INTERM EDIATE EXAMIN ATION
June 2025 P-8(CA)
Syllabus 2022
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All working notes must from part of the answer.
Section-A
Answer Question No. 1, which is Compulsory.
1. Choose the correct answer from the given alternatives (You may write only the Roman
numeral and the alphabet chosen for your answer): 2x15=30
(i) Which of the following statements is true?
(A) Batch costing is a variant of job costing.
(B) Job cost sheet may be used for estimating profit of jobs.
(C) Job costing cannot be used in conjunction with marginal costing.
(D) In cost plus contracts, the contractor runs a risk of incurring a loss.
(ii) Which of the following is applicable for Cost Control?
(A) It is a corrective function.
(B) It challenges the standards set.
(C) It ends when targets are achieved.
(D) It is related with the future.
(iii) Which of the following budget recognises the difference between fixed, semi-fixed
and variable cost and is designed to change in relation to the change in level of
activity?
(A) Master Budget
(B) Flexible Budget
(C) Operational Budget
(D) Activity Budget
(iv) Under net realisable value method of apportionment of joint costs to joint products
the selling and distribution cost is ____. '
(A) Added to joint cost.
(B) Deducted from sales value.
(C) Added to sales value.
(D) Deducted from further processing cost.
37499 Please Turn Over
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P-8(CA) (2)
Syllabus 2022
(v) Which of the following is not a potential benefit of using a budget?
(A) More motivated managers
(B) Improved inter-departmental communication
(C) Enhanced coordination of firm activities
(D) More accurate external financial statements
(vi) A & Co. calculates the prices of jobs by adding overheads to the
prime cost and
adding 30% to total costs as a profit margin. Job No. LM-24 was sold for~
6,760 and
incurred overheads off 2,776. The prime cost of the job is _ _ __
(A) f 1,956
(B) ~ 2,424
(C) f 3,984
(D) f 5,200
(vii) In a Non-integrated Accounting System, what is the primary objec
tive of Overhead
Ledger?
(A) Managing generai ledger entries
(B) Recording direct costs
(C) Controlling indirect costs
(D) Maintaining financial transactions
(viii) Navi & Co. pays f 8 per unit royalty to the designer of a product which
it manufactures
and sells. The royalty charge would be classified in the comp any's
accounts as
(A) Direct expense
(B) Indirect expense
(C) Production overhead
(D) Selling overhead
(ix) Blue Star Transport Co. operates two trucks. During a particular
period, the two
trucks travelled a total of 25,000 kms carrying goods. The average load
was 3 tonnes
per journey. In total they made 20 journeys. Total costs were~ 2,25,000.
In this case,
the average cost per tonne-km is _ __
(A) f 2.22
(B) f 6.67
(C) f 3.00
(D) f 9.00
(x) Which Section of the Companies Act, 2013 deals with the adoption
and adherence to
Cost Accounting Standards (CAS)?
(A) Section 13~
(B) Section 148
(C) Section 154
(D) Section 182
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(3) P-8(CA)
Syllabus 2022
(xi) Jolly Ltd. manufactures a student level fountain pen and sale each pen @ t 40 per
unit. The variable cost of each fountain pen is t 22 and the fixed cost for a month is
t 16,000. The company wishes to earn a target profit of~ 20,000 for the month.
In the above situation, sales volume (in units) required is _ _ __
(A) 1,500 units
(B) 1,800 units
(C) 2,000 units
(D) 2,400 units
(xii) Which of the following would not be used to estimate standard direct material price?
(A) Purchase contracts already agreed
(B) The forecast movement of prices in the market
(C) The availability of bulk purchase discounts
(D) Performance standards in operation
(xiii) During August 2024, there were 21 working days of 8 hours per day in a firm. The
workforce consists of 20 workers and due to a machine breakdown, 480 hours were
recorded as idle time during the month.
During August, the workforce produced 10,800 units of output. The expected time
per unit of output is 15 minutes (i.e. 0.25 hours). The Production Volume Ratio of
the firm for the month of August 2024 is _ __
(A) 80.36%
(B) 85.71 %
(C) 89.73%
(D) 93.75%
(xiv) The operations to produce a unit of product R require 9 hours. Budgeted idle time
of 10% of total hours paid for is to be incorporated into the standard times for all
product. The wage rate is ~16 per hour. The standard labour cost of one unit of
product R is _ _ __
(A) t 129.60
(B) ~ 144.00
(C) ~ 158.40
(D) ~ 160.00
(xv) In an integrated accounting system, the accounting entry for indirect wages incurred
would be - - - - -
(A) Debit Wages Control Account and Credit Work-in-progress Account
(B) Debit Overheads Control Account and Credit Wages Control Account
(C) Debit Work-in-progress Account and Credit Wages Control Account
(D) Debit Wages Control Account and Credit Overheads Control Account
P-8(CA) (4)
Syllabus 2022
Section-B
Answer any five questions from question number 2 to 8.
