Scribd
Upload
160 views

Grand Test - Question Paper

This document contains information about a cost and management accounting exam for The Professionals’ Academy of Commerce in Pakistan. It includes 4 questions asking students to: 1) Prepare income statements using marginal and absorption costing and reconcile the profits for a division that produces refrigerators. 2) Determine the optimal inventory level for a retailer to reorder a product considering demand probabilities, ordering costs, holding costs, and interest earned. 3) Calculate overhead absorption rates for five production and service departments of a garment manufacturer. 4) Calculate total wages for a worker under two bonus calculation methods, considering piece rate production, overtime, and training hours.

Uploaded by

Waseim khan Barik zai
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
160 views

Grand Test - Question Paper

This document contains information about a cost and management accounting exam for The Professionals’ Academy of Commerce in Pakistan. It includes 4 questions asking students to: 1) Prepare income statements using marginal and absorption costing and reconcile the profits for a division that produces refrigerators. 2) Determine the optimal inventory level for a retailer to reorder a product considering demand probabilities, ordering costs, holding costs, and interest earned. 3) Calculate overhead absorption rates for five production and service departments of a garment manufacturer. 4) Calculate total wages for a worker under two bonus calculation methods, considering piece rate production, overtime, and training hours.

Uploaded by

Waseim khan Barik zai
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 3

The Professionals’ Academy of Commerce

Pakistan’s Leading Accountancy Institute

Certificate in Accounting and Finance Stage Examinations


Test#6 Grand Test Spring- 2021
Section: A (Sir Shoaib Yaqoob) 50 marks – 1.5 H

Cost & Management Accounting


Q.1 A division of Electronic Appliances Limited (EAL) sold 6,000 units of refrigerators during the year ended September
30, 2020. The sale price is Rs. 50,000 per unit. The finished goods inventory was 800 units at the beginning of the
year and 1,000 units at the end of the year. During the year, following costs were incurred:

Rs. ‘000’
Direct Material 102,300
Direct Labor 80,352
Variable Production overheads 34,100
Actual Fixed 25,700
Production overheads

EAL follows absorption costing and for this purpose fixed overhead absorption rate is calculated using budgeted
fixed overheads for normal production level of 6,000 units. During 2020, actual fixed production overheads were
Rs. 260,000 higher than budgeted.

The product cost per unit for current year is different from last year’s cost as follows:

Direct Material 10% higher


Direct Labor 8% higher
Variable Production overheads 10% higher
Fixed production overheads 6% higher

EAL uses FIFO method for inventory costing. The selling and admin costs for 2020 were as follows:

Rs.
Variable Selling cost per unit 1,200
Fixed Selling and admin costs 12,000,000

Required:

(a) Prepare Income Statement for the year ended September 30, 2020 using:
(i) Marginal Costing
(ii) Absorption Costing
(b) Reconcile both profits as calculated in part (a). (15 marks)

Q.2 Adnan Limited (AL) is a retailer and sells product Zafran (Z) at a price of Rs. 3,400 per unit. The product is
purchased from a supplier in Islamabad at a cost of Rs. 2,400 per unit plus transportation charges amounting to
Rs. 6,000 for each delivery.
The records over a 5-year period show that monthly sales ranged between 900 units to 1,200 units, as shown
below:
Units Probability
900 0.30
1000 0.45
1100 0.20
1200 0.05

The following further information is available:


(i) The supplier requires 30 days to fulfil an order.
(ii) The costs of the ordering department are as follows:
• Variable costs - Rs. 3,000 per order
• Fixed costs – Rs. 480,000 per annum Purchases of Z
constitute 5% of the total purchases of AL.
(iii) The holding costs associated with Z are as follows:
• Warehouse rent Rs. 360,000 per annum. 2% of the warehouse space is required to store 1,000 units of
Z.
• Cost of Insurance @ 1.0% of the cost of goods stored in the warehouse, per annum.
(iv) AL places its surplus funds in an account which earns interest @ 8% per annum on a daily basis.

Required:
Determine the level of inventory at which it would be most profitable for AL to reorder the product Z. (10 marks)

Q.3 Sigma Garments (SG) is engaged in selling ready-made garments. These garments are processed through three
production departments. SG's production facility also has two service departments. Following information relates
to budgeted production overheads for the year ending December 31, 2019

Rs.
million
Depreciation (building) 40.00
Depreciation (P&M) 18.00
Indirect labor 54.00
Insurance (building) 22.00
Power 96.00
General lighting 14.00
Repairs (P&M) 36.00

Other relevant budgeted information for 2019:

Cutting Stitching Finishing Maintenance Canteen


Direct material [Rs.
million] 94.00 102.00 50.00 - -
Direct labor [Rs. million] [Rs. 800
per 45.00 32.00 24.00 - -
hour]
Indirect labor [Rs. million] 11.00 12.00 13.00 10.00 8.00
Area covered (sq. yards) 1500 1200 800 500 400
Cost of P&M [Rs. million] 240 360 120 - -
KWH consumption 10000 25000 10000 - -
Machine hours 24000 36000 12000 - -
Light points (no.) 20 20 15 5 10

Machine Labor
Basis of OAR - -
Labor hours hours hours

Service departments provide support as follows:

Cutting Stitching Finishing Maintenance Canteen


Maintenance 25% 45% 30% - -
Canteen 30% 30% 35% 5% -

Required:
Calculate OAR for year 2019 for each production department. (15 Marks)

Q.4 The following information pertains to a week’s performance of a worker Mr Pabbi:

Day Hours worked Units produced


Monday 9 44
Tuesday 10.5 32
Wednesday 11 50
Thursday 8.5 42
Friday 8 30

Standard production per hour is 4 units. Normal working hours per day are 8. Basic wage rate is Rs.200 per hour. Overtime is
paid at time and half. Bonus is paid at 70% of basic wage rate for time saved.
Alam spent 1 hour each on Tuesday and Wednesday in a training arranged by employer. Time spent in training is paid at
120% of basic wage rate. These training hours are included in aforementioned hours worked.

Required:
Calculate total wages of Alam for the week if:
(a) Bonus is calculated on the basis of daily performance.
(b) Bonusis calculated on the basis of full week performance. (10 Marks)

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy