National Management College – Thudupathi
Ca Intermediate (2021 – 2022)
Sub : Cost And Management Accounting
Model 2 / 100 Marks/3 Hours /13.04.2022

  Answer The Following Questions (10*10=100 Marks)

SM  Motors Ltd. Is A Manufacturer Of Auto Components. Following Are The Details Of Expenses For the Year 2019-20


Opening Stock Of Material   15,00,000

Closing Stock Of Material                                                                                  20,00,000

Purchase Of Material                                                                                      1,80,50,000

Direct Labour                                                                                                       90,50,000

Factory Overhead                                                                                               30,80,000

Administrative Overhead                                                                                  20,50,400

During The Fy 2020-21, The Company Has Received On Order From A Car Manufacturer Where It Estimates That The Cost Of Material And Labour Will Be ₹ 40,50,000 Respectively. The Company Charges Factory Overheads As A Percentage Of Direct Labour And Administrative Overheads As A Percentage Of Factory Cost Based On Previous Year’s Cost.

Cost Of Delivery Of The Components At Customer’s Premises Is Estimated At ₹ 4,50,000

You Are Required To:

  1. Calculate The Overhead Recovery Rates Based On Actual Costs For 2019-20
  2. Prepare A Job Cost Sheet For The Order Received And The Price To Be Quoted If The Desired Profit Is 25% On Sales.

A Company Produces A Component Which Passes Through Two Processes. During The Month Of November For 40,000 Components Were Put Into Process.-I Of Which 30,000 Were Completed And Transferred To Process- Ii Those Not Transferred To Process- Ii Were 100% Complete As To Materials Cost And 50% Complete As To Labour And Overheads Cost. The Process- I Costs Incurred Were As Follows:

Direct Materials                                                    ₹ 3,00,000

Direct Wages ₹ 3,50,000

Factory Overheads              ₹ 2,45,000

Of Those Transferred To Process Ii, 28,000 Units Were Completed And Transferred To Finished Goods Stores. There Was A Normal Loss With No Salvage Value Of 200 Units In Process Ii. There Were 1,800 Units, Remained Unfinished In The Process With 100% Complete As To Materials And 25% Complete As Regard To Wages And Overheads.

Costs Incurred In Process-2 Are As Follows:

Packing Material                                                                                                                ₹ 80,000

Direct Wages                                                                                                                       ₹ 71,125

Factory Overheads                                                                                                             ₹ 85,350

Packing Material Cost Is Incurred At The End Of The Second Process As Protective Packing To The Completed Units Of Production.


  1. Prepare Statement Of Equivalent Production, Cost Per Unit And Process I A/C.
  2. Prepare Statement Of Equivalent Production, Cost Per Unit And Process Ii A/C

VPS Is A Public School Having 25 Buses Each Plying In Different Directions For The Transport Of Its School Students. In View Of Large Number Of Students Availing Of The Bus Service, The Buses Work Two Shifts Daily Both In The Morning And In The Afternoon. The Buses Are Garaged In The Morning , The First Trip Picks Up Senior Students And The Second Trip Plying An Hour Later Picks Up Junior Students. Similarly, In The Afternoon, The First Trip Takes The Junior Students And An Hour  Later The Second Trip Takes The Senior Students Home.

The Distance Travelled By Each Bus. One Way Is 8 Km. The School Works 22 Days In A Month And Remains Closed For Vacation In May And June. The Bus Fee, However, Is Payable By The Students For All The 12 Months In A Year.

The Details Of Expenses For A Year Are As Under.

Driver’s Salary – Payable For All The 12 In Months ₹12,000 Per Month Per Driver

Cleaner’s Salary – Payable For All The 12 In Months ₹ 8,000 Per Month Per Cleaner

License Fees, Taxes Etc.  ₹ 8,400 Per Bus Per Annum

Insurance Premium ₹ 15,600 Per Bus Per Annum

Repairs And Maintenance ₹ 20,500 Per Bus Per Annum

Purchase Price Of The Bus ₹ 20,00,000 Each

Life Of The Bus 16 Years

Scrap Value            ₹ 1,60,000

Diesel Cost       ₹ 78.50 Per Litre

Each Bus Gives An Average Of 5 Km. Per Litre Of Diesel. The Seating Capacity 0f Each Bus Is 40 Students.

The School Follows Differential Transportation Fees Based On Distance Travelled As Under:

Students Picked Up And Dropped With      Transportation Fee        Percentage Of Students

In The Range Of Distance From   Availing This Facility

The School                          

2 Km                                                          25% Of Full                            15%

4 Km                                                          50% Of Full                             30%

8 K M                                                             Full                                       55%

Due To A Pandemic, Lockdown Was Imposed On Schools And The School Remained   Closed From April 2020 To December 2020. Drivers And Cleaners Were Paid 75% Of Their Salary During The Lockdown Period. Repairing  Cost Reduced To 75% For The Year 20202.

