Maximum Marks: 51 Time Allowed: 120 Minutes Date: 2 May 2025
Syllabus: Material Cost, Employee Cost, Direct Expenses, Overheads, Process Costing, Contract
Costing, Service Costing, Job Costing & Batch Costing
Instructions:
▪ Part A is Compulsory. All MCQs questions are to be solved.
▪ Part B: Solve any 5 Questions out of the 7 Questions [Solve any 5 questions from Q2 - Q8]
▪ Number your answers clearly and start each new question on a fresh page.
▪ Workings and notes must be shown clearly wherever required.
▪ Scan your answer sheets properly (in order) after completion. Upload the answer-sheet in PCA App
only. In case of any issues, you may contact PCA Office after completion of Paper on 8888111034.
▪ No late submissions will be entertained without prior permission.
▪ Treat these tests with full seriousness - they are a rehearsal for your real exam.
PART A – OBJECTIVE QUESTIONS
Q1. Multiple Choice Questions [8 Questions x 2 Marks = 16 Marks]
(i) At the economic ordering quantity level, the following is true:
(a) Ordering cost is minimum (b) Carrying cost is minimum
(c) Ordering cost = carrying cost (d) Purchase price is minimum
(ii) Cost of idle time arising due to non-availability of raw materials is____________ .
(a) recovered by inflating raw materials cost
(b) recovered by inflating wage rate.
(c) charged to factory overheads.
(d) charged to costing profit & loss account.
(iii) Batch costing is suitable for______.
(a) Oil Industry (b) Sugar Industry (c) Chemical Industry (d) Pharmaceutical Industry
(iv) Warehouse expense is an example of ______ .
(a) Production overhead (b) Administration overhead
(c) Selling overhead (d) Distribution overhead
(v) The most suitable cost system where the products differ in type of material and work
performed is
(a) Process Costing (b) Batch Costing
(c) Job Costing (d) Operating Costing
(vi) SANUM P.I.C. producing product-ZEMO provides the following information:
Royalty paid on Sales Rs. 35,000
Design Charges paid for the product Rs. 8,000
Higher Charges for Equipment used for production Rs. 3,000
Direct Expenses will be ___________ .
(a) Rs. 58,000 (b) Rs. 55,000 (c) Rs. 46,000 (d) None of these
(vii) Primary packing is a part of ________.
(a) Direct material cost (b) Production cost
(c) Selling overhead (d) Distribution overhead
(viii) Which of the following method is used for evaluation of equivalent production when prices
are fluctuating in the market?
(a) FIFO method (b) LIFO method
(c) Simple average method (d) Weighted average method
PART B – DESCRIPTIVE QUESTIONS
Solve ANY 5 out of remaining 7 Questions [5 Questions x 7 Marks = 35 Marks]
Q2. Sun & Moon Ltd, (SML) is a leading hardware manufacturing startup, It manufactured and sold
200 computers in the year 2022. The summarized Trading and Profit & Loss Account of SML for the
year 2022 is as follows: Total Output (in units) = 200
Particulars Amount Particulars Amount
To Cost of Material consumed 12,00,000 By Sales 60,00,000
To Direct Wages 18,00,000
To Manufacturing Charges 7,50,000
To Gross Profit c/d 22,50,000
60,00,000 60,00,000
To Management Expenses 9,00,000 By Gross Profit b/d 22,50,000
To General Expenses 3,00,000
To Rent, Rates & Taxes 1,50,000
To Selling Expenses 4,50,000
To Net Profit 4,50,000
22,50,000 22,50,000
The management of SML estimated the following facts for the year 2023:
1. The output and sales will be 300 computers.
2. Price of material will rise by 25% compared to previous year level.
3. Wages per unit will rise by 10%.
4. Manufacturing charges will increase in proportion to the combined cost of material and wages.
5. Selling expenses per unit will remain unchanged.
6. Other expenses will remain unaffected by the rise in output.
Required:
(a) Prepare a Cost Sheet for the year 2023.
(b) Suggest a Selling Price per unit to earn a profit of 20% on selling price. (7 Marks)
Q3. ZEDYAAH TUBES LTD. manufactures a special product, which requires ZEDY. The following
particulars were collected for the year 17-18:
Monthly demand of Zedy 7,500 units
Cost of placing an order Rs. 500
Re-order period 5 to 8 weeks
Cost per unit Rs. 60
Carrying cost % p.a. 10%
Normal usage 500 units per week
Minimum usage 250 units per week
Maximum usage 750 units per week
Required: Calculate the following:
(a) Re-order quantity
(b) Re-order level
(c) Minimum stock level
(d) Maximum stock level
(e) Average stock level (7 Marks)
Q4. M/s Lotus Inc. manufactures the fountain pen called 'Pluto'. In the manufacturing of “Pluto”, the
overheads were recovered at a pre-determined rate of Rs. 25 per man-day. The other information for
the month of April, 2023 is as under:
Total factory overheads incurred Rs. 83,00,000
Man-days actually worked 2,97,200
Total units manufactured 80,000
Units sold during the month 60,000
Incomplete units (60% Complete) 60,000
On analysing the reasons, it was found that 40% of the unabsorbed overheads were due to defective
planning & the rest were attributable to increased overhead costs.
