorrect
Question 8
Marks: 5
The following details relates to product Rotomax
Level of activity (units) 1000 unit 2000 unit
Rs Rs
Direct materials 4.00 4.00
Direct labour 3.00 3.00
Production overhead 3.50 2.50
Selling overhead 1.00 0.50
Total 11.50 10.00
The total fixed cost and variable cost per unit are
Total fixed
Variable cost per unit Rs.
cost Rs.
1 2000 1.50
2 2000 7.00
3 2000 8.50
4 3000 7.00
5 3000 8.50
Choose one answer.

a. 3
b. 1
c. 2
d. 4
e. 5
Incorrect
Question 9
Marks: 5

Rs
100 1000
90 2000
80 3000
70 4000
60 5000
50 6000
30 7000
A division

Choose one answer.

a. 4,000
b. 7,000
c. 5,000
d. 3,000
Correct
Question 10
Marks: 5
X Plc operates a single retail outlet selling direct to the public. Profit statements for October and
October November
Rs Rs
Sales 80,000 90,000
Less:
Net Profit 7,000 11,000
Total annual fixed cost is

Choose one answer.
a. 50,000
b. 110,000
c. 300,000
d. 62,500
Correct
Question 11
Marks: 5
annum.
What would the annual profit be with the machine if the output/sales remain at 6,000 units
Choose one answer.

a. 8,000
b. 50,000
c. 60,000
d. 10,000
Correct
Question 12
Marks: 5
Products P Q R
Rs Rs Rs
Material 22 31 38
Labour 15 20 18
Variable Overhead 12 15 18
Bottle neck resource time 10 10 15

(minutes)
Assuming that labour is a unit variable cost, if the products are ranked according to their contribution to sales rat
Choose one answer.
a. S
b. R
c. p
d. Q
Correct
Question 13
Marks: 5
P 40%
Q 25%
R 35%

Choose one answer.
a. 48.4%
b. 68.4%
c. 27.4%
d. 47.4%
e. 45.3%
Correct
Question 14
Marks: 5
The following information has been extracted from the record of NYK chemical company


Output 2850 kg of H
Material cost variance

Choose one answer.
a. 500 ADV
b. 100 ADV
d. 167 FAV
Correct
Question 15
Marks: 5
Products P Q R S
Rs Rs Rs Rs
Labour 15 20 18 24

(minutes)
Assuming that labour is a unit variable cost, if the budgeted unit sales are in the ratio P:2 Q:3 R:3, Z :
4 and
monthly fixed costs are budgeted to be Rs 15000, the number of units of P that would be sold at the budgeted bre
Choose one answer.

a. 283
b. 106
c. 142
d. 145
Incorrect
Question 16
Marks: 5
sold
rate
The net present value of the project( to the nearest Rs500)
Choose one answer.

a. 5000
b. 3500
c. 4500
d. -3400
Correct
Question 17
Marks: 5


Choose one answer.

a. 135 ADV
b. 50FAV
c. 25 ADV
d. 155ADV
Correct
Question 18
Marks: 5
division
including
division.
Componant P Q R
Rs Rs Rs
10,000.
Products K L M
Rs Rs Rs
coming
price.
that would maximise the profit of :Component division
P/K Q/L R/M
1 10,000 10,000 30,000
2 30,000 10,000 10,000
3 10,000 30,000 10,000
Choose one answer.
a. 2
b. 3
c. 4
d. 1
Incorrect
Question 19
Marks: 5
KMP Ltd is highly geared company that wishes to expand its operations. Six possible capital
investemnts have been identified. But the company only has access to a total of Rs 620,000.
The projects are not divisible and may not be postponed until the future period. After
the
project end it is unlikely that similar investment oppertunaties will
occur.
Expected Net Cash Inflows (including salvage value)
Project Year1 (Rs) 2 (Rs) 3 (Rs) 4 (Rs) 5 (Rs) Initial Out

P-1 70,000 70,000 70,000 70,000 70,000
P-2 75,000 87,000 64,000
P-3 48,000 48,000 63,000 73,000
P-4 62,000 62,000 62,000 62,000
P-5 40,000 50,000 60,000 70,000 40,000
P-6 35,000 80,000 82,000
Projects P-1 and P-5 are matually exclusive. All projects are believed to be of similar risk to
the company’s existing capitital investments.
Any surplus funds may be invested in the money markets to earn a return of 9% per
year.
The maney market may be assumed to be an efficient market.
KMP's cost of capital is 12% per year.
Maximum NPV if the company have adequate funds

Choose one answer.
a. 27009
b. 21519
c. 24413
d. 32415
e. 19637
Incorrect
Question 20
Marks: 5
Choose one answer.
d. By discounting nominal cash flows at the nominal discounting rate.
Marks: 5
annum.

If the ABC Limites expected to invest Rs. 80,000 for a new advertising campaign what
is the additional quantity should be made and sold by the ABC Ltd to accept the new
decision.
Choose one answer.
a. 14,000
b. 12,000
c. 13,000
d. 8,000
Correct
Question 2
Marks: 5
FBP Ltd produces PPN. The standard ingredients of 1kg of

PPN are :
1.15kg
Production of 4000kg of PPN was budgeted for January 2010. Since the Production of PPN is
entirely automated
Production cost s attributed to PPN production comprise only direct materials

and overheads.
Overheads were budgeted for January 2010 for PPN production

operation as follows.
Recept of deliveries from

Rs
suppliers
(standard delivery quantity is

4000
460 kg)
Despatch of goods to
customers

8000
100kg)
12000
In January 2010 , 4200kg of PPN were produced and cost details were
as follows:
Material used,
2840kg of A
1210kg of B
860kg of C
Twelve supplier deliveries(cost Rs 4,800) were made, and 38 customer despatches (cost
Rs 7,800) were
processed.
Choose one answer.
a. 235 ADV
b. 190ADV
c. 341 ADV
d. 457 FAV
Correct
Question 3
Marks: 5
Punchee PLC is considering which of two mutually exclusive

projects
cost of capital is 10% and net after tax cash flows of the projects
are as follows
Project A-Rs, Project B-Rs,
Initial capital
(200000) (200000)
expenditure
Year 1 35000 218000
Year 2 80000 10000
Year 3 90000 10000
Year 4 75000 4000
Year 5 20000 3000
What project should be selected
i A
ii B
iii A&B
iv None
Choose one answer.
a. iii
b. i
c. ii
d. iv
Correct
Question 4
Marks: 5
DPL Ltd can choose from five mutually exclusive projects. The projects will each last for one year o
cash inflows
will b determined by the prevailing market conditions. The forcast annual cash inflows and their a
shown below.
Probability 0.2 0.5 0.3
Rs 000 Rs 000 Rs 000
Project-A 500 470 550
Project-B 400 550 570
Project-C 450 400 475
Project-C 360 400 420
Project-D 600 500 425

Choose one answer.
a. Nil
b. Rs 56,000
c. Rs 5,000
d. Rs
180,000
e. Rs 40,000
Correct
Question 5
Marks: 5
ABC Ltd manufactures four products. The unit cost , selling price and bottleneck resource details p
Products P Q R
Rs Rs Rs
Material 22 31 38
Labour 15 20 18
(minutes)
Assuming that labour is a unit variable cost, if the products are ranked according to their contribu
most
Choose one answer.
a. Q
b. R
c. p
d. S
Incorrect
Question 6
Marks: 5
Rambo Ltd manufactures three products ,the selling price and cost details of which are
given below:
Products DA DB DC
Direct material(Rs 5
2Kg 1 kg 3 kg
per kg)
Normal loss-Input
30% 20% 5%
material
Direct labour (Rs 4

