Mock Test Paper - Series I: March, 2024

Date of Paper: 12 March, 2024

Time of Paper: 2 P.M. to 5 P.M.
INTERMEDIATE: GROUP – II
PAPER – 4: COST AND MANAGEMENT ACCOUNTING
Answers are to be given only in English except in the case of the candidates who
have opted for Hindi medium. If a candidate has not opted for Hindi medium his/ her
answer in Hindi will not be valued.
Working notes should form part of the answer.
Time Allowed – 3 Hours Maximum Marks – 100
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs) for
30 marks
3. Part II comprises questions which require descriptive type answers for 70
marks.
PART I – Case Scenario based MCQs
Part I is compulsory.
Write the most appropriate answer to each of the following multiple-choice
questions by choosing one of the four options given. All questions are
compulsory.
1. Arnav Ltd. manufactures chemical solutions used in paint and adhesive
products. Chemical solutions are produced in different processes. Some of
the processes are hazardous in nature which may results in fire accidents.
At the end of the last month, one fire accident occurred in the factory. The fire
destroyed some of the paper files containing records of the process
operations for the month.
You being an associate to the Chief Manager (Finance), are assigned to
prepare the process accounts for the month during which the fire occurred.
From the documents and files of other sources, following information could be
retrieved:
Opening work-in-process at the beginning of the month was 500 litres, 80%
complete for labour and 60% complete for overheads. Opening work-in-
process was valued at ` 2,78,000.
Closing work-in-process at the end of the month was 100 litres, 20% complete
for labour and 10% complete for overheads.
Normal loss is 10% of input (fresh) and total losses during the month were
800 litres partly due to the fire damage.
Output transferred to finished goods was 3,400 litres.
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Losses have a scrap value of ` 20 per litre.
All raw materials are added at the commencement of the process.
The cost per equivalent unit is ` 660 for the month made up as follows:
Raw Material ` 300 Labour ` 200 Overheads ` 160
The company uses FIFO method to value work-in-process and finished goods.
The following information are required for managerial decisions:
i. How much quantity of raw material introduced during the month?
A. 4,300 Litres
B. 3,500 Litres
C. 4,200 Litres
D. 3,800 Litres
ii. The Quantity of normal loss and abnormal loss are:
A. Normal loss- 380 litres & Abnormal loss- 420 litres
B. Normal loss- 350 litres & Abnormal loss – 450 litres
C. Normal loss- 430 litres & Abnormal loss – 370 litres
D. Normal loss- 420 litres & Abnormal loss – 380 litres.
iii. Value of raw material added to the process during the month is:
A. ` 10,10,000
B. ` 10,33,600
C. ` 10,18,400
D. ` 10,20,000
iv. Value of labour and overhead in closing Work-in-process are:
A. ` 4,000 & ` 1,600 respectively
B. ` 20,000 & ` 16,000 respectively
C. ` 16,000 & ` 9,000 respectively
D. ` 13,200 & ` 6,600 respectively
v. Value of output transferred to finished goods is:
A. ` 22,57,200
B. ` 20,06,400
C. ` 22,44,000
D. ` 19,27,200 (5 x 2 = 10 Marks)

