Online Exam Cost Accounting Question Paper

M - 2 Question Paper for Online Examination
INTERMEDIATE EXAMINATION
Syllabus 2016
Paper 8: COST ACCOUNTING (CAC)
Time Allowed: 3 Hours Full Marks: 100
There are Sections A, B, C and D to be answered subject to instructions given against each.
(Time allotted for Sections A and B shall be limited to a maximum of 50 minutes)
Section A 20
Marks
1. You are required to answer all the questions. Each question carries 1 mark. 20 X 1
Instructions: Each question is followed by 4 Answer choices and only one is correct. You are required to = 20
select the choice which according to you represents the correct answer.
a. At lowermost level, cost object may be termed as

(i) Cost Unit
(ii) Cost Object
(iii) Cost Centre
(iv) Cost Allocation
b. Which Cost is very much relevant in consideration of price fixation during trade recession ?
(i) Out of pocket cost
(ii) Common cost
(iii) Managed cost
(iv) Controllable cost
c. The process of charging to the cost unit by means of rate is known as

(i) Cost Absorption
(ii) Cost Allocation
(iii) Cost Apportionment
(iv) Cost Control
d. Which is a quantitative record of receipts, issues and closing balance of items of stores ?
(i) Store Card
(ii) Store Ledger
(iii) Cost Card
(iv) Bin Card
e. Under which method, labour turnover is calculated by taking into consideration the addition as well
as separation ?
(i) Addition Method
(ii) Flux Method
(iii) Separation Method
(iv) Replacement Method
f. Packing material cost comes under which Cost Accounting Standards ?

(i) CAS 12
The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament)
(ii) CAS 9
(iii) CAS 24
(iv) CAS 10
g. A Principal Budget Factor is …

(i) the highest value item of cost.
(ii) a factor common to all budget center.
(iii) a factor which limits the activities of an organization.
(iv) a factor controllable by the manager of budget center.
h. A Master Budget comprises of …

(i) a Cash budget
(ii) Budgeted Profit & Loss Account
(iii) Budgeted Balance Sheet
(iv) All of the above
i. The concept of equivalent units is relevant for which of the following methods of Costing?
(i) Job Costing
(ii) Process Costing
(iii) Service Costing
(iv) Batch Costing
j. Contract Costing is extension of …

(i) Job Costing
(ii) Process Costing
(iii) Batch Costing
(iv) None of the above
k. When Contract is above 25% complete but not exceeding 50%, the profit of the Contract to be
credited to Profit & Loss Account is based on which of the following formulas?
(i) 1/2 of notional profit
(ii) 2/3 of notional profit
(iii) 1/3 of notional profit
(iv) 1/3 of estimated profit
l. Which of the following would be the most appropriate basis for reapportioning the cost of personal
services in a factory?
(i) Floor space occupied
(ii) Hours worked by direct operatives
(iii) Number of direct operatives
(iv) Number of employees
m. Product A and B are manufactured in a joint process. Job process costs Rs.30,000. Output of Product A
2000 kg. and Product B 4000 kg. Selling Price of Product A Rs.12/kg. and Product B Rs.18/kg. What is
the Product A’s share of joint process costs if sales value method of cost apportionment is applied?
(i) Rs. 10,000
(ii) Rs. 22,500
(iii) Rs. 7,500
(iv) Rs. 20,000
n. Generally in hospitals, which method of Costing method is applied?

(i) Operating Costing
(ii) Operation Costing
(iii) Process Costing
(iv) Batch Costing
o. Which of the following classification is meant for distinction between Costs of Material, Labour and
Expenses?
(i) Function
(ii) Element
(iii) Variability
(iv) Controllability
p. A single product business has the following results for a period.

Rs.
Sales Revenue (@ Rs.25/unit) 2,68,000
Less: Variable Cost 1,39,360
Contribution 1,28,640
Less: Fixed Cost 87,480
Net Profit 41,160
What is the break-even point (in units)?
(i) 7290
(ii) 3499
(iii) 8645
(iv) 9074
q. Which is the amount available to cover fixed costs and then provide for profit?
(i) Profit
(ii) Selling Price
(iii) Estimated Profit
(iv) Contribution
r. Which of the following distinguishes Absorption Costing from Marginal Costing?