16 24 20
per hour)
In a period when direct materials are restricted in supply, the most and the least profitable uses o
materials are
i DB DA
ii DB DC
iii DC DA
iv DC DB
v DA DB
Choose one answer.
a. iv
b. i
c. v
d. ii
e. iii
Correct
Question 7
Marks: 5
X Plc operates a single retail outlet selling direct to the public. Profit
statements for October and
October November
Rs Rs
Sales 80,000 90,000

Less:
Net Profit 7,000 11,000
If the selling price is increased by 10% in December, monthly break even

sales should be
Choose one answer.
a. 62,500
b. 110,000
c. 50,000
d. 55,000
Correct
Question 8
Marks: 5
Woda Plc uses a standard absorption costing system. The absorption rate is based on labour hours
relates January 2010.
Budget Actual
Labour hours
10000 11135
worked
Standard hours
10000 10960
produced
Fixed overhead
Rs 45000 Rs 46200
cost
The fixed overhead capacity variance to be reported for January 2010 is nearest to Rs,
Choose one answer.
a. 4500 ADV
b. 5108 FAV
c. 5108 ADV
d. 5000 ADV
Incorrect
Question 9
Marks: 5
P 40%
Q 25%
R 35%
Choose one answer.

a. 48.4%
b. 47.4%
c. 27.4%
d. 68.4%
e. 45.3%
Correct
Question 10
Marks: 5

projects
are as follows
Initial capital
(200000) (200000)
expenditure
Year 1 35000 218000
Year 2 80000 10000
Year 3 90000 10000
Year 4 75000 4000
Year 5 20000 3000
What are the Accounting Rates of Returns on Average capital

invested
A B
i 20% 9%
ii 33% 16%
iii 10% 4.5%
Choose one answer.
a. iii
b. ii
c. iv
d. i
Incorrect
Question 11
Marks: 5
Standard
ingredient
Proportion
P 50%
N 40%
Q 10%
ingredient Actual Usage
P 49 tonnes
N 43tonnes
Q 8 tonnes
Choose one answer.
a. All answers are

wrong
b. 42.6 ADV
c. 42.6 FAV
d. 75.98 ADV
Incorrect
Question 12
Marks: 5
Niyo plantation is currently considering an investment that gives a possitive net

present value of
Rs, 3664 at 15% discounting rate . At a discounting rate of 20% it has a negative net
present value of Rs 21451.
What is the internal rate of return of this investment
Choose one answer.
a. 19.9%
b. 16.0%
c. 15.7%
d. 19.3%
Correct
Question 13
Marks: 5
1.15kg
Production of 4000kg of PPN was budgeted for January 2010. Since the Production of PPN is entire
12000
Material used,
2840kg of A
1210kg of B
860kg of C
Twelve supplier deliveries(cost Rs 4,800) were made, and 38 customer despatches (cost Rs 7,800
processed.
Choose one answer.
a. All answers are

wrong
b. 1108 FAV
c. 600 FAV
d. 508FAV
Correct
Question 14
Marks: 5
P Limited used an incremental budgeting approch to setting its budgets for

the
The budget for the company's power costs was determined by analysing
the past
inflation of 6%.
The relationship between monthly cost and activity levels, before adjusting
for the
Y = Rs(14,000 + 0.0025x2 )
x = machine hours
In April 2009, the number of machine hours was 1525 and the actual cost
incurred
Choose one answer.
a. Rs.3691(F)
b. Rs.4391(A)
c. Rs. 4580
(F)
d. Rs.3740 (F)
Correct
Question 15
Marks: 5
Year Hence
Years 1 2 3
i 1425 1285
ii 6632 6312
iii 5412 5673
iv 5136 5510
Choose one answer.
a. iii
b. iv
c. ii
d. i
Correct
Question 16
Marks: 5
Choose one answer.
a. 6000
b. 12000
c. 14000
d. 2000
e. 8000
Correct
Question 17
Marks: 5

Choose one answer.
a. Rs. 253,000
b. Rs. 200,000
c. Rs. 196,000
d. Cannot be determined from the

above
e. Rs. 255,000
Correct
Question 18
Marks: 5
annum.
Choose one answer.

a. 6,000
b. 5,800
c. 4,000
d. 5,000
Correct
Question 19
Marks: 5
ADB plc is organised on a divisional basis. Two of the divisions are the Components division and
the Product division
The Components division produces components P, Q, R. The Components are sold to a wide variet
customers including
Product division at the same price. The Product division uses one unit of component P,Q,and R res
products K,L and M.
Recently Product division has been force to work below capacity because of limits in the supply of
components
from Component division. ADB's Managing Director has therefore directed component divisions to
put to product division.
Componant P Q R
Rs Rs Rs

Components division has a maximum out put capacity 50,000 of which each component must
number at least 10,000.
Products K L M
Rs Rs Rs
product division has been forced to operate at 20,000 units below capacity because of lack of
components coming
from Component division. Product division is able to sell all the out put it can produce at the
current selling price.
Assuming all components are supplied to Product division, What is the different component and
product output mixes
that would maximise the profit of :ADB plc as a whole
P/K Q/L R/M
1 10,000 10,000 10,000
2 30,000 10,000 10,000
3 10,000 10,000 30,000

Choose one answer.
a. 1
b. 3
c. 4
d. 2
Correct
Question 20
Marks: 5
Apsolt Plc has two division A and B. One of the products manufactured by the A division is
external market.
This intermediate product for which there is no external market and it is transferred to B
products
for sale in the external market. One unit of the intermediate product is used in the produc
The expected units of the final products which the B division estimates ,it can sell at vario
Rs
100 1000
90 2000
80 3000
70 4000
60 5000
50 6000
30 7000
A division
The transfer price of the intermediate product has been set at 35/= based on a full cost plus a ma
What is the maximum profit of A division?
Choose one answer.
a. Rs,84000
b.
Rs,112000
c. Rs,123500
d.
Rs,108000
Incorrect
Marks: 5
Choose one answer.
a. Cannot be determined from the

above
b. Rs. 253,000
c. Rs. 255,000
d. Rs. 200,000
e. Rs. 196,000
Correct
Question 2
Marks: 5
NPV and IRR of two mutually exclusive projects which have same life time and initial capital
are as follows
the cost of capital is 10%
Project-1 Project-2
NPV 87,654 57,213
IRR 17% 21%
Choose one answer.

a. Project-2
b. Project-1
c. None
d. project 1 &
2
Correct
Question 3
Marks: 5
external market.
products
Rs
100 1000
90 2000
80 3000
70 4000
60 5000
50 6000
30 7000
A division
Choose one answer.
a. 3,000
b. 7,000
c. 4,000
d. 5,000
Correct
Question 4
Marks: 5
external market.
products

Rs
100 1000
90 2000
80 3000
70 4000
60 5000
50 6000
30 7000
A division
Choose one answer.
a. 7,000
b. 6,000
c. 5,000
d. 3,000
Correct

Question 5
Marks: 5
regarding
three of its key customer is available:
ROSI SOSI TOSI
Gross Margin (Rs) 1100000 1750000 1200000
General dministration cost

