CAF 3 CMA Benchmark Questions Other Than CAF Past Papers - Sir Saud Tariq ST Academy

Some must revise Questions (other than CMA Past Papers)
CAF 3 Cost and Management Accounting by ST ACADEMY

Sir SAUD TARIQ (ACA, ACCA)
Relevant Costing Summer 2010 – Q5-MAC (Haji Amin)
Lectures: sta.saudtariq.com/Course/Detail/4885 1 Sir Saud Tariq (CAF 3, CAF 6, CFAP 3, CFAP 4, MSA 2)
Solution Haji Amin (HAPL)
Learning Curve Winter 2009 Q2
Solution Learning Curve Winter 2009 Q2
(1 Marks for preparation of Learning Table above)
(1 Mark) (1 Mark) (2 Mark) (1 Mark)

(See below (Connect from (Connect from (Units x Workers)
working) Learning Table) Learning Table)
(1)
(1)
(1)
Full 8 Marks to be provided if final answer of total units i.e. 11,727 is matching
(1)
(1)
(1)
(1)
Learning Curve Winter 2014 Q5
Solution
(1)
(1)
(1)
(3)
(1)
(2)
(4)
Number of Units = 4 Batches x 500 units = 2,000 Units (2)
Rework included in EPU (Refer register for detailed concept)
Q8) Fayyaz Ahmed Limited has provided following information:
Units started 10,000 units
Units transferred out 8,000 units
Units still in process (100% material, 50% cc) 1,500 units
Inspection occurred at the end. Normal spoilage is 10% of inspected units. Normal rework quantity 10%
of inspected units. Actual rework units are included in transferred out 1,000 units. The units being rework
require 25% of direct materials and 100% of CC cost to bring them up to standard. Actual reworked cost
is included in material and CC cost for the period, which are as under:
Material Rs. 410,000

Conversion cost Rs. 205,000
Required: Cost of production report.
Solution
Double Inspection (Similar to Q10 Our Book)
Q2) Following information is provided by the cost accountant of Safwan Limited:
Units started 150,000 units
Units transferred out 90,000 units
Units still in process (all material, 50% CC) 30,000 units
Units spoiled in process 30,000 units
Inspection occurred 2 times. 1 inspection is carried out at 30% stage and 2nd inspection is carried
st
out at the stage of 75%. Normal spoilage is expected 6% and 8% of inspected units at 30% stage
and at 75% stage respectively. Material is added at the beginning of the process.
Actual spoilage units and their realizable values are as under:
Units Found Spoiled Stage Of Inspection Per Unit Realizable Value
15,000 units 30% Rs. 9.85
15,000 units 75% Rs. 5
Cost of process during the month:
Material Rs. 460,000
CC Rs. 197,000
Required: Cost of production report. (13 Marks)
Solution
0% 30% 50% 75% 100%

Insp. 1 Insp. 2
Spoilage = 15,000 Spoilage = 15,000
Inspection Inspected Units NL % Normal Loss Actual Loss Abnormal Loss

1 150,000 6% 9,000 (0.5 Mark) 15,000 6,000 (0.5 Mark)
105,000 (150,000-15000 -
2 30,000) (1 Mark) 8% 8,400 (0.5 Mark) 15,000 6,600 (0.5 Mark)
(3 Marks Covered above)
EPU Material Conversion Cost