Ignore The Interest Cost.


(I) Prepare A Statement Showing The Expenses Of Operating A Single Bus And The Fleet Of 25              Buses For A Year.

(Ii)Find Out Transportation Fee Per Student Per Month In Respect Of.

  1. Students Coming From A Distance Of Upto 2 Km. From The School
  2. Students Coming From A Distance Of Upto 4 Km. From The School; And
  3. Students Coming  From A Distance Of Upto 8 Km. From The  School.

( Iii)Calculate The Minimum Bus Fare That Has To Be Recovered From The Students For The Year 2020.

Lm Limited Produces A Product ‘Sx4’ Which Is Sold In A 10 Kg Packet. The Standard Cost Card Per Packet Of ‘Sx4’ Is As Follow;

Direct Materials 10 Kg @ ₹ 90 Per Kg                           900

Direct Labour 8 Hours @ ₹ 80 Per Hour                     640

Variable Overhead 8 Hours @ ₹ 20 Per Hour            160

Fixed Overhead                                                                  250


Budgeted Output For A Quarter Of A Year Was 10.000 Kg. Actual Output Is 9.000 Kg. Actual Cost

For This Quarter Are As Follows:

Direct Materials 8.900 Kg @ ₹ 92 Per Kg                8.18.800

Direct Labour 7.000 Hours @ ₹ 84 Per Hour         5,88,000

Variable Overhead Incurred                                        1,40,000

Fixed Overhead Incurred                                             2,60,000

You Are Required To Calculate:

  1. Material Usage Variance
  2. Material Price Variance
  3. Material Cost Variance
  4. Labour Efficiency Variance
  5. Labour Rate Variance
  6. Labour cost variance
  7. Variable Overhead Cost Variance
  8. Fixed Overhead Cost Variance

The Following Figures Are Related To Kg Limited For The Year Ending 31st March, 2020:

Sales – 48.000 Units @ ₹ 40 Per Unit:

P/V Ratio 25% And Break –Even Point 50% Of Sales

You Are Required To Calculate:

  1. Fixed Cost For The Year
  2. Profit Earned For The Year
  3. Units To Be Sold To Eam A Target Net Profit Of ₹ 22,00,000 For a Year
  4. Number of units to be sold to earn a net income of 25% on cost.
  5. Selling price per unit if break-even point is to be brought down by 4,000 units.

Rs Ltd Manufactures And Sells A Single Product And Has Estimated Sales Revenue Of ₹ 302.4 Laks During The Year Based On 20% Profit On Selling Price. Each Unit Of Product Requires 6 Kg Of Material A And 3 Kg Material B And Processing Time Of 4 Hours In Machine Shop And 2 Hours In Assembly Shop. Factory Overheads Are Absorbed At A Blanket Rate Of 20% Of Direct Labour. Variable Selling & Distribution Overheads Are ₹ 60 Per Unit Sold And Fixed Selling & Distribution Overheads Are Estimated To Be ₹ 69,12,000.

The Other Relevant Details Are As Under:

Purchase Price:                     Material A          ₹ 160 Per Kg

Material B          ₹ 100 Per Kg

Labour Rate:                        Machine Shop    ₹ 140 Per Hour

Assembly Shop    ₹ 70 Per Hour

Finished Stock                   Material A Material B

Opening Stock 2,500 Units        7,500 Kg      4,000 Kg

Closing Stock 3,000 Units        8,000 Kg      5,500 Kg


  1. Calculate Number Of Units Of Product Proposed To Be Sold And Selling Price Per Unit.
  2. Prepare Production Budget In Units And
  3. Prepare Material Purchase Budget In Units.

A Transport Company Has 20 Vehicles, The Capacities Are As Follows:

No. Of Vehicles             Capacity Per Vehicle

5                                           9 Mt

6                                          12mt

7                                         15mt

2                                        20 Mt

The Company Provides The Goods Transport Service Between Stations ‘A’ To Station ‘B’ Distance Between These Stations Is 100 Kilometers. Each Vehicle Makes One Round Trip Per Day On An Average. Vehicles Are Loaded With An Average Of 90 Per Cent Of Capacity At The Time Of Departure From Station ‘A’ To Station ‘B’ And At The Time Of Return Back Loaded With 70 Per Cent Of Capacity. 10 Per Cent Of Vehicles Are Laid Up For Repairs Every Day. The Following Information Is Related To The Month Of August, 2020:

Salary Of Transport Manager                         ₹ 60,000

Salary Of 30 Drivers                ₹ 20,000 Each Driver

Wages Of 25m Helpers                ₹ 12,000 Each Helper

Loading And Unloading Charges                ₹ 850 Each Per

Consumable Stores (Depends On Running Of Vehicles   ₹ 1,35,000

Insurance (Annual)               ₹ 8,40,000

Road Licence (Annual)               ₹ 6,00,000

Cost Of Diesel Per Litre  ₹  68

Kilometers Run Per Litre Each Vehicle  ₹ 5 Km.