40000 80000 30000
(Rs)
Unit sold 1750 2000 1500
as follows
Order Processing Rs 100 per order placed
Dispatch Costs Rs 100 per order placed
Billing and Collections Rs 175 per invoice raised
ROSI SOSI TOSI
1 1 st 2 nd 3 rd
2 2 nd 1 st 3 rd
3 3 rd 1 st 2 nd
4 3 rd 2 nd 1 st
Choose one answer.
a. 4
b. 2
c. 3
d. 1
Correct
Question 6
Marks: 5
Choose one answer.
a. 14000
b. 8000
c. 6000
d. 2000
e. 12000
Correct

Question 7
Marks: 5
XYZ Company manufactures and sells two poducts P and Q . Forcast data for a
year are:
Product P Product Q
Sales(units) 80,000 20,000
Annual fixed cost are

estimated at Rs 273,000.
Choose one answer.
a. Rs.
606,667
b. Rs.
679,467
c. Rs.
728,000
d. Rs.
570,000
Correct
Question 8
Marks: 5

projects
are as follows
Initial capital
(200000) (200000)
expenditure
Year 1 35000 218000
Year 2 80000 10000
Year 3 90000 10000
Year 4 75000 4000
Year 5 20000 3000
i A
ii B
iii A&B
iv None
Choose one answer.
a. i
b. iii
c. iv
d. ii
Correct
Question 9
Marks: 5
given below:
Products DA DB DC
2Kg 1 kg 3 kg
per kg)
Normal loss-Input
30% 20% 5%
material
Direct labour (Rs 4

16 24 20
per hour)
materials are
i DB DA
ii DB DC
iii DC DA
iv DC DB
v DA DB
Choose one answer.
a. ii
b. iii
c. i
d. v
e. iv
Correct
Question 10
Marks: 5
Z Limited has fixed costs of Rs. 60,000 per annum. It manufactures a single product which
it sells for Rs 20 per unit. Its contribution to sales ratio is 40%.
Z Limited's breakeven point in unit is:
Choose one answer.
a. 1800
b. 5000
c. 3000
d. 7500
e. 1200
Incorrect
Question 11
Marks: 5
The following information has been extracted from the record of NYK
chemical company

2200 kg of P , costing Rs,

used :
4,650/=
Output 2850 kg of H
Choose one answer.
a. All answers are

wrong
b. 267FAV
c. 400ADV
d. 667FAV
Correct
Question 12
Marks: 5
KMP Ltd is highly geared company that wishes to expand its operations. Six possible
capital
investemnts have been identified. But the company only has access to a total of Rs
620,000.
The projects are not divisible and may not be postponed until the future
period. After the
project end it is unlikely that similar investment

oppertunaties will occur.
Expected Net Cash Inflows (including salvage

value)
Initial Ou
Project Year1 (Rs) 2 (Rs) 3 (Rs) 4 (Rs) 5 (Rs)
(Rs)
P-1 70,000 70,000 70,000 70,000 70,000 246,000
P-2 75,000 87,000 64,000 180,000
P-3 48,000 48,000 63,000 73,000 175,000
P-4 62,000 62,000 62,000 62,000 180,000
P-5 40,000 50,000 60,000 70,000 40,000 180,000
P-6 35,000 80,000 82,000 150,000
Projects P-1 and P-5 are matually exclusive. All projects are believed to be of similar risk
to
Any surplus funds may be invested in the money markets to earn a return
of 9% per year.
The maney market may be assumed to be an efficient

market.

After selecting the combination of investments that will maximise NPV subject to a total capital ou
Rs 620,000/=
What is the return on unused funds per annum
Choose one answer.
a. 0
b. 7200
c. 452
d. 11800
e. 3960
Incorrect
Question 13
Marks: 5
Which of the following are true with regrd to expected

values ?
Expected values
a) represents the sigle most likely estimate of an out come
b) take no account of decision maker's risk
c)are reliant on the accuracy of the probability distribution
Choose one answer.
a. (a),(b) and(c)
b. (b)and( c)
only
c. (a) and( c)
only
d. (a),
and(b)only
Correct
Question 14
Marks: 5
cash inflows
probabilities are shown below.
Rs 000 Rs 000 Rs 000
Project-A 500 470 550
Project-B 400 550 570
Project-C 450 400 475
Project-C 360 400 420
Project-D 600 500 425
Choose one answer.
a. Nil
b. Rs 40,000
c. Rs 5,000
d. Rs 56,000
e. Rs
180,000
Correct
Question 15
Marks: 5
Standard
ingredient
Proportion
P 50%
N 40%
Q 10%
P 49 tonnes
N 43tonnes
Q 8 tonnes
Choose one answer.
a. 62 FAV
b. 19.4 FAV
c. 138 ADV
d. 48.4 ADV
Incorrect
Question 16
Marks: 5
Standard
ingredient
Proportion
P 50%
N 40%
Q 10%
P 49 tonnes
N 43tonnes
Q 8 tonnes
Choose one answer.
a. All answers are

wrong
b. 42.6 FAV
c. 75.98 ADV
d. 42.6 ADV
Correct
Question 17
Marks: 5
Loto Pvt Ltd mnufactures four products , A,B,C and D.The product uses a series of different machin
which causes a bottleneck.
The standard selling price and standard cost per unit for each products for the forth coming year a
A B C
Rs Rs Rs
Direct Materials 410 200 300
Labour 300 200 360
Variable Overheads 250 200 300
Profit 680 600 330

Machine Y - hour Per Unit 2 1.667 1.1667
Direct materials is the only unit level manufacturing cost, using a through put accounting approac
A B C
1 3rd 1st 2nd
2 1st 4th 3rd
3 3rd 1st 4th
4 2nd 3rd 1st
Choose one answer.
a. 2
b. 4
c. 3
d. 1
Incorrect
Question 18
Marks: 5
Woda Plc uses a standard absorption costing system. The absorption rate is based on labour hours
relates January 2010.
Budget Actual
Labour hours
10000 11135
worked
Standard hours
10000 10960
produced
Fixed overhead
Rs 45000 Rs 46200
cost
The fixed overhead capacity variance to be reported for January 2010 is nearest to Rs,
Choose one answer.
a. 4500 ADV
b. 5108 ADV
c. 5108 FAV
d. 5000 ADV
Correct
Question 19
Marks: 5
XY Plc sells three products
Product A has a contribution to sales ratio

of 30%
Product B has a contribution to sales ratio

of 20%
Product C has a contribution to sales ratio

of 25%
monthly fixed costs are Rs.

100,000
if the products are sold in the

ratio:
A:2 B:5 C:3

The monthly breakeven sales revenue , to the nearest
Rs 1, is
Choose one answer.
a. Rs.411,107
b. imposible to calculate without futher

information.
c. Rs.400,000
d. Rs.425,532
Correct
Question 20
Marks: 5
1.15kg
Production of 4000kg of PPN was budgeted for January 2010. Since the Production of PPN is entire

12000
Material used,
2840kg of A
1210kg of B
860kg of C
Twelve supplier deliveries(cost Rs 4,800) were made, and 38 customer despatches (cost Rs 7,800
processed.
Choose one answer.
a. 1108 FAV
b. 508FAV
c. All answers are

wrong
d. 600 FAV
Correct
ABC Ltd manufactures four products. The unit cost , selling price and bottleneck resource details per unit
are as follows
Products P Q R S
Rs Rs Rs Rs
Labour 15 20 18 24

(minutes)
Assuming that labour is a unit variable cost, if the products are ranked according to their contribution to
sales ratio, the most
Choose one answer.
a. R
b. S
c. p
d. Q
Incorrect
Question 2
Marks: 5
January 2010.
Budget Actual
Standard hours
10000
produced
Choose one answer.

a. 690ADV
b. 787 ADV
c. 730 ADV
d. 714ADV
Incorrect
Question 3
Marks: 5
below.