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2. M Ltd. is producing a single product and may expand into product diversification
in next one to two years. M Ltd. is amongst a labour-intensive company where
majority of processes are done manually. Employee cost is a major cost
element in the total cost of the company. The company conventionally uses
performance parameters Earnings per manshift (EMS) to measure cost paid
to an employee for a shift of 8 hours, and Output per manshift (OMS) to
measure an employee’s output in a shift of 8 hours.
The Chief Manager (Finance) of the company has emailed you few information
related to the last month. The email contains the following data related to the last
month:
During the last month, the company has produced 2,34,000 tonnes of output.
Expenditures for the last months are:
(i) Raw materials consumed ` 50,00,000
(ii) Power consumed 13,000 Kwh @ ` 8 per Kwh to run the machines for
production.
(iii) Diesels consumed 2,000 litres @ ` 93 per litre to run power generator
used as alternative or backup for power cuts.
(iv) Wages & salary paid – ` 6,40,00,000
(v) Gratuity & leave encashment paid – ` 64,20,000
(vi) Hiring charges paid for HEMM- ` 30,00,000. HEMM are directly used in
production.
(vii) Hiring charges paid for cars used for official purpose – ` 66,000
(viii) Reimbursement of diesel cost for the cars – ` 22,000
(ix) The hiring of cars attracts GST under RCM @5% without credit.
(x) Maintenance cost paid for weighing bridge (used for weighing of final
goods at the time of dispatch) – ` 12,000
(xi) AMC cost of CCTV installed at weighing bridge (used for weighing of
final goods at the time of dispatch) and factory premises is ` 8,000 and
` 18,000 per month respectively.
(xii) TA/ DA and hotel bill paid for sales manager- ` 36,000
(xiii) The company has 1,800 employees works for 26 days in a month.
You are asked to calculate the followings:
i. What is the amount of prime cost incurred during the last month:
A. ` 7,54,20,000
B. ` 7,57,10,000
C. ` 7,56,06,000
D. ` 7,87,10,000
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 ii. What is the total and per shift cost of production for last month:
A. ` 7,87,10,000 and ` 336.37 respectively
B. ` 7,87,10,000 and ` 1,681.84 respectively
C. ` 7,87,28,000 and ` 1,682.22 respectively
D. ` 7,87,28,000 and ` 336.44 respectively
iii. What is the value of administrative cost incurred during the last month:
A. ` 92,400
B. ` 88,000
C. ` 1,48,400
D. ` 1,44,000
iv. What is the value of selling and distribution cost and total cost of sales:
A. ` 36,000 & ` 7,88,76,400 respectively
B. ` 56,000 & ` 7,88,76,400 respectively
C. ` 36,000 & ` 7,88,72,000 respectively
D. ` 56,000 & ` 7,88,72,000 respectively
v. What is the value EMS and OMS for the last month:
A. ` 1,504.70 & 5 tonnes respectively
B. ` 1,367.52 & 5 tonnes respectively
C. ` 1,504.70 & 4.37 tonnes respectively
D. ` 1,367.52 & 4.37 tonnes respectively (5 x 2 = 10 Marks)
3. The wages budget for the last period was based on a standard repair time of
30 minutes per unit and a standard wage rate of ` 50 per hour. The actual
data for the last period are as follows:
Number of units = 30,000
Labour rate variance = 7,500 (A)
Labour efficiency variance = Nil
From the information find out the actual rate of wages per unit
A. ` 50
B. ` 25.50
C. ` 50.50
D. ` 25.25 (2 Marks)

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4. The following extract is taken from the overhead budget of X:
Budgeted activity 50% 75%
Budgeted overhead (`) 30,00,000 40,00,000
What would be the budgeted overhead for 60% level of activity:
A. ` 32,00,0000
B. ` 34,00,000
C. ` 30,00,000
D. ` 36,00,000 (2 Marks)
5. Which of the following statements relating to Zero Based Budgeting (ZBB) is
false:
A. It is a method of budgeting whereby all activities are re-evaluated each
time a budget is formulated.
B. ZBB attempts to eliminate unnecessary expenditure being retained in
budgets.
C. It is probably the least time consuming and least costly approach to
budgeting.
D. It requires that budgets are built up from scratch. (2 Marks)
6. Based on the data below, what is the amount of the overhead under-/over-
absorbed?
Budgeted overhead – ` 5,25,000
Budgeted machine hours- 17,500
Actual machine hours- 17,040
Actual overheads- ` 5,20,000
A. 5,000 under-absorbed
B. 8,800 under-absorbed
C. 8,800 over-absorbed
D. 5,000 over-absorbed (2 Marks)
7. A customer has been ordering 80,000 caps during the year. It is estimated
that it costs ` 1 as inventory holding cost per cap per month and that the set
up cost per run of cap manufacture is ` 3,500
What is optimum run size of cap manufacture?
A. 12 runs
B. 10 runs
C. 15 runs
D. 7 runs (2 Marks)