(i) Stock valuation includes a share of all production costs
(ii) Stock valuation includes a share of all costs
(iii) Product cost includes both production and non-production cost
(iv) Product cost includes both price cost and production overhead
s. Prime Cost is …
(i) all costs incurred in manufacturing a product.
(ii) the material cost of the product.
(iii) the total of direct material cost and direct labour cost.
(iv) the labour cost of the product.
t. The following information relates to a raw material stock item. EOQ 800 units, Annual Demand 12000
units, Holding Cost per unit per annum Rs.1.50. What would be the amount of Ordering Cost per
order?
(i) Rs. 27
(ii) Rs. 71
(iii) Rs. 40
(iv) Rs. 80
Section B 20
Marks
2. You are required to answer all the questions. Each question carries 1 mark. 20 X 1
Instructions: Each question is followed by a space where you are required to type your answer. = 20
a. _______ is a discount allowed to bulk purchase.

Type your answer here
b. ______________is a department responsible for maintaining the records of time worked by

employees
c. ______________costs per unit remain relatively constant with changes in production.

d. ______________is used when different service departments render services to each other in addition
to rendering services to production department.
e. The objective of CAS-1 is to bring ___________and consistency in principle of classification of cost for
disclosure and presentation in cost statements
f. _____________________is a system of accounting under which separate ledger are maintained for
cost and financial accounts by accountants
g. _____________has been constituted for regulating tariffs in major ports of the country.
h. A job on which some manufacturing overhead costs are still due before it can be made to finished
product is known as ______________ .
i. __________is a form of costing where each batch is treated as cost unit.

j. Workers employed on the site of the contract are regarded as ____________employee

k. _____________ is specific order costing where work is undertaken to customer specific requirement.
l. In Marginal Costing classification of expenses is based on Functional Basis. Is it True or False?

m. ______________is an angle formed at the intersection point of Total Sales Line and Total Cost Line in
Break Even Chart.

n. Margin of Safety is a sales point within the Breakeven Point. Is it True or False?
o. Fixed costs are treated as Period Costs. Is it True or False?

p. Standard Costing is an yard-stick against which efficiency of actual performance is measured. Is it True
or False?
q. ____________ is the price fixed on the basis of specification of a product / service and all factors
affecting price.
r. Fixed budget can be re casted on basis of activity level. Is it True or False?

s. A budget manual is summary of all Functional Budget. Is it True or False?

t. Joint Process cost is apportioned to By- products. Is it True or False?

Section C 40
Marks
You are required to answer any 4 out of 6 questions in this section 4 X 10
3. a. Product A required 10 kg of material at a rate of Rs. 4 per kg. The actual consumption of material for 6
the manufacturing product A comes to 12 kg of material at the rate of Rs. 4.50 per kg.
You are required to calculate Standard Cost of Standard Material, Standard Cost of Actual Material
and Actual Cost of Material and therefrom derive and compute Material Cost Variance, Material
Usage Variance and Material Price Variance.
Given
Standard Quantity of Material = SQ =
Actual Quantity of Material = AQ =
Standard Price = SP =
Actual Price = AP =
Let
(1) Standard Cost of Standard Material
Formula =
Computation =
(2) Standard Cost of Actual Material
Formula =
Computation =
(3) Actual Cost of Material
Formula =
Computation =
Material Usage Variance

Formula =
Computation =
Formula =
Computation =
Formula =
Computation =
b. Discuss the types of Variances. 4

Controllable and Uncontrollable Variances
Favourable and Adverse Variances
4. a. What do understand by Reverse Cost Method? 4

Reverse Cost Method
b. Find out the pre separation costs per tonne of by-products B and C from the following data: 6
Cost of manufacture before separation Rs. 25,60,000
Main product is A.
The normal selling price of by-products B and C are as under
Sale price of B Rs. 500 per tonne
Sale price of C Rs. 800 per tonne
Selling and distribution expenses have been estimated to be 25% of selling price and the net profit is
expected to be 10% of selling price. Costs to manufacture each tonne after separation from main
products are
Rs. 95 for by product B
Rs. 145 for by product C
Both B and C have equal weight.

Pre-separation Cost
B:
C:
Working Notes:
Calculation of Estimated Pre Separation Cost per tonne of By product B & C
Particulars Computation B (Rs.) C (Rs.)
Selling price per tonne
Less: Expected Profit
Less: Selling and Distribution Cost
Less: Post separation Cost

Estimated Pre separation Cost per tonne
5. a. What are the assumptions underlying the Economic Ordering Quantity (EOQ)? 3
b. XYZ company buys in lots of 500 boxes which is a 3-month supply .The cost per box is Rs. 125 and 7
ordering cost is Rs. 150. The inventory carrying cost is estimated at 20% of unit value.
What is the total annual cost of the existing inventory policy?
What is the size of EOQ?
How much money could be saved by employing the EOQ Inventory policy?
Total Annual Cost of Existing Inventory Policy:
Working Notes:
Particulars Computation Amount (Rs.)
Ordering Cost
Carrying Cost of Average Inventory
Total Annual Cost of Existing Inventory Policy
EOQ:
Formula of EOQ =
Computation =
Total Annual Cost of EOQ Inventory Policy:

