Question

Calculate annual requirement of material If Economic Order Quantity = 625 units Cost of placing an order = ₹30
Carrying cost per unit per annum = 5% Purchase price per unit = ₹6​

Answer 1

Explanation:

Answer to PTP_Intermediate_Syllabus 2012_Jun2014_Set 1

Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 1

Paper – 8: Cost Accounting & Financial Management

Time Allowed: 3 Hours Full Marks: 100

Section A-Cost Accounting

(Answer Question No. 1 which is compulsory and any three from the rest in this section)

Working Notes should form part of the answer.

Question.1

(a) Standard time is 60 hours and guaranteed time rate is `50 per hour. Under Rowan plan,

what is the amount of wages, if job is completed in 48 hours? [2]

Answer:

Earnings under Rowan Plan

=Hours worked × Rate per hour + (Time taken/Time allowed × Rate per hour)

=48 × 50 + (48/60 ×12 × 50)

=`2,880

(b) If the overhead absorption rate is `130 per hour, the production hours are 300 and the

under absorption being ` 3,000. What would be the actual expenses? [2]

Answer:

Actual Expenses = (300 hours x `130)+ `3,000

= `(39,000+3,000)

= `42,000

(c) For a particular item of store, the following information are available:

Re-order quantity=1,200

Maximum consumption per week=300 units

Normal consumption per week=200 units

Re-order period=2 to 4 weeks

What will be the re-order level? [2]

Answer:

Re-order level = Maximum Consumption × Maximum Reorder Period

= 300 × 4

= 1,200 units

(d) After inviting tenders for supply of raw materials, two quotations are received as follows-

Supplier A `2.20 per unit, Supplier B `2.10 per unit plus `2,000 fixed charges irrespective of

the units ordered.

What will be the ordered quantity for which the purchase price per unit will be same?

[2]

Answer:

Let the no. of units to be ordered be x.

At x unit the cost of Supplier A is 2.20x and of Supplier B is 2.10x + 2,000

Now, if, 2.10x = 2.10x + 2,000

Or, 0.10x = 2,000

Or, x = 2,000/0.10 = 20,000

At 20,000 order quantity the purchase price will be same.

(e) Purchase of materials is $20,000 [Forward contract rate $44.30; but $44.50 on the date of

importation]; Freight inward `50,000; Cash discount `15,000; CENVAT Credit refundable

`17,000. Compute the landed cost of material as per CAS-6.