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39 7

UNIVERSITY PAPER SO~UTIONS (UPS)

run•: 3 Hours Total Marb : 100

f,1.B. (1) All questions are compulsory.
(2) Figures to the right indicate full m1r1<1 allotted to the question.
(3) Working notes should form the part of your anawer.

0.1 (1): Select the most appropriate option and rewrite the full sentence : (Any Ten)
1. If actual cost is more than standard cost variance is - · (10)
(a) Favourable (b) Adverse
(c) Nil (d) All the above
2. Subsidiary Ledger is - ·
(a) Stores Ledger (b) Work in Progress ledger
(c) Finished Goods ledger (d) All of the above
3_ Work done but uncertified is to be valued at _ _
(a) Contract Price (b) Market Price
(c) Material Price (d) Cost Price
4. Notional Profit i s -·
(a) difference between value of work certified and cost of work certified
(b) profit of contract
(c) difference between cash received and work certified
(d) difference between retention money and cash received
5_ Normal loss is debited t o -·
(a) Process account (b) Abnormal gain
(c) Abnormal loss (d) None of the above
6. At break-even point the contribution is equal to - ·
(a) Variable cost (b) Zero
(c) Fixed cost · (d) None of the above .
7_ Amount transferred to Profit and loss Account out of Notional Profit when contract 1s 50% to
90% complete-·
Cash Received Work Certified
(a) 2/3 x Notional Profit x Work Certified (b) 2/3 x Notional Profit x Cash Received
Cash Received Work Certified
(c) 2/3 x Notional Profit x Retention Money (d) 2/3 x Notional Profit x Retention Money
8. When selling price decreases, then break even point - -·
(a) increases (b) decreases
(c) no effect (d) _can't say
9. Sales are 1,50,000; Fixed cost~ 40,000; Profit~ 30,000
Variable cost i s - -·
(a) 80,000 (b) 1,10,000
(c) 25,000 (d) 70,000
10. Margin of safety i s - -·
(a) Sales - Contribute (b) Actual Sales - Break-even Sale
(c) Fixed Cost - Variable Cost (d) Sales-Variable Cost
11 . Variances are difference between--·
(a) Standard and Actual Cost (b) Fixed and Variable Cost
(c) Sales and Profit (d) Variable and Semi-Variable Cost
 Cost Accounting (T. Y.B. Com. : SEM-V/J
398

12. WIP Ledger balance shows--·

(a) Cost of Finished Work (b) cost of Unfinished Work
(c) Cost of Material (d) None of the above

{10)
Q.1 (b) · Match the column · (Any Ten)

Group A Group B
1. Non-Integrated System (a) Activity Based Costing
2. (b) Benchmarked with Company Process
Plant issued to Site
3. Escalation Clause (c) Activity that generates Cost
4. Normal Loss (d) Variable Cost
5. Joint Product (e) First Step in Benchmarking
6. By Product (f) Benchmarking on Global Scale
7. Marginal Cost (g) Standard minus Actual Cost
8. Cost Variance (h) Cost and Financial Accounts maintained
9. ABC separately
10. Cost Driver (i) Debited to Contract Account
11. Planning 0) Product Emerging in Process having
12 . Global Benchmarking insignificant value
(k) Inevitable Loss
(I) Avoidable Loss
(m) Covers increase in Cost
(n) Additional Product with Significant Value

Q.2 (a): The Product of a company passes through three distinct processes to completion . They
are known as A, B and C. (15)
From past experience, it is ascertained that Normal Loss is incurred in each .process as under :
Process A - 2%, Process B - 5% and Process C - 10%. In each case the percentage of Normal Loss
is computed on the number of units enteri ng the process concerned.
Normal Loss of each process possesses a scrap value. The Normal Loss of Process .A is sold at 5,o
paise per unit and B is sold at 20 paise per unit and that of Process C at 50 paise per unit.
Output of each process passes immediately to the next process and the fi nished are passed from
Process C into Stock.
Following information is obtained :