Working Notes:
Ordering Cost
Carrying Cost of Average Inventory
Total Annual Cost of EOQ Inventory Policy
Savings in annual inventory costs:

Computation of Saving in Annual Inventory Costs
Particulars Amount (Rs.)
Total Annual Cost of Existing Inventory Policy

Total Annual Cost of EOQ Inventory Policy
Saving in Costs
6. a. What are the steps for Budgetary Control? 3

Steps for Budgetary Control:
b. D Ltd. produces a single product. 7

The cost card for this product is as follows:
Rs. Per unit
Direct Material 3 kg per unit at Rs. 6 per kg 18
Direct labour 2hrs per unit at Rs. 10 per hour 20
Fixed overhead 2hrs. per unit at Rs. 2 per hour 4
Total Cost 42
Additional Information:
1) D Ltd. prepares budgets on a quarterly basis. Each quarter consists of 13 weeks, with five working
days per work.
2) Selling price is Rs. 56 per unit
3) D Ltd. incurs no cost other than those included in the cost card
4) D Ltd.’s policy is to maintain an inventory of finished goods at the end of each quarter equal to five
day’s demand of the next quarter.
5) No raw material inventory is maintained
6) Forecasts sales units for the end of next five quarters :
Quarter Units
1 1950000
2 2275000
3 3250000
4 2275000
5 1950000
Produce the Sales Budget showing sales volume in units and sales revenue in Rs. for each of the
quarters 1, 2, 3 and 4, Production Budget in units, showing opening and closed inventories, sales and
production and Purchase Budget showing purchases in Kg. and Rs. for each of the quarters 1, 2, 3 and
4.
D Ltd.
Sales Budget for the Quarters 1,2,3 and 4 [in Units & Sales Revenue ]
Quarter 1 2 3 4
Sales (in ‘000 units)
Selling price (in Rs. per unit
Sales revenue (in Rs. '000s)
Production Budget for the Quarters 1, 2, 3 & 4 (Figures in '000 units)

Quarter 1 2 3 4
Budgeted Sales
Add: Desired Closing Stock
Total Requirement
Less: Opening Stock
Budgeted production in units
Computation of Closing Stock of 1st Quarter

Demand of 2nd Quarter =
Demand per week =
Demand per day =
Closing Stock of 1st Quarter =
Computation of Opening Stock of 1st Quarter

Demand of 1st Quarter =
Closing Stock of 4th Quarter =
Closing Stock of 4th Quarter of last year =
Opening Stock of Current Year 1st Quarter =
Purchase Budget for the Quarters 1, 2 3 and 4

Quarter 1 2 3 4
Production ('000 units)
Direct Materials required per unit
Total Direct Material required ('000 kg.)
Cost of Direct Material per kg.
Total Cost of Purchase (Rs.'000)
7. a. What are the main features of Marginal Costing? 3

b. The following figures are extracted from the books of a manufacturing concern for the year 2020-21. 7
Rs.
Direct Materials 205000
Direct Labour 75000
Other Variable Overheads 10000
Fixed Overheads 60000
Sales 500000
Calculate the Break-Even Point (Sales).

What will be the impact on Break-even Point (Sales) if there is a 10% increase in either Fixed Expenses
or Variable Expenses?
Break-even Point (Sales):
Impact on Break-even Point if Fixed Expenses increase by 10%:
Impact on Break-even Point if Variable Expenses increase by 10%:
Working Notes:
Statement showing the Sales, Contribution and Profit
Particulars Rs. Rs.
Sales
Less: Variable Expenses

Direct Materials
Direct Labour
Other Variable Overheads
Contribution
Fixed Expenses
Profit
P/V Ratio
Formula =
Computation =
Break-Even Point (Sales)
Formula =
Computation =
Statement showing Impact of change in Fixed Expenses and Variable Expenses on BEP (Sales)
Present Fixed Expenses
Change in Fixed Expenses
Revised Fixed Expenses
Present Contribution
Revised Contribution
Present P/V Ratio
Revised P/V Ratio
Present Break-Even Point (Sales)
Revised Break-even Point (Sales)
Impact on Break-even Point (Sales)
Present Variable Expenses

Change in Variable Expenses
Revised Variable Expenses
Present Contribution
Revised Contribution
Present P/V Ratio
Revised P/V Ratio
Present Break-even Point (Sales)
Revised Break-even Point (Sales)
Impact on Break-even Point (Sales)
8. You are required write Short Notes on any 4 out of 5 4 X 2.5