Probability 0.2 0.5
Rs 000 Rs 000 Rs 000
Project-A 500 470
Project-B 400 550
Project-C 450 400
Project-C 360 400
Project-D 600 500
Choose one answer.

a. Rs 180,000
b. Rs 40,000
c. Rs 56,000
d. Nil
e. Rs 5,000
Incorrect
Question 4
Marks: 5
by the formula
y= Rs 10,000 + Rs 0.25 x
in hours.
a = 100,000 + 30b
the month number.
Choose one answer.
a. Rs.36,000
b. Rs. 35,000
c. Rs. 39,000
d. Rs. 40,000
Incorrect
Question 5
Marks: 5
Initial capital
50,000 50,000
expenditure
Profit(loss) 1 25,000 10,000
2 20,000 10,000
3 15,000 14,000
4 10,000 26,000
10%.

X Y
i 45860 34142
ii 42315 35212
iii -39876 -45321
Choose one answer.
a. iv
b. i
c. iii
d. ii
Correct
Question 6
Marks: 5
A Ltd is planning to obtain a term loan to invest in a project. Loan amount is Rs 2,000,000/= at a fixed interest ra
annum
and should repay in end of every year by five equal annual installments with
interest.
Value of an installment should be,

Choose one answer.
a. 640,000
b. 554,785
c. 456,789
d. 400,000
e. 678,340
Correct
Question 7
Marks: 5
H Ltd makes leather purses.It has drawn up the following budget for its next financial period.
Selling price per unit Rs. 11.60
Variable production cost per unit Rs.3.40
Sales commission 5% of selling price
Fixed production cost Rs. 430,500
Fixed selling and administration costs Rs 198,150
Sales 90,000 units
The margin of safty

represents
Choose one answer.
a. 8.3% of budgeted sales
b. 11.6% of budgeted sales
c. 5.6% of budgeted sales
d. 16.8% of budgeted sales
Incorrect
Question 8
Marks: 5
projects.
success.
success to 95%.
received.
Choose one answer.
a. Rs29000
b. Rs50000
c. Rs17500
d. Rs32500
Correct
Question 9
Marks: 5
products,
below.

Budgeted annual
100,000 100,000 50,000
production(units)
are as follows:
Choose one answer.

a. 0.78
b. 0.52
c. 5.67
d. 6.52
Incorrect
Question 10
Marks: 5

Rs
100 1000
90 2000
80 3000
70 4000
60 5000
50 6000
30 7000

A division

Choose one answer.

a. 4,000
b. 7,000
c. 3,000
d. 5,000
Incorrect
Question 11
Marks: 5
annum.
Choose one answer.

a. 4,000
b. 6,000
c. 5,000
d. 5,800
Incorrect
Question 12
Marks: 5
production
are
Year Hence
Years 1 2 3 4
year
year
basis.
Choose one answer.

a. It is recommended to purchased the'Ordinary model
b. Cannot be determined from the above information
c. It is recommended to purchased both the models
d. It is recommended to purchased the'standard' model
Incorrect
Question 13
Marks: 5
are :
1.15kg
follows.

4000
kg)

8000
100kg)
12000
Material used,
2840kg of A
1210kg of B
860kg of C

were
processed.
Choose one answer.

a. 341 ADV
b. 457 FAV
c. 235 ADV
d. 190ADV
Incorrect
Question 14
Marks: 5
company


Material mix variance
Choose one answer.

a. 112.5FAV
b. 12.5 ADV
d. 110.25FAV
Incorrect
Question 15
Marks: 5
Halibon PLC has three products Soft, Hard , Thick. Currently sales, cost and selling price details and processing
time requirments are as follows.
Products Soft, Hard ,

Annual sales(units) 6000
selling Price Rs 20
Unit cost 18
Processing Time 1
required per unit(hour)
The factory is working at full capacity(13500 Processing hours per year). Fixed manufacturing overheads are
absorbed in to unit costs by a charge of 200% of variable cost. This procedure fully absorbs the fixed manufactur
Assuming that
i) Processing time can be switched from one product line to another,
ii)The demand at current selling price is ,
Soft, Hard ,
11000 8000
and
Selling prices are not to be altered.
The best production programme for the next operating period should be ?
Soft, Hard , Thick
1 11000 8000 2000
2 1500 8000 2000
3 6000 6000 750
4 11000 500 1500
5 11000 0 1250
Choose one answer.

a. 2
b. 1
c. 4
d. 3
e. 5
Incorrect
Question 16
Marks: 5


Choose one answer.

b. 20.5 ADV
c. 110.25FAV
d. 110FAV
Incorrect
Question 17
Marks: 5
Baltex PLC is planning to invest funds in financially viable projects. The weighted average cost of capital of the
Projects IRR
A 20%
B 11%
C 30%
D 14%
E 8%

Choose one answer.
a. B,E
b. A,C,D
c. A,B,C,D,E
d. A,B,C,D
e. E,D,B
Correct
Question 18
Marks: 5
AB plc has recently developed a new product.
The nature of AB Plc 's work is
repetitives, and it is usual for there to be an
80% learning effect when a new
The time taken for the the first unit was 22 minutes.
product is developed.
Assuming
that an 80 % learning effect applies, the time
to be taken for the fourth unit is
nearest to
Choose one answer.
a. 15.45 minutes
b. 14.08 minutes
c. 10.91 minutes
d. 9.97 minutes
e. 16.60 minutes
Correct
Question 19
Marks: 5
annum.
If the machine is acquired how many unit must be made and sold to maintain the profit at its
existing level
Choose one answer.

a. 48,000 units
b. 6,000units
c. 5,000 units
d. 5,800 units
Incorrect
Question 20
Marks: 5
follows
Products P Q R S
Rs Rs Rs Rs
Labour 15 20 18 24

(minutes)
If the company adopted throughput accounting and the products were ranked according to product return per min
be
Choose one answer.

a. Q
b. S
c. R
d. P
regarding
three of its key customer is
available:
ROSI SOSI TOSI
Gross
1100000 1750000 1200000
Margin (Rs)
General
dministration cost 40000 80000 30000
(Rs)
Unit sold 1750 2000 1500
as follows

Rs 100 per order
Order Processing
placed
Rs 100 per order
Dispatch Costs
placed
Billing and Rs 175 per invoice
Collections raised
ROSI SOSI TOSI

1 1 st 2 nd 3 rd
2 2 nd 1 st 3 rd
3 3 rd 1 st 2 nd
4 3 rd 2 nd 1 st
Choose one answer.
a. 1
b. 4
c. 3
d. 2
Incorrect
Question 2
Marks: 5
Choose one answer.
a. By discounting nominal cash flows at the nominal discounting rate.
d. By discounting real cash flows at tax adjusted discounting rate.
Correct
Question 3
Marks: 5
Product P Product Q
Sales(units) 80,000 20,000
at Rs 273,000.
Choose one answer.
a. Rs. 570,000
b. Rs. 679,467
c. Rs. 728,000
d. Rs. 606,667
Incorrect
Question 4
Marks: 5
sold
rate
If the annual inflation rate is now projected to be 4%, the maximum monetory cost of capital for this project
to remain viable, is (to the nearest 0.5%)
Choose one answer.

a. 14.0%
b. 12.0%
c. 14.5%
d. 13.5%
e. 16.0%
Incorrect
Question 5
Marks: 5
January 2010.
Budget Actual
Standard hours
10000
produced
Choose one answer.

a. 730 ADV
b. 714ADV
c. 690ADV
d. 787 ADV
Correct
Question 6
Marks: 5
1.15kg


12000
Material used,
2840kg of A
1210kg of B
860kg of C

processed.
Overhead Expenditure variance
Choose one answer.

a. 600ADV
b. 190ADV
c. 300FAV
d. 400 ADV
Incorrect
Question 7
Marks: 5
are :
1.15kg
follows.

