For 20,000 units - Raw Material - Rs 75, Direct Labour - Rs 20, Direct exp - Rs 25, Variable Overheads - R$ 15, Fixed overheads - Rs 20, Fixed admin overheads - Rs 10, Selling exp (10% Fixed) - R$ 15, Distribution exp (25% Fixed) - R$ 20. Hence TOTAL VARIABLE DISTRIBUTION EXP FOR 15,000 UNITS WILL BE © 225000 © 150000 © 250000 © 300000
Answers
Answer:
PAPER – 3: COST AND MANAGEMENT ACCOUNTING
Question No. 1 is compulsory.
Attempt any four questions out of the remaining five questions.
In case, any candidate answers extra question(s)/ sub-question(s) over and above the required
number, then only the requisite number of questions first answered in the answer book shall be
valued and subsequent extra question(s) answered shall be ignored.
Working notes should form part of the answer
Question 1
Answer the following:
(a) Surekha Limited produces 4,000 Litres of paints on a quarterly basis. Each Litre requires 2 kg of
raw material. The cost of placing one order for raw material is ` 40 and the purchasing price of
raw material is ` 50 per kg. The storage cost and interest cost is 2% and 6% per annum
respectively. The lead time for procurement of raw material is 15 days.
Calculate Economic Order Quantity and Total Annual Inventory Cost in respect of the above
raw material.
(b) The following data is presented by the supervisor of a factory for a Job:
` per unit
Direct Material 120
Direct Wages @ ` 4 per hour
(Departments A-4 hrs, B-7 hrs, C-2 hrs & D-2 hrs) 60
Chargeable Expenses 20
Total 200
Analysis of the Profit and Loss Account for the year ended
31st March, 2019
Material 2,00,000 Sales 4,30,000
Direct Wages
Dept. A 12,000
Dept. B 8,000
Dept. C 10,000
Dept. D 20,000 50,000
Special Store items 6,000
© The Institute of Chartered Accountants of India
44 INTERMEDIATE (NEW) EXAMINATION: NOVEMBER, 2019
Overheads
Dept. A 12,000
Dept. B 6,000
Dept. C 9,000
Dept. D 17,000 44,000
Gross Profit c/d 1,30,000
4,30,000 4,30,000
Selling Expenses 90,000 Gross Profit b/d 1,30,000
Net Profit 40,000
1,30,000 1,30,000
It is also to be noted that average hourly rates for all the four departments are similar.
Required:
(i) Prepare a Job Cost Sheet.
(ii) Calculate the entire revised cost using the above figures as the base.
(iii) Add 20% profit on selling price to determine the selling price.
(c) A Factory produces two products, 'A' and 'B' from a single process. The joint processing costs
during a particular month are :
Direct Material `30,000
Direct Labour ` 9,600
Variable Overheads ` 12,000
Fixed Overheads ` 32,000
Sales: A- 100 units@ ` 600 per unit; B – 120 units @ ` 200 per unit.
I. Apportion joints costs on the basis of:
(i) Physical Quantity of each product.
(ii) Contribution Margin method, and
II. Determine Profit or Loss under both the methods.
(d) When volume is 4,000 units; average cost is ` 3.75 per unit. When volume is 5,000 units,
average cost is ` 3.50 per unit. The Break-Even point is 6,000 units.
Calculate: (i) Variable Cost per unit (ii) Fixed Cost and (iii) Profit Volume Ratio.
(4 x 5 = 20 Marks)