Particulars Process A ProcessB ProcessC

r r r
Material Consumed ......... ...... 6,000 4,000 2,000
Direct Labour ............ ... 8,000 6,000 3,000
Manufacturing Expenses ...... ... ...... 1,500 1,773 2,332
20,000 units have been issued to Process A at a cost oft 10,000.
Output of each process has been as under : ·
Process A - 19,300, Process B - 18,800, Process C - 16,500
There is no work in progress in any process.
Prepare Process accounts and t~e calculations should be made to the nearest rupee.
OR
Q.2 _(b) : Asha Ltd. manufactures a chemical which passes through three processes. The following
particulars gathered for the month of December 2018 . (15)

Particulars Process A Process B Process C

r r r
Basic Materials (in kg.) 4,000 2,080 1,772
Cost of Basic Materials 3,84,000 1,88,000 60,000
Wages 76,800 76,000 22,000
Other Direct Expenses 84,000 88,000 99,720
 (),rb•ersity Paper Solution,y (UPS)
) 99
production Overheads
... ............ 25,600 42,5 12 39,765
r.iorrnal Loss (% on Total Input) ... ............
scrap Value per Kg . 5% 4% 5%
... ... ' " ...... 2 per kg . 3 per kg . 5 per kg .
output transferred to Next Process (%) ...... ... ... ... 40% 50%
output transferred to Warehouse (o/o)
... '" ... ... ... 60% 60% 100°/o
you ere required to prepare process accounts.

Q.3 (a) : Mahesh Construction Company has three independent contracts.

(15)
Following particulars are available for the year ended 31st December, 2018.
f1rtlCUIBf8
. Contract A ContrsctB IContmctC
r r
contract Price
r
Material issued to Contract
... ............ 5,00,000 12,50,000 3,75,000
Labour Charges Paid
... ... ...... ... 82,600 1,12,250 94,800
sub-Contract Charges
... ... ...... ... 51,400 63,250 87,750
supervision Charges
......... ...... 36,400 32,950 14,250
Architect Fees Paid
... ... ......... 6,000 9,000 7,500
insurance Charges Paid
............... 5,000 7,500 12,500
Work Certified
............ ... 1,500 3,050 3,700
Work Uncertified
............... 2,00,000 2,50,000 2,50,000
............... 17,500 20,000 12,500
Amount Received from Contractee ......... ...... 1,60,000 2,25,000 1,87,500
Closing Balance of Material ............... 4,500 5,000 10,000
Note:
1. All the contracts have commenced during the year.
2. Total Depreciation on plant amounted tot 5,600. Allocate the same to all the contracts In the
ratio of work certified.
Prepare Contract Accounts for all the contracts.
OR
Q.3 (b) : Following information relates to a contract oft 1,00,00,000. The contractee pays 80% of
'>' the work in progress as certified by the architect. (15)
Particulars 1st Year 2nd Year 3rd Year
I
r r r
Material Issued ............ ... 4,60,000 9,40,000 14,50,000
Dir~ Wages ... ... ......... 7,00,000 13,50,000 9,50,000
Direct Expenses ... ......... ... 50,000 95,000 1,10,000
Indirect Expenses ... ...... ... ... 10,000 20,000 25,000
Work Certified (Cumulative) ... ...... ...... 22,50,000 75,00,000 1,00,00,000
Uncertified Work ...... ...... ... 50,000 50,000 -
Plant Issued ......... ...... 75,000 . -
Material on Site at year end ... ...... ...... 25,000 35,000 50,000
Architect Fees - % of Work Certified ... ...... ... ... 4% 4% 4%
Value of plant at the end of 1st year, 2nd year and 3rd year wast 60,000, t 45,000 and t 37,500
respectively.
Prepare Contract Account for these three years and show the calculation of profit or loss to be
transferred to Profit and Loss Account for each year.