4000
kg)

8000
100kg)
12000
Material used,
2840kg of A
1210kg of B
860kg of C

were
processed.
Choose one answer.

a. 341 ADV
b. 457 FAV
c. 190ADV
d. 235 ADV
Correct
Question 8
Marks: 5
Baltex PLC is planning to invest funds in financially viable projects. The
weighted average cost of capital of the
Projects IRR
20
A
%
11
B
%
30
C
%
14
D
%
E 8%

Choose one answer.
a. A,B,C,D
b. E,D,B
c. A,B,C,D,E
d. B,E
e. A,C,D
Correct
Question 9
Marks: 5
Nazdaz Ltd regularly uses material K and currently has in stock 600kg , for which it paid Rs 1500 two month ego
If this were to be sold as raw material it could be sold today for Rs 2 per kg and 5% trade discount also approved
You are aware that the material can be bought on the open market for Rs 3.25 per kg but it must be purchased in
What is the relevent cost of 600kg of material K to be used in a job for a customer.
Choose one answer.
a. 1200
b. 3250
c. 1140
d. 1950
e. 1325
Correct
Question 10
Marks: 5
Year Hence
Years 1 2

i 2 4
ii 4 3
iii 3 4
iv 3 3
Choose one answer.
a. iv
b. i
c. ii
d. iii
Incorrect
Question 11
Marks: 5
A company P sells 3 products P,Q and R. Sales information for May 2009 was as
follows
Budeted Sales Budgeted Price Actual Sales Actual Price

Units per unit-Rs units per unit-Rs
P 100 100 108 104
Q 150 50 165 47
R 250 35 221 37
The expected size of the market for May 2009 was 2500 units.The actual market size was 2650 units.
Sales Mix Variance
Choose one answer.

a. 1690 Fav
b. 850Fav
c. 850 Adv
d. 1690 Adv
Correct
Question 12
Marks: 5
The
additional
Choose one answer.
a. 13 Units
b. 14Units
c. 20 Unit
d. 11 Units
e. 10 Units
Incorrect
Question 13
Marks: 5
Initial capital
50,000 50,000
expenditure
Profit(loss) 1 25,000 10,000
2 20,000 10,000
3 15,000 14,000
4 10,000 26,000
10%.
What is the best project
Choose one answer.

a. X
b. X & Y Both are best
c. Y
d. None is best
Incorrect
Question 14
Marks: 5
Choose one answer.
a. 2000
b. 14000
c. 12000
d. 6000
e. 8000
Incorrect
Question 15
Marks: 5
October and
October November
Rs Rs
Sales 80,000 90,000
Less:
Net Profit 7,000 11,000
If the selling price is increased by 10% in December, monthly break even sales should be
Choose one answer.

a. 55,000
b. 110,000
c. 62,500
d. 50,000
Correct
Question 16
Marks: 5

Rs
100 1000
90 2000
80 3000
70 4000
60 5000
50 6000
30 7000

A division

What is the maximum profit of B division?
Choose one answer.
a. Rs,123500
b. Rs,24000
c. Rs,26000
d. Rs,22000
Correct
Question 17
Marks: 5
A product is being considered which has the following details
(a) Capital outlay Rs. 3,000,000
(b) Annual sales 500 units
(c) Salling price Rs. 2,200 per unit
(d) Variable cost Rs. 400 per unit
(e) Fixed cost Rs. 250,000 per year
The project life is 10 years and the cost of capital is 14%.
If there is a 10% adverse variance in each of the above five elements (a) to (e)
What is the new NPV
Choose one answer.
a. (819,670)
b. (1,119,670)
c. (587,375)
d. 187,576
Incorrect
Question 18
Marks: 5

Rs
100 1000
90 2000
80 3000
70 4000
60 5000
50 6000
30 7000

A division

Choose one answer.
a. 6,000
b. 3,000
c. 7,000
d. 5,000
Incorrect
Question 19
Marks: 5
P 40%
Q 25%
R 35%

Choose one answer.
a. 47.4%
b. 45.3%
c. 48.4%
d. 68.4%
e. 27.4%
Incorrect
Question 20
Marks: 5
are as follows
Standard standard
ingredient
Proportion cost Rs
P 50% 20
N 40% 25
Q 10% 42
A standard process loss of 5%
is anticipated
Actual
Actual
ingredient Price
Usage
Rs
16 per
P 49 tonnes
tonne
27 per
N 43tonnes
tonne
48 per
Q 8 tonnes
tonne
Choose one answer.

a. 29 FAV
b. 24.2 FAV
c. 48.4 ADV
d. 122.75 ADV
A fertiliser is made by mixing and processing three ingredients, A, B,and C, the standard cost data are as follows
ingredient Standard Proportion s

P 50%
N 40%
Q 10%

ingredient Actual Usage A
P 49 tonnes 1
N 43tonnes 2
Q 8 tonnes 4
Choose one answer.

a. 24.2 FAV
b. 19.4 FAV
c. 42.6 ADV
d. 62 FAV
Incorrect
Question 2
Marks: 5
Rambo Ltd manufactures three products ,the selling price and cost details of which are given below:
Products DA DB DC
Direct material(Rs 5 per
2Kg 1 kg 3 kg
kg)
Normal loss-Input material 30% 20% 5%
Direct labour (Rs 4 per
16 24 20
hour)
In a period when direct materials are restricted in supply, the most and the least profitable uses of direct materials

i DB DA
ii DB DC
iii DC DA
iv DC DB
v DA DB
Choose one answer.
a. iii
b. i
c. iv
d. v
e. ii
Correct
Question 3
Marks: 5

Probability 0.2 0.5
Rs 000 Rs 000 Rs 000
Project-A 500 470
Project-B 400 550
Project-C 450 400
Project-C 360 400
Project-D 600 500
Choose one answer.

a. Rs 5,000
b. Rs 56,000
c. Rs 180,000
d. Rs 40,000
e. Nil
Correct
Question 4
Marks: 5
The following information has been extracted from the record of NYK chemical
company


Output 2850 kg of H
Choose one answer.

a. 400ADV
b. All answers are wrong
c. 667FAV
d. 267FAV
Incorrect
Question 5
Marks: 5
The following information has been extracted from a local biscuite
company
which manufactures high protein biscuite
standard price : Rawmaterial P1- Rs 5 per kg

standard Mix : P1 : 60%, P2 ,30% , P3 10% (by weight)

Output 3600kg of high protein biscuite
Choose one answer.

a. 25 ADV
b. 125 ADV
c. 50FAV
d. 150 ADV
Correct
Question 6
Marks: 5
division
including
K,L and M.
product division.
Componant P Q R
Rs Rs Rs
10,000.
Products K L M
Rs Rs Rs
coming
price.
that would maximise the profit of :Products division
P/K Q/L R/M

1 30,000 10,000 10,000
2 10,000 30,000 10,000
3 10,000 10,000 30,000
Choose one answer.
a. 1
b. 3
c. 4
d. 2
Incorrect
Question 7
Marks: 5
Year Hence
Years 1 2

i 1425 1285
ii 6632 6312
iii 5412 5673
iv 5136 5510
Choose one answer.

a. ii
b. i
c. iv
d. iii
Incorrect
Question 8
Marks: 5
products,
below.