= 10
a. Distinguish between Cost unit & Cost Centre
Type your answer here 2.5
Cost Centre Cost Unit
b. Role of Cost Accounting 2.5

c. Advantages of Cost plus contract 2.5

Advantages of Cost plus contract
For the Contractor:
For the Contractee:
d. Sales Budget 2.5

e. Material Mix Variance 2.5

Section D 20
Marks
You are required to answer all the questions in this section 10 X 2
Marks
9. a. ABC Co. runs its factory for past several years. Now the company is facing competition from various
other companies producing the same article in the country. The company wants to focus on the cost
control as well as cost reduction to struggle better in the competition.
As a Cost Accountant, you are required to report to the Management about the various variances
which are appearing while calculating different element of costs such as labour. Although
establishment of standard cost data is very much difficult in practice and sometimes, it creates
adverse psychological issues among the labours but as the Management wants to adopts standard
costing mechanism to control its labour cost and functionalities, you are required to undergo the
following information.
The following figures have been extracted from the Cost Books of the factory for the month of March
2021.
Category of Workers Standard Actual
No. of Weekly Wage Rate No. of Weekly Wage Rate
labourers per labourer (Rs.) labourers per labourer (Rs.)
Skilled 75 60 70 70
Semi-skilled 45 40 30 50
Unskilled 60 30 80 20
The work is to be completed in 30 weeks but the work was actually completed in 32 weeks.
a. You are required to compute the Standard Cost and Actual Cost of Labour and find out the Labour 4
Cost Variance.
Standard Cost Labour:
Actual Cost of Labour:
Labour Cost Variance:
Working Notes:
Computation of Standard Cost and Actual Cost of Labour
Skilled Semi-skilled Unskilled Total
Standard
No. of labourers
No. of Weeks
Total Weeks (No. of Labourers X No. of
Weeks)
Weekly Wage Rate per labourer (Rs.)
Amount (Rs.)
Actual
No. of labourers
No. of Weeks
Total Weeks (No. of Labourers X No. of
Weeks)
Weekly Wage Rate per labourer (Rs.)
Amount (Rs.)
Labour Cost Variance

Formula =
Computation
Skilled Semi-skilled Unskilled Total Comments
Standard Cost
Actual Cost
Variance
Labour Rate Variance

Formula = Computation:
Standard Rate (Rs.)
Actual Rate (Rs.)
Actual Time (Total weeks)
Comments
b. You are required to compute the Labour Efficiency Variance. 2
Labour Efficiency Variance

Formula =
Computation:
Standard Time (Total weeks)
Standard Rate (Rs.)
Comments
c. You are required to compute the Labour Mix Variance. 2
Labour Mix Variance

Formula =
Computation:
Standard No. of labourers
Actual No. of Weeks
Revised Standard Time (Weeks)
Standard Rate (Rs.)
Comments
d. Calculate the Labour Yield Variance. 3

Labour Mix Variance
Formula =
Computation:
Standard Time (Total weeks)
Revised Standard Time (Weeks)
Standard Rate (Rs.)
Comments
10. S Ltd. is a very famous in preparing the widgets in the industry.

The company produces the products since last twenty years. Not only, it also exports its’ products to
various foreign country also. But in last year, the company faces some resource problem due to covid
pandemic.
In that situation, the company appoints you as a Cost Accountant to focus upon the limiting factors
and to maximize its profit despite of the present market condition.When there is a limitation on any
input factor, the profitability of the product cannot simply be determined by finding out the
contribution of the unit, but it can be found out by ascertaining the contribution per unit of that
factor of production which is limited in the given situation.
S ltd. manufactures two types of widget, ‘Large’ and ‘Small’.
Details of the budget for the year 2020-2021 are as follows:
Large Small
Output (units) 10,000 15,000
Sales Price (Rs.) 12 8
Variable Manufacturing Cost (Rs.) 4 3
Variable selling Cost (Rs.) 2 1
Fixed Manufacturing Cost (Rs.) 2 1.5
Fixed Selling Costs (Rs.) 1 0.5
Manufacturing of both the products required time on Machine Z.