Q,4 (a): Following balances are available from the books of Neel manufacturing company on_1st
April, 2017. (15)
'f'articulars or. r er. r
Stores Ledger Control Account 32,000
Finished Stock Ledger Control Account 48,700
Work-in-Progress Ledger Control Account 62,000
Cost Ledger Control Account 1,42,700
400 Cost Accounting (T. Y.B.Com.: SEM- VI)
Transactions for the year were as follows :

r
Purchase of Materials 3,00,000
Stores issued to Production 2,76,000
Wages (Direct) 2,66,400
Work Expenses 2,69,600
Cost of Completed Production 8,38,080
Cost of Finished Goods Sold 8,85,600
Selling Expenses 22,680 )
Office and Administration Expenses 53,000
Wori<s Overhead Allocated to Production 2,70,920
Office Expenses Recovered 52,600
Sales 10,00,000
Prepare the following Control Accounts.
1 . Cost Ledger Control Account
2. Work in Progress Ledger Control Account
3. Finished Stock Ledger Control Account
4: Stores Ledger Control Account
5. Costing Profit and Loss A~unt
OR
Q.4 (b) (1) : From the following information relating to financial and cost records of a new business,
pass necessary entries of Cost-Journal. (8)
1. Purchase of Material t 45,000
2. Direct Labour Charges t 42,000
3. Factory Overheads incurred t 1,80,000
4. Material issued to Production t 4,25,000
5. Indirect Wages Allocated t 60,000
Q.4 (b) (2) : From the following information you are required to calculate : (7)
1 . Material Cost Variances
2. Material Price Variances
3. Material Usage Variances
S~ndard quantity for 35 units of Product Z
Material 70 kgs. @ t 25 per kg.
Actual Production - iJO,OQO unit
Actual Material used 95,000_l,lait : Actual rate~ 28 per kg.

_)>:5 (a) : From the following i~ation calculate Material and Labour Variances : (8)
For 5 units of Product A, standard data are :
Material 40 kg @ t 25 per kg.
Labour 100 hours @ t 4.50 per hour
Actual Data :
Actual production 1,000 units
Material 7,840 kg. @ t 27 per kg .
Labour 19,800 hrs. @ t 4.60 per hour
OR
Q.5 (b) : Selling Price of a Product was t 200 per unit. (15)
Its Cost Structure was as follows :
Variable Cost Per Unit :
Material 76
Labour t 28
Direct Expenses ~ 16
Fixed Overhead for the year :
Factory Overhead t 5,60.000
Office Overhead t 4,40,000
Selling Overhead t 80,000
I
University Paper Solutions (UPS) 401
t-Jumber of Units sold 40,000 units
c,lculate:
1. PN Ratio
2. Break-even Point in Units
3. Margin of Safety
4. Break Even Sales - amount, if Fixed Overhead is increased by 20%.
5. Revised PN Ratio when selling price is increased by 20%.
6, (a) Write the meaning of Break-Even Chart. What are the steps in drawing Break-even Chart.(10)
(b) Explain in short the meaning and benefits of Standard Costing. (10)
OR
6. Write a short note on any four of the following : (20)
(a) Types of Benchmarking (b) Cost Plus Contract
(c) Limitations of Marginal Costing (d) Advantages of Cost Ledger
(e) Abnormal Gain
(f) Joint Product

SOLUTIONS
Solutlon 1 (a) :
1. If actual cost is more than standard cost variance is Advef"6.
2. Subsidiary Ledger is Stores Ledger, Work In Progress Ledger and Rn/shed Goods Ledger.
3. Work done but uncertified is to be valued at Cost Price.
4. Notional Profit is difference between value of work certified and cost of work certified.
5. Normal loss is debited to - None of the given options.
6. At break-even point the contribution is equal to Fixed cost.
7. Amount transferred to Profit and Loss Account out of Notional Profit when contract is 50% to
· . Cash Received
90% complete 2/3 x Notional Profit x Wo,w Certified .
8. When selling price decreases, then break even point decrHSN .
9. Sales are f 1,50,000
Fixed cost f 40,000
Profit f 30,000
Variable cost is 80,000.
10. Margin of safety is Actual Sales- Break..even Sale.
11 . Variances are difference between Standard and Actual Cost.
12. WIP Ledger balance shows Cost of Unfinished Work.
Solutlon 1 {b) :