Budgeted annual
100,000 100,000 50,000
production(units)
are as follows:
Choose one answer.

a. 6.52
b. 6734
c. 50000
d. 0.5
Incorrect
Question 9
Marks: 5
A company is considering investing in a new project that would have a five year life span. The invest ment value
expected annual net inflow is Rs 1.5 million in every year end.The expected inflation will be 5% in each of the n
years.
the cost of capital of the company is
10%.
The real discount rate should be

Choose one answer.
a. 4.76%
b. 15.00%
c. 10.00%
d. 6.85%
Incorrect
Question 10
Marks: 5
annum.
Choose one answer.

a. 5,800
b. 5,000
c. 4,000
d. 6,000
Correct
Question 11
Marks: 5
The
additional
Choose one answer.
a. 20 Unit
b. 11 Units
c. 14Units
d. 13 Units
e. 10 Units
Incorrect
Question 12
Marks: 5
by the formula
y= Rs 10,000 + Rs 0.25 x
in hours.
a = 100,000 + 30b
the month number.
Choose one answer.
a. Rs. 39,000
b. Rs. 35,000
c. Rs.36,000
d. Rs. 40,000
Incorrect
Question 13
Marks: 5
Choose one answer.
a. Rs. 255,000
b. Rs. 196,000
c. Cannot be determined from the above
d. Rs. 200,000
e. Rs. 253,000
Incorrect
Question 14
Marks: 5



Choose one answer.
b. 20.5 ADV
c. 110.25FAV
d. 110FAV
Incorrect
Question 15
Marks: 5
Rs (000)
Division A B C
Sales 350 420 150
Total fixed cost is Rs 262,500/= . General fixed overhead are allocated to each division on the basis of sales reve
60% of the total fixed costs incurred by the company are specific to each division been split equally between them
Using relevent costing techniques, which divisions should remain open if P Ltd wishes to maximise profits?
Choose one answer.
a. A and B only
b. B only
c. A, B and c
d. B and C only
Incorrect
Question 16
Marks: 5
P 40%
Q 25%
R 35%

Choose one answer.
a. 47.4%
b. 27.4%
c. 68.4%
d. 48.4%
e. 45.3%
Incorrect
Question 17
Marks: 5
below.

Probability 0.2 0.5
Rs 000 Rs 000 Rs 000
Project-A 500 470
Project-B 400 550
Project-C 450 400
Project-C 360 400
Project-D 600 500
Choose one answer.

a. Rs 56,000
b. Rs 5,000
c. Rs 180,000
d. Rs 40,000
e. Nil
Correct
Question 18
Marks: 5
Product P Product Q
Sales(units) 80,000 20,000
at Rs 273,000.
Choose one answer.
a. Rs. 606,667
b. Rs. 570,000
c. Rs. 728,000
d. Rs. 679,467
Incorrect
Question 19
Marks: 5
Taxi Service is trying to determine the optimal replacement policy for its fleet of hiring vehicles. The total
purchase price of the fleet is Rs 220,000,million. The running cost and scrap values of the fleet at the end of each
Year 1 2 3 4 5
Running cost (Rs Million) 110000 132000 154000 165000 176000
Scrap value(Rs Million) 121000 88000 66000 55000 25000
The cost of capital is 12% per annum
The Taxi Service should replace its fleet of vehicles at the end of
Choose one answer.
a. Year-1
b. Year-4
c. Year-2
d. Year-3
e. Year-5
Correct
Question 20
Marks: 5
production
are
Year Hence
Years 1 2 3 4
year
year
basis.
Choose one answer.

a. It is recommended to purchased both the models
b. It is recommended to purchased the'standard' model
c. It is recommended to purchased the'Ordinary model
d. Cannot be determined from the above information
Apsolt Plc has two division A and B. One of the products manufactured by the A division is intermediate produc
This intermediate product for which there is no external market and it is transferred to B division where it is cove
for sale in the external market. One unit of the intermediate product is used in the production of the final product
The expected units of the final products which the B division estimates ,it can sell at various selling prices are as

Rs
100 1000
90 2000
80 3000
70 4000
60 5000
50 6000
30 7000

A division

The B division maximises the profit at an out put level of ,
Choose one answer.

a. 6,000
b. 7,000
c. 2,000
d. 3,000
Incorrect
Question 2
Marks: 5
Year Hence
Years 1 2

i 1425 1285
ii 6632 6312
iii 5412 5673
iv 5136 5510
Choose one answer.

a. iv
b. i
c. ii
d. iii
Correct
Question 3
Marks: 5
The cost of capital is 12% of the company and consideing Rs 10 million investment.The expected inflation will b
years.
Net present value of this project can be calculated

by
Choose one answer.
b. By discounting real cash flows at risk and time adjusted discounting rate.
c. By discounting real cash flows at the real discounting rate.
d. By discounting real cash flows at the nominal discounting rate.
Incorrect
Question 4
Marks: 5

Choose one answer.

b. 112.5FAV
c. 97.75 FAV
d. 100FAV
Correct
Question 5
Marks: 5
P Limited used an incremental budgeting approch to setting its budgets for the
The budget for the company's power costs was determined by analysing the past
inflation of 6%.
The relationship between monthly cost and activity levels, before adjusting for the
Y = Rs(14,000 + 0.0025x2 )
x = machine hours
In April 2009, the number of machine hours was 1525 and the actual cost incurred
Choose one answer.
a. Rs.3740 (F)
b. Rs. 4580 (F)
c. Rs.4391(A)
d. Rs.3691(F)
Incorrect
Question 6
Marks: 5
projects.
success.
success to 95%.
received.
Choose one answer.
a. Rs50000
b. Rs17500
c. Rs32500
d. Rs29000
Correct
Question 7
Marks: 5
1.15kg


12000
Material used,
2840kg of A
1210kg of B
860kg of C

processed.
Choose one answer.

a. 1108 FAV
b. 508FAV
d. 600 FAV
Incorrect
Question 8
Marks: 5
The following details relates to product Rotomax
Level of activity (units) 1000 unit 2000 unit
Rs Rs
Direct materials 4.00 4.00
Direct labour 3.00 3.00
Production overhead 3.50 2.50
Selling overhead 1.00 0.50
Total 11.50 10.00
The total fixed cost and variable cost per unit are
Total fixed
Variable cost per unit Rs.
cost Rs.
1 2000 1.50
2 2000 7.00
3 2000 8.50
4 3000 7.00
5 3000 8.50
Choose one answer.

a. 3
b. 1
c. 2
d. 4
e. 5
Incorrect
Question 9
Marks: 5

Rs
100 1000
90 2000
80 3000
70 4000
60 5000
50 6000
30 7000

A division

Choose one answer.

a. 4,000
b. 7,000
c. 5,000
d. 3,000
Correct
Question 10
Marks: 5
X Plc operates a single retail outlet selling direct to the public. Profit statements for October and
October November
Rs Rs
Sales 80,000 90,000
Less:
Net Profit 7,000 11,000

Choose one answer.
a. 50,000
b. 110,000
c. 300,000
d. 62,500
Correct
Question 11
Marks: 5
annum.
What would the annual profit be with the machine if the output/sales remain at 6,000 units
Choose one answer.

a. 8,000
b. 50,000
c. 60,000
d. 10,000
Correct
Question 12
Marks: 5
Products P Q R
Rs Rs Rs
Material 22 31 38
Labour 15 20 18