Required: You, as a qualified cost accountant, are asked to suggest how would unabsorbed
overheads be treated in Cost Accounts? (7 Marks)
Q5. M/s Peacock Ltd. is in the process of evaluation of employee’s welfare scheme of the company.
In this regard, it has selected three workers - K, L, and M to study their wage earnings. The company
furnishes the following particulars for the month of April, 2023 as under:
SN Particular K L M
(a) Job completed (Units) 10,000 8,000 14,400
(b) Out of above output rejected & unsaleable (Units) 400 160 1,600
(c) Time allowed for 100 units 2 Hrs. 36 Min. 3 Hrs. 1 Hr. 30 Min.
(d) Basic wage rate per hour (Rs.) 25 40 30
(e) Time taken (Hrs.) 200 216 184
The normal working hrs. per month are fixed at 176 hrs. Bonus is paid @ 60% of the basic wage rate
for gross time worked and gross output produced without deduction for rejected output. The rate of
overtime for first 20 hrs. is paid at time plus 1/3 and for next 20 hrs. is paid at time plus 1/2.
From the above information, you are asked by the management to calculate the following for each
worker:
▪ Number of bonus hrs. and amount of bonus earned
▪ Total wages earned including basic wages, overtime premium and bonus
▪ Direct wages cost per 100 saleable units (7 Marks)
Q6. SANT TRAVELS AGENCY is a bus and operates a tourist service on daily basis. Bus starts from
New City to Rest Village & returns to New City the same day. Distance between New City and Rest
Village is 250 km. This trip operates for 10 days a month. Bus also plies for another 10 days between
New City & Kolanpur and returns to New City the same day, the distance between these two places
is 200 km. Bus makes local sight-seeing trips for 5 days in a month covering a total distance of 80 km
per day. The following data are given: Cost of Bus Rs. 35 lacs. Depreciation 25% (Straight line method)
Driver's Salary Rs. 16,000 p.m.
Conductor's Salary Rs.10,000 p.m.
Part-time clerk's salary Rs. 6,000 p.m.
Insurance Rs. 18,000 p.a.
Diesel consumption 5 km per litre @ Rs. 65 per litre
Token Tax Rs. 30,000 p.a.
Permit fee Rs. 4,500 p.m.
Sundry Expenses Rs. 1,000 for the month
Lubricant oil Rs. 500 for every 200 km
Repairs and Maintenance Rs. 11,000 p.m.
The normal capacity of the bus is 50 passengers? While playing to for Rest Village the bus occupies
90% of capacity & 80% when it plies between New City to Kolanpur (both ways). In New City, the bus
runs at full capacity. Passenger Tax is 15% of the net takings of the travel firms. Ignore interest & taxes.
Required: Calculate the rate to be charged to Rest Village and Kolanpur from New City per passenger
if the profit required to be earned is 25% of the takings of the Agency. (7 Marks)
Q7. The net profit of X Ltd., appeared at Rs. 41,800 as per financial records for the year ending 31
March, 2018. A scrutiny of the figures from both the sets of accounts revealed the following facts:
Works overhead under-recovered in costs 1,500
Administrative overheads over-recovered in costs 850
Depreciation charged in financial accounts 5,600
Depreciation recovered in costs 6,250
Interest on investments not included in costs 3,000
Loss due to obsolescence charged in financial accounts 2,850
Income tax reserve made in financial accounts 20,150
Bank interest and transfer fee credited in financial books 370
Stores adjustment (credit) in financial books 230
Value of opening stock in : Cost accounts 24,800
: Financial accounts 26,300
Value of closing stock in : Cost accounts 25,000
: Financial accounts 23,000
Interest charged in cost accounts. 2,000
Imputed rent charged in cost accounts 1,000
Goodwill written off 5,000
Loss on sale of furniture 600
Selling and distribution expenses not charged in cost accounts 10,000
Donations to Prime Minister’s Relief Fund 5,100
Transfer to Debenture Redemption Fund 9,000
Transfer to Dividend Equalisation Fund 20,500
Required: Prepare a statement showing reconciliation statement & find out profit as per Cost
Accounts.
Q8. “Super Bite” is a leading product in the confectionery market which is obtained after it has gone
through three distinct processes - X, Y & Z. The following information is obtained from cost records
of Super (India) Ltd, for the month of July, 2023:
Particulars Process X Process Y Process Z
Input of raw materials @ Rs. 30 per unit (units) 1,000 - -
Other materials (Rs.) 26,000 19,800 29,620
Direct wages (Rs.) 20,000 30,000 40,000
Normal loss of input 5% 10% 15%
Output (units) 950 840 750
Sale of scrap per unit (Rs.) 20 40 50
Total overheads are Rs. 90,000 which are recovered at 100% of wages
Required: Prepare different Process Accounts of the firm for July 2023.