Group A, Groupe
1. Non-Integrated System (a) Cost and Financial Accounts maintained
separately
2. Plant issued to Site (b) Debited to Contract Account
3. Escalation Clause (c) Covers increase in Cost
4. Normal Loss (d) Inevitable Loss
5. Joint Product (e) Additional Product with Significant Value
6. By Product (f) Product Emerging in Process having
insignificant value
7. Marginal Cost (g) Variable Cost
8. Cost Variance (h) Standard minus Actual Cost
9. ABC (i) Activity Based Costing
10. Cost Driver 0) Activity that generates Cost
11 . Planning (k) First Step in Benchmarking
12. Global Benchmarking (I) Benchmarking on Global Scale
402 Cost Accounting (T. Y.B.Com. : SEM-VJJ
Solution 2 (a) :
Dr. Procea1 A Account Cr.
Particulars Unit r Partlculars Unit r
To Input 20,000 10,000 By Normal Loss 400 20
To Material 6,000 By Abnormal Loss 300 390
To Direct Labour 8,000 By Output of B O 1.30 19,300 25,090
To Manufacturing Expenses 1,500
20,000 25,500 20,000 25,500
Dr. Proceas B Account Cr.
Particulars Unit r Particulars Unit r
To Output from A 19,300 25,090 By Normal Loss 965 193
To Material 4,000 By Output to C @ 2.00 18,800 37,600
To Direct Labour 6,000
To Manufacturing Expenses 1,773
To Abnormal Gain 465 930
19,765 37,793 19,765 37,793
Dr. Process C Account Cr.
Particulars Unit r Particulars Unit r
To Output from B 18,800 37,600 By Normal Loss 1,880 940
To Material 2,000 By Abnormal Loss 420 1,092
To Direct Labour 3,000 By Output of Finished
To Manufacturing Expenses 2,332 Goods@ 2.60 16,500 42,900
18,800 44,932 18,800 44,932
Working Note :
Particulars Process A Process A ProcessB ProcessB ProcessC Processc
Quantity r Quantity rQuantity r J
Input 20,000 25,500 _19,300 36,863 18,800 44,932
Normal Loss 400 20 965 193 1,880 940
Normal Output 19,600 25,480 18,335 36,670 16,920 43,992
Per Unit 1.3 2 2.6
Actual Output 19,300 18,800 16,500
Abnormal Loss / Gain 300 390 465 930 420 1,092
OR
Solutlon 2 (b) :
Dr. Process A Account Cr.
'Particulars Kg. r Particulars Kg. r I
To Raw
Material · 4,000 3,84,000 By Normal Loss 200 400
To Wages 76,800 By Output to Warehouse 2,280 3,42,000
To Other Direct Expenses 84,000 By Output of Y 1,520 2,28,000
To Production Overhead 25,600
4,000 5,70,400 4,000 5,70,400
Dr. . Process B Account Cr.
Particulars Kg. r Particulars Kg. r
To Transfer from X 1,520 2,28,000 By Normal Loss 144 432
To Raw Material 2,080 1,88,000 By Output to Warehouse 1,728 3,11 ,040
To Wages 76,000 By Output of Z 1,728 3,11,040
To Other Direct Expenses 88,000
To Production Overhead 42,512
3,600 6,22,512 3,600 6,22,512
University Paper Solutions (UPS)
403
or. Process C Account Cr.
particulars Kg. {'
Particulars Kg. {'
To Transfer from Y 1,728 3,11 ,040 By Normal Loss
To Raw Material 175 875
1,772 60,000 By Output to Warehouse 3,325 5,31 ,650
To Wages 22,000
To Other Direct Expenses 99,720
To Production Overhead 39,765
3,500 5,32,525 3,500 5,32,525
Working Note :

f_articulars Processx Processx Process Y Process Y ProcessZ ProcessZ

Input 4,000 5,70,400 3,600 6,22,512 3,500 5,32,525
Normal Loss 200 400 144 432 175 875
Normal Output 3,800 5,70,000 3,456 6,22,080 3,325 5,31 ,650
Per Unit 150 180 159.89