Working Units Marks Working Units Marks
Output 90,000 90,000
Normal loss 2 (8,400 x 100%) 8,400 0.5 (8,400 x 75%) 6,300 1
Abnormal loss 1 (6,000 x 100%) 6,000 (6,000 x 30%) 1,800 1
Abnormal loss 2 (6,600 x 100%) 6,600 (6,600 x 75%) 4,950 1
CWIP (30,0000 x 100%) 30,000 (30,0000 x 100%) 15,000 0.5
141,000 118,050
Cost per Unit Cost EPU Cost per Unit
Material 460,000
Less: Scrap Value of Normal Loss 1 (9,000 x 9.85) (88,650) (0.5)
371,350 ÷ 141,000 2.63
Conversion Cost 197,000 ÷ 118,050 1.67
Total Cost 568,350 4.30 (0.5)
Scrap Value of Normal Loss 2 (8,400 x 5) (42,000) (1)
Net Cost 526,350 (2 Marks Covered above)
Rupees
Cost of output (90,000 x 4.3) 387,223
Cost of normal loss – material (8,400 x 2.63) 22,092 (0.5)
– CC (6,300 x 1.67) 10,521 (0.5)
Scrap value of normal loss (8,400 x 5) (42,000) (0.5)
Total cost charged to customer 377,836
Cost of abnormal loss 1
Material (6,000*2.63) 15,802 (0.5)
CC (1,800 * 1.67) 3,004 (0.5)
18,806
Cost of abnormal loss 2

Material (6,600*2.63) 17,358 (0.5)
CC (4,950 * 1.67) 8,267 (0.5)
25,625
Closing WIP
Material (30,000 x 2.63) 79,011
Conversion cost (15,000 1.67) 25,032
104,042 (0.5)
526,308
CVP: Star Airline (Q20 Our Book)
Solution: CVP: Star Airline (Q20 Our Book)
Capacity Utilized Capacity Weighted Capacity
Business Class 50 (10%) 50 (50 x 100%) 50/400 = 12.5%
First Class 100 (20%) 70 (100 x 70%) 70/400 = 17.5%
Economy Class 350 (70%) 280 (350 x 80%) 280/400 = 70%
500 400 100%
Business Class First Class Economy Class TOTAL (Rs)

Revenue/passenger 120,000 100,000 80,000
Variable Cost:
-Baggage (60x 200); (50x 200); (40x 200) (12,000) (10,000) (8,000)
-CM from extra Baggage (W1) - - +1,500
-Meal (2,000) (1,500) (1,000)
-Airport tax (30,000) (30,000) (30,000)
-Duty free shopping (W2) +4,000 +2000 +1000
CM 80,000 60,500 43,500
Weighted capacity 12.5% 17.5% 70%
W.CM/passenger 10,000 10,587.5 30,450 51,037.5
(w1): CM from extra baggage:
S.P of extra Baggage = 500/kg
Variable Cost = (200)/kg
CM = 300/kg
Total Cm = 300/kg x 10kg x 50% = Rs 1500
(w2): Duty free Shopping:
Business Class First Class Economy Class
Revenue 10,000 5,000 4,000
Variable Cost (50%) (5,000) (2,500) (2,000)
CM 5000 2500 2000
80% 80% 50%
CM 4,000 2,000 1,000
Fixed Cost:
Given = 112,450,000
Return journey cost = 500,000,000 (5500 km + 7000 km) x 200/km x200 journeys
Total fixed cost = 612,450,000
𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡
B.E (units) =
𝑊𝑒𝑖𝑔ℎ𝑡𝑒𝑑 𝐶𝑚/𝑝𝑎𝑠𝑠𝑎𝑛𝑔𝑒𝑟
B.E (units) = 612,450,000/51037.5 = 12,000 passengers
Weighted Capacity B.E (units)
Business Class 12.5% 1,500
First Class 17.5% 2,100
Economy Class 70% 8,400
100% 12,000
Summer 2011-Q3 MAC (Burger, Fries)
ABC Limited operates a fast food chain and has 15 outlets all over Pakistan. The
company’s turnover for the year ending December 31, 2020 is estimated at Rs.
181 million and the annual fixed costs are estimated at Rs. 30 million. The analysis
of sale has revealed the following:
Quantity wise Contribution margin as
Product Selling price (Rs.)
sales ratio % of sale price
Burger 150 6 40
Fries 50 7 45
Cold drink 40 8 50
Ice-cream 80 3 60
The company has witnessed very little growth in turnover and profitability during
the past two years. In order to increase the profitability, the management is
considering the following options:
Option 1:
To introduce the following deals:
▪ Deal 1 offering burger, fries and cold drink for Rs. 210
▪ Deal 2 offering burger, fries, cold drink and ice-cream for Rs. 280
As a result, the total turnover is expected to increase by 25%. The ratio between
sale of Deal 1 and Deal 2 would be 60% and 40% respectively. 70% of the revenues
would be generated from the sale of deals and 30% from the sale of individual items
in the existing ratio.
Option 2:
Under this option the price of all the products would be reduced by 20% to
make the prices competitive in the market. In addition, home delivery would be
allowed for orders of Rs. 250 and above. Home delivery would require additional
fixed costs of Rs. 850,000 per annum and variable cost of Rs. 20 per delivery.
It is estimated that the above measures would increase the total sales revenue by
35% inclusive of sales through home delivery service which is estimated at Rs. 30
million. The average revenue per delivery is estimated at Rs. 600. All sales would
increase in existing ratio except that ice-cream would not be sold through deliveries.
Required: Evaluate each of the above options and give your recommendations.
(15 marks)
Summer 2011-Q3 MAC (Burger, Fries)
Weighted Average CM Ratio = Weighted Average CM x 100
Weighted Average S.P
Weighted Average CM ≠ Weight x CM Ratio
Wrong Approach ≠ Weight x CM weight not

