Professional Documents
Culture Documents
ISBN : 978-93-5034-029-5
Appendix
ICWA Inter Gr. II
(Solution upto June 2011 & Questions of Dec. 2011
included)
Paper - 8 : Cost and Management Accounting
Chapter-1 : Cost Concept and Classification of Cost
2011 - June [4] (a)
Answer :
Management Accounting : management accounting is concerned
with accounting information which is useful for the management. It
is the presentation of accounting information in such a way as to
assist the management in the creation of policy and day to day
operation of the undertaking It includes the methods and concepts
necessary for effective planning, for choosing between alternative
business actions and for control through the evaluation and
interpretation of performance. It embraces within its fold several
subjects and cost accounting is one of them.
2011 - June [5] (b)
Answer :
Chargeable Expenses:
II-2
II-3
Merit Rating
II-4
Working Note
Contribution = 83,03,300
= ` 16,60,660
II-5
D
9,000 18,000
6,000
3,000
Direct Materials (`)
9,000
4,500
3,000
1,500
Direct Labour (`)
300
150
100
50
Direct Labour Hours
5
10
15
30
Machine Hours
You are required to prepare a statement showing the allocation of
factory overheads (which amounted to ` 1,08,000) using the basis
of allocation as under:
(i) Direct Material Cost
(ii) Direct Labour Cost
(iii) Direct Labour Hours
(iv) Machine Hours
Out of these four bases of allocation, which you prefer and why?
(2 + 2 + 2 + 2 + 2 = 10 marks)
Chapter-6 : Job, Batch and Contract
2011 - Dec [7] (b) Distinguish between Job costing and Process
costing.
(5 marks)
2011 - Dec [8] Write short notes on the following :
(c) Cost-plus Contract;
(5 marks)
Chapter-7 : Process Costing, Joint Products and By-Products
2011 - June [6] (b)
Answer :
Difference between By-Products and Joint Products
Basis
Joint products
By-products
1. Meaning
impact
II-6
1,20,000
96,000
80,000
64,000
3,00,000
2,40,000
X
Y
Z
89,000
49,600
1,41,600
Profit/
Loss
(`)
70,000 19,000
1,600
48,000
1,60,000 (18,400)
33,740
16,500
10,500
60,740
0.0225
0.0110
0.0070
0.0405
21,000
21,000
0.0140
0.0140
II-7
0.0205
0.0750
= 1020.58
II-8
Present
Level
Proposal (i)
Proposal (ii)
(a)
Quantities in
Units
(c)
70,000
50,000
70,000
75,000
75
40,000 @ ` 75
30,000 @ ` 55
70
67
64
50
50
50
50
50
10 lakh
11.90
10.5
Selling price
per unit (`)
Variable cost
per
unit (`)
Total
(b)
40,000
(40,000 25)
25) +
1.5 lakh (30,000
5) = 11.50
(50,000
20)
Lakhs
(70,000
17)
II-9
lakhs
(75,000
14)
II-10
II-11
C.
D.
E.
F.
G.
80%
`
90%
`
Variable overhead:
10,500 12,000 13,500
(i) Indirect Labour
4,000
4,500
3,500
(ii) Indirect Material
Variable portion of Semi- variable
overhead:
12,250 14,000 15,750
(i) Power
800
900
700
(ii) Repair & maintenance
26,950 30,800 34,650
Total Variable (a)
Fixed portion of semi variable
overhead;
6,000
6,000
6,000
(i) Power
1,200
1,200
1,200
(ii) Repair & maintenance
Fixed overhead
11,000 11,000 11,000
(i) Depreciation
3,000
3,000
3,300
(ii) Insurance
10,000 10,000 10,000
(iii) Others
31,200 31,200 31,200
Total Fixed(b)
58,150 62,000 65,850
Total Over head[(a) + (b)]
1,08,500 1,24,000 1,39,500
Estimated direct Cost
Overhead recovery rate per direct
0.5359 0.5000 0.4720
labour hrs.
Working Notes:
Variable overhead
(i) Indirect labour
12,000
= ` 10,500
12,000
= ` 13,500
4,000
= ` 3,500
4,000
= ` 4,500
20,000
= ` 14,500
= ` 12,250
14,000
= ` 15,750
II-12
2,000
= ` 800
800
= ` 700
800
= ` 900
= 1,08,500 hrs
1,24,000
= 1,39,500 hrs
II-13
Siliguri
800 units at ` 200 each
750 units at ` 200 each
600 units at ` 300 each
750 units at ` 300 each
II-14
II-15
2011 - Dec [1] {C} (a) Match the statement in Column I with the
appropriate statement in Column II:
Column I
Column II
(i) Performance of Public
(a) Measures Divisional
Enterprises
Performance
(ii) Residual Income
(b) Purchase Order Processed
(iii) Cost Driver
(c) Future Costs affected by
decision making
(iv) Point Rating
(d) Shows profitability and
capacity utilization
(v) Relevant Cost
(e) Job Evaluation
(1 5 = 5 marks)
(b) State whether the following statements are True or False:
(i) Incentive systems benefit only workers.
(ii) Service departments do not render services to each other.
(iii) Contract costing is only a variant of Job costing.
(iv) Differential costing and Marginal costing mean the same
thing.
(v) Standards are arrived at based on past performance.
(1 5 = 5 marks)
(c) Fill-up the blanks suitably:
(i) In absorption costing ________ cost is added to inventory.
(ii) ________ becomes more effective in a firm with the use of
standard costing.
(iii) In make or buy decision, it is profitable to buy from outside
only when the suppliers price is below the firms own
_________.
(iv) A cost which does not involve any cash outflow is called
______.
(v) ________ costing reduces the possibility of under pricing.
(1 5 = 5 marks)
(d) In the following cases, one out of four answers is correct. You
are required to indicate the correct answer and give brief workings:
(i) XYZ Co. Ltd. is having 400 workers at the beginning of the
year and 500 workers at the end of the year. During the year
20 workers were discharged and 15 workers left the
company. The Labour Turnover rate under separation
method is:
(a) 22.20%
(b) 7.78%
(c) 4.00%
(d) 14.40%
(iii)
(iv)
(v)
II-16
(2 5 = 10 marks)