Solutlon 3 (a) :
Or. Contract Account Cr.
Piirticulars Contract Contract Contract Particulars Contract Contract Contract'
A B C A B C
{' {' r r {' {'
To Materials 82,600 1,12,250 94,800 By Work in
To Wages paid • 51 ,400 63,250 87,750 Progress
To Sub Contract 36,400 32,950 14,250 - Certified 2,00,000 2,50,000 2,50,000
To Supervision 6,000 9,000 7,500 - Uncertified 17,500 20,000 12,500
To Architect Fees 5,000 7,500 12,500 - Material at
To Insurance 1,500 3,050 3,700 Site 4,500 5,000 10,000
To Depreciation 1,600 2,000 2,000
To Sub Total 1,84,500 2,30,000 2,22,500 11
To Notional
Profit elf 37,500 45,000 50,000
2,22,000 2,75,000 2,72,500 2,22,000 2,75,000 2,72,500
To Profit & Loss By Notional
Ale 10,000 -- 25,000 Profit 37,500 45,000 50,000
To Balance elf 27,500 45,000 25,000
37,500 45,000 50,000 37,500 45,000 50,000
Working Note :
(1) Profit Transferred to Profit & Loss A/C :

Particulars Contract A Contracts Contract C 1

A. Contract Price 5,00,000 12,50,000 3,75,000
B. Work Certified 2,00,000 2,50,000 2,50,000
C. % of Work
Complete 40% 20% 66.67%
1 Notional Cash 2 Notional Cash
D. Ratio of Applied - -X
- 3 Profit
X
Work Certified
- -X
- 3 Profit
X
Work Certified
_ ..!.x 37,500x l ,60,000 2 50 OOO 1,87,500
- - X X
- 3 2,00,000 - 3 ' 2,50,000
= 10,000 Nil = 25,000

(2) Depreciation 5,600 allocated to A : B : C :: 4 : 5 : 5

OR
404 Cost Accounting (T. Y. B. Com. : SEM-VJ)
Solution 3 (b) :
Contract Accounts
PartJculars 1st Year 2nd Year 3rd Year Partlculsrs 1st Year 2nd Year 3rd Year
r r r r r r
ToWIPb/d - 10,00,000 16,94,000
By Reserve bid
Work Certified - 22,50,000 75,00,000 By Contractee' Ale - - 1,00,00,000
Work Uncertified
Materials at site
- 50,000 50,000 ByWIP c/d
- 25,000 3q,OOO Work Certified 22,50,000 75,00,000 -
Plant at site - 60,000 45,000 Work Uncertified 50,000 50,000 .
·To Materials Issued 4,60,000 9,40,000 14,50,000 25,000 35,000 50,000
Materials at site
To Direct Wages 7,00,000 ,13,50,000 9,50,000 60,000 45,000 37,500
Plant at site
To Direct Expenses 50,000 95,000 1, 10,000
To Indirect Exps. 10,000 20,000 25,000
To Architect's Fees 90,000 2,10,000 1,00,000
To Plant Issued 75,000 -
To P & l Ale (Profit)
-
To Reserve elf
-19,36,000 15,16,500
10,00,000 16,94,000 -
23,85,000 86,30,000 1,17,81 ,500 23,85,000 86,30,000 1,17,81 ,500
Profit to be transferred to P & L Ale
Year I : % of work certified= 22,50,000 / 1,00,00,000 x 100 = 22 .5%
As the% of work certified (22.5%) is less than 25%, the whole notional profit of ~ 10,00,000 will be
treated as reserve.
Year II : % of work certified = 75,00,000 / 1,00,00,000 x 100 = 75%
As the % of Work certified (75%) is in the range 50% to 75% of the contract price, 213rd of the
notional profit of 36,30,000 multiplied by the % of cash received to the work certified will be
transferred to P & L Ale which is= 36,30,000 x 2/3 x 80% = 19,36,000.
Year 111 : As the contract is 100% completed , the whole profit of i 15, 16,500 will be transferred to
P & L Ale.