Each question carries 14 marks. 14x5=70
2. (a) Standard Engineering Limited (SEL) manufactures and sells standard size of machine.
The SEL submits the following details for the accounting year ended on 31st March,
2025:
Particulars Amount~)
Sales for the year 90,00,000
Purchases of raw material for the year 34,00,000
Direct labour 16,00,000
Inventories at the beginning of the year:
Work-in-progress 1,20,000
Finished goods 3,60,000
Raw materials inventory:
At the beginning of the year 80,000
At the end of the year 1,30,000
Inventories at the end of the year:
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Work-in-progress 1,80,000
Finished goods 2,20,000
Factory overheads were 60% of direct labour cost.
Administration overheads were 6% of sales and not related to the production activity.
Selling & distribution overheads were 12% of sales.
You are required to:
Prepare a Cost and Profit Statement for the year ended on 31st March, 2025. 7
(b) Babbu Small Industries employ two workmen, Vikas and Shiv. Both works to
produce the same product, with the help of same raw material and also with the same
normal wage rate. Vikas is paid bonus according to the Rowan System, while Shiv is
paid bonus according to the Halsey System. The time allowed to make the product is
50 hours. Vikas takes 30 hours while Shiv takes 40 hours to complete the product.
The factory overhead rate is f 10 per man-hour actually worked. The factory cost of
the product for Vikas is f 14,560 and for Shiv it is~ 15,200.
You are required to:
(i) Find the cost of materials;
(ii) Prepare a Statement comparing the factory cost of the product as made by the
two workmen. 7
(5) P-8(CA)
Syllabus 2022
3. (a) Following details are taken from the books of ABC Ltd. for the month of October,
2024:
Indirect Materials: Production Departments: X ?19,000; Y ?24,000; Z ?4,000;
Service Departments: Maintenance ?30,000; Stores ?8,000.
Indirect Wages: Production Departments: X ?18,000; Y ?22,000; Z ?6,000;
Service Departments: Maintenance ?20,000; Stores ?13,000.
Other Expenses: Power and Light ?1,20,000; Rent and Rates ?56,000; Insurance of
Assets ?20,000;
Meal Charges ?60,000; Depreciation @ 6% p.a. on capital value of assets.
Departmental Data
Production Departments Service Departments
Items
X y z Maintenance Stores
Area (Sq. Ft.) 4,000 4,000 3,000 2,000 1,000
Capital Value of Assets ~) 20,00,000 24,00,000 16,00,000 12,00,000 8,00,000
Kilowatt Hours 2,000 2,200 800 750 250
Number of Employees 180 240 60 80 40
Service rendered by Maintenance Department to Production Departments:
X 50%; Y 30%; Z 20%.
Service rendered by Stores Department to Production Departments:
X 40%; Y 40%; Z 20%.
You are required to:
Prepare a Departmental Distribution Summary showing apportion of costs of
Service Departments to the Production Departments and the Total Overheads of the
Production Departments. 7
(b) A summary of the Profit & Loss Account of ABC Ltd. for the year ended on 31st
March, 2025 is as follows:
Particulars Amount~) Particulars Amount~
To Materials consumed 5,48,000 By Sales (24,000 units) 12,00,000
To Direct wages 3,02,000 By Finished stock (800 units) 32,000
To Factory overheads 1,66,000 By Work-in- progress:
To Administration overheads 76,480 Material 12,800
To Selling and distribution 90,000 Direct wages 7,200
overheads
To Preliminary expenses 12,000 Factory overheads 4s000 24,000
By Dividend received 3,60Q_
To Net Profit 65,120
12,59,600 12,59,600
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P-8(CA) ( 6)
Syllabus 2022
The company manufactures a standard unit. The cost accounting records of the
company shows the following information:
(i) Factory overheads have been charged at 20% on prime cost.
(ii) Administration overheads have been recovered at f 3 per finished unit.
(iii) Selling and distribution overheads have been recovered at f 4 per unit sold.
(iv) Work-in-progress in valued at prime cost.
Prepare:
(I) A Costing Profit and Loss Account indicating Net Profit.
(II) A statement reconciling the profit as disclosed by cost accounts with that shown
in financial accounts. 7
4. (a) Component 'Diamond' is made entirely in Machine Shop No. XYZ-11. Material cost
is ~ 10 per component and each component talces 6 minutes to produce. The machine
operator is paid f12 per hour and machine hour rate is ~2 per hour.