Lubricant, Oil Etc.                ₹ 1,15,000

Cost Of Replacement Of Tyres, Tubes, Other Parts               ₹ 4,25,000

Etc.(On Garage Basis)

Garage Rent (Annual)               ₹ 9,00,000

Routine Mechanical Services               ₹ 3,00,000

Electricity Charges (For Office, Garage And Washing Station)  ₹    55,000

Depreciation Of Vehicles (On Time Basis)              ₹ 6,00,000

There Is A Workshop Attached To Transport Department Which Repairs These Vehicles And Other Vehicles Also. 40 Per Cent Of Transport Manager’s Salary Is Debited To The Workshop The Transport Department Has Been Apportioned ₹ 88,000 By The Workshop During The Month. During The Month Operation Was For 25 Days.

You Are Required:

  1. Calculate Per Ton-Km Operating Cost.
  2. Determine The Freight To Be Charged Per Ton – Km, If The Company Earned A Profit Of 25 Per Cent On Freight

Following Are The Standard Cost For A Product –X:

Direct Material 10 Kg @ ₹ 90 Per Kg                 900

Direct Labour 8 Hours @ ₹ 100 Per Hour        800

Variable Overhead 8 Hour @ 15 Per Hour        120

Fixed Overhead                                                      400


Budgeted Output For The Year Was 2,000 Units. Actual Output Is 1,800 Units Actual Cost For Year Is As Follows:

Direct Materials 17.800 Kg @ ₹ 92 Per Kg                  16,37,600

Direct Labour 14,000 Hours @ ₹ 104 Per Hour        14,56,000

Variable Overhead Incurred                                          2,17,000

Fixed Overhead Incurred                                               7,68,000

You Are Required To CALCULATE:

  1. Material Usage Variance
  2. Material Price Variance
  3. Material cost variance
  4. Labour Efficiency Variance
  5. Labour Rate Variance
  6. Labour Cost Variance
  7. Variable Overhead Cost Variance
  8. Fixed Overhead Cost Variance.

J Ltd. Manufactures A Product – Y Analysis Of Income Statement Indicated A Profit Of ₹ 250 Lakhs On  A Sales Volume Of 5,00,000 Units. Fixed Costs Are ₹ 1,000 Lakhs Which Appears To Be Highy. Existing Selling Price Is ₹ 680 Per Unit. The Company Is Considering Revising The Profit Target To ₹ 700 Lakhs. You Are Required To Computer –

  1. Break- Even Point At Existing Levels In Units And In Rupees.
  2. The Number Of Units Required To Be Sold To Earn The Target Profit.
  3. Profit With 10% Increase In Selling Price And Drop In Sales Volume By 10%
  4. Volume To Be Achieved To Earn Target Profit At The Revised Selling Price As Calculated In (Ii) Above , If A Reduction Of 10% In The Variable Costs And ₹ 170 Lakhs In The Fixed Costs Is Envisaged.

The Information Of Z Ltd. For The Year Ended 31st March 2020 Is As Below:

Amount ₹

Direct Materials                               17,50,000

Direct Wages                                    12,50,000

Variable Factory Overhead           9,50,000

Fixed Factory Overhead               12,00,000

Other Variable Costs                     6,,00,000

Other Fixed Costs                         4,00,000

Profit                                               8,50,000

Sales                                               70,00,000

During The Year, The Company Manufactured Two Products, X And Y, And The Output And Cost Were

                                                    X                                     Y

Output (Units)                          8,000                              4,000

Selling Price Per Unit (₹)      600                                   550

Direct Material Per Unit (₹)  140                                  157.50

Direct Wages Per Unit (₹)    90                                    132.50

Variable Factory Overheads Are Absorbed As A Percentage Of Direct Wages And Other Variable Costs Are Computed As:

Product X – 40 Per Unit And Product Y – ₹ 70 Per Unit.

For The Fy 2020-21, Due To A Pandemic, It Is Expected That Demand For Product X And Y Wii Fall By 20% & 10% Products Will Be Required To Be Sold At A Discount Of 20%

You Are Required To:

  1. Prepare Product – Wise Profitability Statement On Marginal Costing Method For The Fy 2019- 20 And
  2. Prepare A Budget For The Fy 2020-21.


Enquire Now