Solution 4 (a) :
Dr. Cost Ledger Control Account Cr.
Particulars r Particulars r
To Cost of Sales 10,00,000 By Balance b/f 1,42,700
To Balance elf 1,47,020 By Stores Ledger Control Ale 3,00,000
By Factory Overhead Control Ale 2,69,600
By Wages Control Ale 2,66,400
By Selling Overhead Control Ale 22,680
By Office Overhead Control Ale 53,000
By Costing Profit and Loss Ale 92,640
11,47,020 11,47,020
Dr. Work-In-Progress Control Account Cr.
Particu/ars
1
r Particulars r
To Balance b/f 62,000 By Finished Goods Control Ale · 8,38,080
To Stores Ledger Control Ale 2,76,000 By Balance elf 37,240
To Wages Control Ale 2,66,400
To Factory Overhead Control Ale 2,70,920
8,75,320 8,75,320
Dr. Finished Stock Control Account Cr.
Particulars r Particulars r
To Balance b/f 48,700 By Cost of Sales 8,85,600
To Work-in-Progress Control Ale 8,38,080 By Balance c/f 53,780
To Office Overhead Control Ale 52,600
9,39,380 9,39,380
I
University Paper Solutions (UPS) 405

pr. Stores Ledger Control Account Cr.

particulars r Particulars r
fo Balance b/f 32,000 By Work-in-Progress Control Ale 2,76,000
ro Cost Ledger Control Ale 3,00,000 By Balance elf 56,000
3,32,000 3,32,000
Pr. Costing Profit and Loss Account Cr.

Particulars r Particulars r
To Office Overhead Control Ale 400 By Factory Overhead Control Ale 1,320
To Selling Overhead Control Ale 22,680 By Cost of Sales 1,44,400
To Cost Ledger Control Ale 92,640
1, 15,720 1,15,720
Dr. Wages Control Account Cr.

Particulars r Particulars r I
To Cost Ledger Control Ale 2,66,400 By Work-in-Progress Control Ale 2,66,400
2,66,400 2,66,400
Dr. Factory Overhead Control Account Cr.

Particulars r Particulars r
To Cost Ledger Control Ale; 2,69,600 By Work-in-Progress Control Ale 2,70,920
To Costing Profit and Loss Ale 1,320
(Bal. Fig.)
2,70,920 2,70,920
Dr. Cost of Sales Account Cr.

Particulars r Particulars r 1
To Finished Stock Ledger Control Ale 8,85,600 By Cost Ledger Control Ale 10,00,000
To Costing Profit and Loss Ale 1, 14,400
(Bal. Fig.)
10,00,000 10,00,000

Dr. Office Overhead Control Account Cr.

Particulars r Particulars r I
To Cost Ledger Control Ale 53,000 By Finished Stock Ledger
Control Ale 52,600
By Costing Profit and Loss Ale 400
(Bal. Fig.)
53,000 53,000
OR
Solutlon 4 (b) (1): '

Journal Entries

No. Particulars Dr.r Cr. r j

1. Stores Ledger Control Ale Dr. 45,000
To Cost Ledger Control Ale 45,000
[Being purchase of material]
2, Work in Progress Control Ale or Wages Control Ale Dr. 42,000
To Cost Ledger Control Ale 42,000
(Being direct labour charges for the year]
'
•l
406 Cost Accounting (T. Y.B.Com. : SEM-Vl)
3. Factory Overhead Control Ne Dr. 1,80,000
To Cost Ledger Control Ne 1,80,000
[Being factory overheads incurred]
4. Work in Progress Control Ne Dr. 4,25,000
To Stores Ledger Control Ne 4,25,000
(Being mateiial issued to production]
5. Factory Overhead Control Ne Dr. 60,000
To Wages Control Ne 60,000
(Being indirect wages allocated]

Solutlon 4 (b) (2) :

Partiou/ars
1

Standard Revised Actual

Standard
Output • Units ... ... ... ...... 35 40,000 40,000
Quantity - Kg. ... ...... ...... 70 80,000 95,000
Rate ... ...... ... ... 25 25 28
Total ... ...... ...... 1,750 20,00,000 26,60,000

1. Material Cost Variance= SC -AC= 26,60,000 - 20,000 = 6,60,000 (A)

2. Material Rate Variance= (SR - AR) x AQ = (25 - 28) x 95,000 = 2,85,000 (A)
3. Material Usage Variance= (SQ - AQ) x SR= (80,000 - 95,000) x 25 = 3,75,000 (A)