The setting up of the machine to produce the component 'Diamond' talces 3 hours for
the operator.
Required:
Prepare a Cost Sheet showing the setting up costs and the production costs, both in
total (i.e. for the batch) and per component, assuming a batch size of:
(i) 100 components,
(ii) 150 components, and
(iii) 200 components. 7
(b) PQR Ltd. undertook a contract on 1st April, 2023 for the construction of a building at
a contract price off 45,00,000. During the first year 2023-24, the following amounts
were spent against which a sum of f 16,87,500 (representing 90% of the work
certified) was received by the contractor:
(t)
Materials used 7,87,500
Wages paid to the workers 4,50,000
Overhead expenses 1,12,500
During the second year 2024-25, the contractor spent the following amounts:
(f)
Materials used 11,25,000
Wages paid to the workers 9,00,000
Overhead expenses 2,25,000
In the second year, the contract was completed and a sum of~ 26,25,000 was received
by the contractor.
Required:
Prepare the Contract Account and the Contractee' s Account for both the years and
determine the profits. 7
( 7) P-B(CA)
Syllabus 2022
5. (a) Moon Ltd. is the market leader in the manufacture and sale of specialized product
"OPT". In manufacturing the main product 'GPT', Moon Ltd. processes the resulting
waste into two by-products X and Y. From the records of the company, you receive
the information as given below:
(i) Total cost up to the point of separation: f 1,36,000
Particulars GPT~ X~) Y~)
(ii) Sales realization (all output) 3,28,000 32,000 48,000
(iii) Cost incurred after separation - 9,600 14,400
(iv) Estimated profit on sales value - 20% 30%
(v) Selling expenses estimated (on sales value) 20% 20% 20%
Required:
Prepare Comparative Profit and Loss Statement using the Reverse Cost Method for
by-products. 7
(b) QTR Ltd., which is following standard costing system, furnishes the following
information regarding production budget for December, 2024:
Product X =40,000 units and Product Y = 80,000 units
One standard hour represents 10 units of Product X and 8 units of Product Y.
The standard wage rate per hour is t 0.50.
During the month, 15,000 hours were paid (@ t 0.60 per hour) which included
700 unproductive hours due to unbudgeted holidays and also loss of production of
500 units of Product X due to machine breakdown.
Actual production for the month was 48,000 units of X and 76,000 units of Y.
Required to calculate the following Labour Variances:
(i) Direct Labour Rate Variance
(ii) Direct Labour Idle Time Variance
(iii) Direct Labour Efficiency Variance
(iv) Direct Labour Total Variance 7
6. Man Limited manufactures and sells Product-X. Following data are available in this
regard for the year ended March, 2025:
Particulars ~ per unit
Raw materials 20.00
Conversion Cost (variable) 15.00
Dealer's Margin 5.00
Selling Price 50.00
Fixed Cost: ~ 8,00,000
Present Sales: 1,50,000 units
Capacity Utilization: 60 per cent
P-8(CA) (8)
Syllabus 2022
There is an acute competition in the 1narket. Extra efforts are necessary to sell the
product.
Following suggestions have been made for increasing sales:
(i) To reduce selling price by 4 per cent.
(ii) To increase dealer's margin by 20 per cent over the existing rate.
Required:
If the company desires to maintain the present level of profit in the next year, which
of the
above two suggestions would you recommend? Give your reasons.
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7. (a) Sun & Moon Ltd. manufactures two produ cts-Pr oduct Rand Product S.
During the
year ending on 31st March, 2025, it is expected to s~ll 30,000 kg of Product Rand
1,50,000 kg of Product S @ ~ 120 and~ 64 per kg respectively.
The direct materials X, Y and Z are mixed in the proportion of 4:4:2 in the manufacture
of Product R and in the proportion of 3:5:2 in the manufacture of Produ
ct S.
The actual and budget inventories for the year are as follows:
Opening Expected Closing Anticipated Cost
Particulars
Stock(kg) Stock (kg) perkg ro
Material X 4,500 3,600 20
Material Y 4,000 7,500 16
Material Z 22,000 24,500 12
Product R 1,800 2,800 -
Product S 4,200 4,700 -
You are required to:
Prepare the Production Budget and Materials Budget showing the purchase cost
of
materials for the year ending 31st March, 2025.
7
(b) What are Direct Expenses as defined in CAS-10? Also discuss the general princip
les
of measurement of direct expenses as per CAS-10.
7
8. Answer the following questions:
(a) What are the essentials of a good Cost Accounting System (any four)?
4
(b) What is ABC Analysis? State the main advantages (any three) of ABC Analys
is. 5
(c) State the objectives and scope of Cost Accounting Standard-8 (CAS-8) on
'Cost of
Utilities' .
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