Each unit of Large requires 6 minutes and Small requires 15 minutes of Machine Z time.
Due to unforeseen circumstances, only 3000 hours will now be available for current year.
a. Calculate Contribution made by each product and Total Fixed Cost of the company. 3
Contribution made by each product:
Large:
Small:
Total Fixed Cost of the company:
Statement showing Contribution per unit, Total Contribution and Total Fixed Costs
Particulars Large (Rs.) Small (Rs.) Total (Rs.)
Selling Price per unit
Less: Variable Cost per unit
Contribution per unit
Number of units produced
Total Contribution by each product
Fixed Manufacturing Cost per unit (Rs.)
Fixed Selling Costs unit (Rs.)
Total Fixed Cost per unit (Rs.)
Total Fixed Cost (Rs.)
b. Calculate the total number of Machine Z hours required by the original budget. 2
Total Machine Z hours by the original budget:
Large:
Small:
Total:
Computation of Total Machine hours of Z required by Original Budget
Particulars Computation Large (Rs.) Small (Rs.)
Number of units produced
Time required per unit (minutes)
Total Time required (minutes)
Total Machine Hours required (hours)
c. Calculate the quantity of each item that should be manufactured in order to maximize profit under 3
the present conditions (production of either product not to exceed production required for budgeted
sales).
No. of units of Large to be manufactured:
No. of units of Small to be manufactured:
Working Notes:
Statement Showing Contribution per machine ’Z’ Hour
Particulars Computation Large Small
Contribution per unit
Time taken by each unit (mins.)
Contribution per hour (Rs.)
Priority of production
Statement Showing Contribution per Machine Z Hour

Particulars Computation Large Small
Maximum no. of units
Time taken per unit (mins.)
Total Hours Consumed
d. Calculate the maximize profit which can be earned. 2

Maximum Profit:
Working Notes:
Statement showing Profit when available Hours of Machine Z is 3000 hours
Particulars Large Small Total
Number of units to be produced
Contribution per unit (Rs.)
Total Contribution(Rs.)
Less : Fixed Cost of the company
Maximum Profit
END

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M - 2 Question Paper for Online Examination

Paper 8: COST ACCOUNTING (CAC)

Time Allowed: 3 Hours Full Marks: 100

a. At lowermost level, cost object may be termed as

c. The process of charging to the cost unit by means of rate is known as

f. Packing material cost comes under which Cost Accounting Standards ?

g. A Principal Budget Factor is …

h. A Master Budget comprises of …

j. Contract Costing is extension of …

n. Generally in hospitals, which method of Costing method is applied?

p. A single product business has the following results for a period.

r. Which of the following distinguishes Absorption Costing from Marginal Costing?

a. _______ is a discount allowed to bulk purchase.

b. ______________is a department responsible for maintaining the records of time worked by

c. ______________costs per unit remain relatively constant with changes in production.

i. __________is a form of costing where each batch is treated as cost unit.

j. Workers employed on the site of the contract are regarded as ____________employee

l. In Marginal Costing classification of expenses is based on Functional Basis. Is it True or False?

Break Even Chart.

o. Fixed costs are treated as Period Costs. Is it True or False?

r. Fixed budget can be re casted on basis of activity level. Is it True or False?

s. A budget manual is summary of all Functional Budget. Is it True or False?

t. Joint Process cost is apportioned to By- products. Is it True or False?

Material Usage Variance

b. Discuss the types of Variances. 4

Favourable and Adverse Variances

4. a. What do understand by Reverse Cost Method? 4

Type your answer here

Less: Selling and Distribution Cost

Less: Post separation Cost

Total Annual Cost of EOQ Inventory Policy:

Savings in annual inventory costs:

Total Annual Cost of Existing Inventory Policy

6. a. What are the steps for Budgetary Control? 3

b. D Ltd. produces a single product. 7

Production Budget for the Quarters 1, 2, 3 & 4 (Figures in '000 units)

Computation of Closing Stock of 1st Quarter

Computation of Opening Stock of 1st Quarter

Purchase Budget for the Quarters 1, 2 3 and 4

7. a. What are the main features of Marginal Costing? 3

Calculate the Break-Even Point (Sales).

Less: Variable Expenses

Present Variable Expenses

8. You are required write Short Notes on any 4 out of 5 4 X 2.5

Cost Centre Cost Unit

b. Role of Cost Accounting 2.5

c. Advantages of Cost plus contract 2.5

For the Contractee:

d. Sales Budget 2.5

e. Material Mix Variance 2.5

Labour Cost Variance

Labour Rate Variance

b. You are required to compute the Labour Efficiency Variance. 2

Labour Efficiency Variance

c. You are required to compute the Labour Mix Variance. 2

Labour Mix Variance

d. Calculate the Labour Yield Variance. 3

10. S Ltd. is a very famous in preparing the widgets in the industry.

Manufacturing of both the products required time on Machine Z.

Statement Showing Contribution per Machine Z Hour

d. Calculate the maximize profit which can be earned. 2

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