Solutlon 5 (a) :
A. BASIC CALCULATIONS
1. SQ = Standard Quantity For Actual Output
1,000 X 40 = 8,000
5
2. SH = Standard Hours For Actual Output
100
1,000 X = 20,000
5
B. MATERIAL VARIANCES
1. Material Cost Variance (MCV) = (SQ x SP)- (AQ x AP)
= (8,000 X 25) • (7,840 X 27) =2,00,000 · 2, 11,680
= (11,680)(A)
2. Materlal Rate Variance (MRV) = (SR - AR) x AQ = (25 - 27) x 7,840 = (15,680) (A)
3. Material Usage Variance (MUV) = (SQ - AQ) x SR = (8,000 - 7,840) x 25
= 160 X 25 = 4,000 (F)
C. LABOUR VARIANCES
1. Labour Cost Variances (LCV)
= (SH x SR) - (AH x AR) = (20,000 .x 4.50) - (19,800 x 4.60) = 90,000 - 91,080 = (1,080) (A)
2. Labour Efficiency Variance (LEV)
= (SH - AH) x SR= (20,000 - 19,800) x 4.50 = 200 x 4.50 = 900 (F)
3. Labour Rate Variance (LRV)
= (SR - AA) x AH = (4:50 - 4.60) x 19,800 = (0.10) x 19,800 = (1,980) (A)
D. VERIFICATION
1. MCV = MUV + MPV
,', (11 ,680) (A)= 4,000 (F) + (1MB0) (A)
2. LCV = LEV + LAV
:. (1,080) (A)= 900 (F) + (1 ,980) (A)
OR
rUniversity Paper Solutions (UPS) 407
501utton 5 (b) :
No. of Units = 40,000
psrtlculsrs Total Per unit
r r
A. Sales ...... ......... 80,00,000 200
s. Variable Cost :
- Material ...... ...... ... 30,40.000 76
- Labour ... ...... ...... 11 ,20,000 28
- Expenses ...... ......... 6,40,000 16
Sub Total ............... 48,00,000 120
c. Contribution (A - B) ...... ...... ... 32,00,000 80
D. Fixed Cost
Factory ...... ... ...... 5,60,000
Office ... ... .. ....... 4,40,000
Selling ............... 80,000
Sub Total ... ............ 10,80,000
E. Profit (C • D) ............ ... 21,20,000

Contribu1ion 40
(1) PN Ratio= Sales = = 40 %
100
Fixed Cost 10,80,000 = 13500U .
(2) Break Even Point In Units = Contribution Per Unit = , nits
80
(3) Margin of Safety = Sales - BEP Sales
Units = 80,000 - 27,000 = 53,000 Units
Amount= 80,00,000 - 27,00,000 = 53,00,000
(4) Break Even Point It fixed overheads Increased by 20%
. . . FixedCost 12,96,000
New Break Even Point 1n Units = Contribution Per Unit = = 16,200 Units
80
New Break Even Point in = 16,200 x 200 = 32,40,000
Or = Fixed Cost + PVR
= 12,96,000 + 40% = 32,40,000
(5) Selllng Price Increased by 20%
Sales - Variable Cost = 240 - 120 = 50 %
P V Ratio =
Sales 240

Solution 6:
(a) MEANING OF BREAK-EVEN CHART AND THE STEPS IN DRAWING BREAK-EVEN CHART:
Refer Chapter 4, Para 10.3.

(b) MEANING AND BENEFITS OF STANDARD COSTING : Refer Chapter 5, Para 1 + 13.

OR
Solution 6:
(a) TYPES OF BENCHMARKING : Refer Chapter 6, Para 15.
(b) COST PLUS CONTRACT : Refer Chapter 2, Para 7.
(c) LIMITATIONS OF MARGINAL COSTING: Refer Chapter 4, Para 11.2.
(d) ADVANTAGES OF COST LEDGER : Refer Chapter 1, Para 2.6.
(e) ABNORMAL GAIN : Refer Chapter 3, Para 4.2.2.
(f) JOINT PRODUCT : Refer Chapter 3, Para 8.