(minutes)
Assuming that labour is a unit variable cost, if the products are ranked according to their contribution to sales rat
Choose one answer.
a. S
b. R
c. p
d. Q
Correct
Question 13
Marks: 5
P 40%
Q 25%
R 35%

Choose one answer.
a. 48.4%
b. 68.4%
c. 27.4%
d. 47.4%
e. 45.3%
Correct
Question 14
Marks: 5
The following information has been extracted from the record of NYK chemical company


Output 2850 kg of H

Choose one answer.
a. 500 ADV
b. 100 ADV
d. 167 FAV
Correct
Question 15
Marks: 5
Products P Q R S
Rs Rs Rs Rs
Labour 15 20 18 24

(minutes)
Assuming that labour is a unit variable cost, if the budgeted unit sales are in the ratio P:2 Q:3 R:3, Z :
4 and
monthly fixed costs are budgeted to be Rs 15000, the number of units of P that would be sold at the budgeted bre
Choose one answer.

a. 283
b. 106
c. 142
d. 145
Incorrect
Question 16
Marks: 5
sold
rate
The net present value of the project( to the nearest Rs500)
Choose one answer.

a. 5000
b. 3500
c. 4500
d. -3400
Correct
Question 17
Marks: 5

Choose one answer.

a. 135 ADV
b. 50FAV
c. 25 ADV
d. 155ADV
Correct
Question 18
Marks: 5
division
including
division.
Componant P Q R
Rs Rs Rs
10,000.
Products K L M
Rs Rs Rs
coming
price.
that would maximise the profit of :Component division
P/K Q/L R/M
1 10,000 10,000 30,000
2 30,000 10,000 10,000
3 10,000 30,000 10,000
Choose one answer.
a. 2
b. 3
c. 4
d. 1
Incorrect
Question 19
Marks: 5
KMP Ltd is highly geared company that wishes to expand its operations. Six possible capital
investemnts have been identified. But the company only has access to a total of Rs 620,000.
The projects are not divisible and may not be postponed until the future period. After
the
project end it is unlikely that similar investment oppertunaties will
occur.
Expected Net Cash Inflows (including salvage value)
Project Year1 (Rs) 2 (Rs) 3 (Rs) 4 (Rs) 5 (Rs) Initial Out

P-1 70,000 70,000 70,000 70,000 70,000
P-2 75,000 87,000 64,000
P-3 48,000 48,000 63,000 73,000
P-4 62,000 62,000 62,000 62,000
P-5 40,000 50,000 60,000 70,000 40,000
P-6 35,000 80,000 82,000
Projects P-1 and P-5 are matually exclusive. All projects are believed to be of similar risk to
Any surplus funds may be invested in the money markets to earn a return of 9% per
year.
The maney market may be assumed to be an efficient market.
Maximum NPV if the company have adequate funds
Choose one answer.

a. 27009
b. 21519
c. 24413
d. 32415
e. 19637
Incorrect
Question 20
Marks: 5
Choose one answer.
d. By discounting nominal cash flows at the nominal discounting rate.
October and
October November
Rs Rs
Sales 80,000 90,000
Less:
Net Profit 7,000 11,000
Choose one answer.
a. 110,000
b. 50,000
c. 300,000
d. 62,500
Incorrect
Question 2
Marks: 5
Which of the following statements about process losses are correct
A). Unit of normal loss should be valued at full cost per unit
B). Unit of abnormal loss should be valued at their scrap value
Choose one answer.
a. Both of them
b. Neither of
them
c. B Only
d. A Only
Incorrect
Question 3
Marks: 5

Choose one answer.
a. 87.5ADV
b. 25 ADV
c. All answers are

wrong
d. 72.75 FAV
Incorrect
Question 4
Marks: 5
The total manufacturing overheads cost is Rs 3.6million and the company has
chosen direct labour hours as the base of the overhead allocation. The total number
of direct labors are 120,000 for the period. The factory has 3 separate production
departments A ,B and C. The products made by the company require different
operations and some products do not pass through all three departments. The
following is a analysis of the Rs 3.6 million total manufacturing overheads and
120,000 direct labors by departments.
Departments A B C
Overheads 800,000 2,400,000 400,000
Direct labour hours 40,000 40,000 40,000
Overhead rate per 20 60 10

Direct labour hour
The blanket overhead rate that the company will use to allocate costs is ?
Choose one answer.
a. 10
b. 20
c. 60
d. 30
Departments A B C
Overheads 800000 2400000 400000
Direct labor hours 40000 40000 40000
Overhead rate per 20 60 10

Direct labor hour
The blanket overhead rate that the company will use to allocate costs is
Incorrect
Question 5
Marks: 5
HBN Ltd is considering the cost for a special order. The order would reqire 1250kgs of material Ke
and regularly used by the company. There are 265 of material Kelone in stock which cost Rs.798 l
price is 3.25 per kg.
Material Kelone is normally used to make products Wandix. Each unit of Wandix requires 3 kg of m
is costed at Rs 3 per kg, each unit of Wandix yield s a contribution of Rs 16.
The cost of material Kelone to be included in the costing of the special order is nearest to
Normal loss is 10% on input material
Choose one answer.
1. 4000
2. 4063
3. 6087
4. 4469
5. 1413
Correct
Question 6
Marks: 5
Choose one answer.

a. Rs. 200,000
b. Rs. 253,000
c. Rs. 196,000
d. Cannot be determined from the

above
e. Rs. 255,000
Correct
Question 7
Marks: 5
Year Hence
Years 1 2 3
basis.
i 2 4
ii 4 3
iii 3 4
iv 3 3
Choose one answer.
a. iii
b. i
c. iv
d. ii
Incorrect
Question 8
Marks: 5
Rs (000)
Division A B C
Sales 350 420 150

Total fixed cost is Rs 262,500/= . General fixed overhead are allocated to each division on the bas
60% of the total fixed costs incurred by the company are specific to each division been split equal
Using relevent costing techniques, which divisions should remain open if P Ltd wishes to maximise
Choose one answer.
1. B and C
only
2. B only
3. A, B and c
4. A and B
only
Incorrect
Question 9
Marks: 5
Division P transfers 100,000 units of componet to Division Q

each year.
the market price of the component is Rs 25/=
Division P 's variable cost is Rs 25/= per unit.
Division P's fixed costs are Rs 500,000/= each year.
What price would be credited toDivision P for each component that it

transfers to
Division Q
under
I ) dual pricing (based on marginal cost and market price)?

ii) two- part tariff pricing(where the divisions have agreed that the fixed fee
will Rs 200,000/=
Dual pricing Two- part tariff pricing
1 20 15
2 18 17
3 25 15
4 15 20
Choose one answer.
a. 4
b. 1
c. 3
d. 2
Correct
Question 10
Marks: 5

product Gama
X 20 5 100
Y 15 4 60
Z 10 7 70
45 230
Less:- standard 5
loss
Standard Yield 40
Deparment X 5 12 60
Deparment B 3 7 21
81 81
311
X 2240 5.3 11872
Y 2070 3.7 7659
Z 1088 7.5 8160
5398 27691
Less:- standard 920

loss
Standard Yield 4478

21151 21151
39842
What was the sales volum profit variance?
Choose one answer.
a. 1475Fav
b. 8096 Adv
c. 8057 Adv
d. 3958Adv
Incorrect
Question 11
Marks: 5
annum.
What would the annual profit be with the machine if the output/sales remain at
6,000 units
Choose one answer.
a. 60,000
b. 8,000
c. 10,000
d. 50,000
Correct
Question 12
Marks: 5
Which of the following statement about IRR and NPV are correct ?
A). An investment with a positive NPV is financially viable
B). NPV is a supirior method to IRR
C). The graph of NPV against discount rate has a negative slope for most projects
D). The NPV is the present value of expected future cash receipts less the cost of
investment.
Choose one answer.
a. A,B
b. A,B,C,D
c. A,B,C
d. A,D
Correct
Question 13
Marks: 5

product Gama
X 20 5 100
Y 15 4 60
Z 10 7 70
45 230
Less:- standard 5
loss
Standard Yield 40
Deparment X 5 12 60
Deparment B 3 7 21
81 81
311
X 2240 5.3 11872
Y 2070 3.7 7659
Z 1088 7.5 8160
5398 27691
Less:- standard 920

loss
Standard Yield 4478
21151 21151
39842
What was the labour rate variance?
Choose one answer.
a. 740Fava
b. 202 Fav
c. 525 Adv
d. 323 Adve
Incorrect
Question 14
Marks: 5
KLM Ltd has identified 3 independent projects A, B, and C It has estimated the cash
flows and positive IRRs as follows
Year A B C
Rs Rs Rs
0 -25,000 82,000 -50,000
1 - -20,000 1,27,500
2 - -20,000 78,750
3 20,000 -20,000
4 40,000 -20,000
5 -27,938 -20,000
IRRs 10% 7% 5% and 50%
If the three projects are of equivalent risk and the company aims to maximize
shareholder wealth, at which of the following cost of capital would all three projects
be deemed to be acceptable by the company.
Choose one answer.
a. 8%
b. 6%
c. 4%
d. 13%
Correct
Question 15
Marks: 5
Choose one answer.
a. By discounting nominal cash flows at the nominal

discounting rate.
b. By discounting real cash flows at risk and time adjusted

discounting rate.
c. By discounting real cash flows at tax adjusted discounting

rate.
d. By discounting nominal cash flows at the real discounting

rate.
Incorrect
Question 16
Marks: 5
given below:
Products DA DB DC
2Kg 1 kg 3 kg
per kg)
Normal loss-Input
30% 20% 5%
material
Direct labour (Rs 4

16 24 20
per hour)
materials are
i DB DA
ii DB DC
iii DC DA
iv DC DB
v DA DB
Choose one answer.
a. iii
b. iv
c. ii
d. v
e. i
Incorrect
Question 17
Marks: 5
cash inflows
shown below.
Rs 000 Rs 000 Rs 000
Project-A 500 470 550
Project-B 400 550 570
Project-C 450 400 475
Project-C 360 400 420
Project-D 600 500 425
Choose one answer.
a. Rs
180,000
b. Rs 5,000
c. Rs 40,000
d. Nil
e. Rs 56,000
Correct
Question 18
Marks: 5
KMP Ltd is highly geared company that wishes to expand its operations. Six possible
capital
investemnts have been identified. But the company only has access to a total of Rs
620,000.
The projects are not divisible and may not be postponed until the future
period. After the
project end it is unlikely that similar investment

oppertunaties will occur.
Expected Net Cash Inflows (including salvage

value)
Initial Ou
Project Year1 (Rs) 2 (Rs) 3 (Rs) 4 (Rs) 5 (Rs)
(Rs)
P-1 70,000 70,000 70,000 70,000 70,000 246,000
P-2 75,000 87,000 64,000 180,000
P-3 48,000 48,000 63,000 73,000 175,000
P-4 62,000 62,000 62,000 62,000 180,000
P-5 40,000 50,000 60,000 70,000 40,000 180,000
P-6 35,000 80,000 82,000 150,000
Projects P-1 and P-5 are matually exclusive. All projects are believed to be of similar risk
to
Any surplus funds may be invested in the money markets to earn a return
of 9% per year.
The maney market may be assumed to be an efficient

market.
After selecting the combination of investments that will maximise NPV subject to a total capital ou
Rs 620,000/=
What is the return on unused funds per annum
Choose one answer.
a. 11800
b. 7200
c. 3960
d. 452
e. 0
Incorrect
Question 19
Marks: 5
Bengemin Co Pvt is a manufacture sport equipment and is planning to launch a

revelutionary new style of sporty excersise machine. The company has
commissioned market research to establish possible demand for the excersise
machine and the following information has been obtained. If the price is set at Rs
425/= demand is expected to be 1000 units , at Rs 500/= it will be 730 units and at
Rs 600/= it will be 420 units. Variable costs are estimated at either Rs, 170, Rs 210,
Rs 260. A decision need to be made on what price to charge.
What is the Maximax regret Price Criterion ?
Choose one answer.
a. Rs 550.00
b. Rs
462.50
c. Rs 425.00
d. Rs
512.50
Correct
Question 20
Marks: 5
Baltex PLC is planning to invest funds in financially viable projects. The weighted average cost of
capital of the
Projects IRR
A 20%
B 11%
C 30%
D 14%
E 8%
Choose one answer.
a. E,D,B
b. A,B,C,D,E
c. B,E
d. A,C,D
e. A,B,C,D
Correct

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/ ► Strategic Management Accounting - December 2010

Strategic Management Accounting - December 2010

Started on Tuesday, 16 November 2010,

Completed Tuesday, 16 November 2010,

Time taken 52 mins 6 secs

Grade Not Eligible

Gihan Ltd is a manufacturing company manufactures a product Gama. Following

Materials Materials kilos Price Per Kg-Rs Total Rs

Labour Hours Rate Per hour Total Rs

X 2240 5.3 11872

Y 2070 3.7 7659

Z 1088 7.5 8160

Less:- standard 920

Standard Yield 4478

Labour Hours Rate Per hour Total Rs

Department X 750 12.7 9525

Department B 404 6.5 2626

Choose one answer.

Which one of the following is not a cause of variances

Choose one answer.

a. Actual resource usage is different planned resource usage.

b. Budgeted prices are different from actual prices

c. Actual production volume is different from budgeted

d. Forecast prices are different from Actual prices

Marks for this submission: 5/5.

X has a contribution to sales ratio of 40 % , whereas that of product Y is 50%. Annaul

fixed costs are estimated to be Rs 120,000

Choose one answer.

e. Cannot be determined from the

Marks for this submission: 0/5.

The following information has been extracted from a plastic manufacturing

which manufactures a plastic component

standard price : Rawmaterial M1- Rs 5 per kg

Rawmaterial M2- Rs 4 per kg

Rawmaterial M3- Rs 3 per kg

Standard Proportion M1 : 60%, M2 ,30% , M3 10% (by weight)

A standard process loss of 10% is anticipated

used : 2450 kg of P1 , costing Rs, 12,200/=

1150 kg of P2 , costing Rs, 4700/=

425 kg of P3 costing Rs 1250/=

Output 3645 Kg of plastic component

scrap sales value is Rs. 0.90 per unit

Material Yield variance

b. All answers are

Marks for this submission: 0/5.

Units Degree of Value

Opening Work in 100 60% Rs 680

Completed during 900

Closing Work in 150 48%

Cost per equivalent unit of production for last month Rs12/=

Choose one answer.

Marks for this submission: 0/5.

details of which are set

Product X Product Y Product Z

Batch size (units) 100 50 25

Machine set-ups per batch 3 4 6

Machine set-ups per batch 2 1 1

Machine set-ups per batch 2 3 3

Machine set-ups costs Rs. 150,000

Purchasing of materials Rs.70,000

Processing Rs. 80,000