Sales applied on Sales
• Sales = 181 million
• FC = 30 million
Product S.P CM/ Unit Variable Cost / *Weights Weighted Average
Unit (See Note)
A B C=A–B D CM S.P
Burger 150 (x 0.4) 60 90 6 360 900
Fries 50 (x 0.45) 22.5 27.5 (0.5 Mark) 7 157.5 350
Cold drink 40 (x 0.5) 20 20 8 160 320
Ice- cream 80 (x 0.6) 48 32 (0.5 Mark) 3 144 240
821.5 (0.5 Mark) 1,810 (0.5 Mark)
*Note: Can also apply Weight as 6/24, 7/24, 8/24 and 3/24.
Weighted Average CM Ratio = 821.5 = 45.39% (1 Mark) (Total = 3 Marks)

1,810
Option 1
Revised Turnover = 181m x 1.25 = 226,250,000
Deals (70%) Individual Sales (30%)

158,375,000 (0.5 Mark) 67,875,000 (0.5 Mark)
Deal 1 Deal 2
60% 40%
95,025,000 63,350,000
(0.5 Mark) (0.5 Mark)
Profit = CM – FC
= (Sales x CM Ratio %) – FC
(Total 2 Marks for Breakup of Sales)
Computation of CM Ratio
Deal 1 Rs.
S.P (A) 210
Less Variable Cost per deal (90 + 27.5 + 20) 137.5 (1 Mark)
CM / Deal (B) 72.5
CM Ratio (B/A) 34.5% (0.5 Mark)
Deal 2 Rs.
S.P (A) 280
Less Variable Cost (90 + 27.5 + 20 + 32) (169.5) (1 Mark)
CM / Deal 2 (B) 110.5
CM Ratio (B/A) 39.46% (0.5 Mark)
(*1.5 Marks for each Correct CM%... Full marks if not shown Variable Cost per unit separately)
Sales CM Ratio Total CM
Deal 1 95,025,000 x 0.345 = 32,783,625 (0.5 Mark)
Deal 2 63,350,000 x 0.3946 = 24,997,910 (0.5 Mark)
Individual Products 67,875,000 x 0.4539 = 30,808,463 (0.5 Mark)
Total CM 88,589,998
Less Fixed Costs (30,000,000)
Net Profit (Total 10 Marks for Option 1) 58,589,998 (0.5 Mark)
Option 2 Revised Sales => 181m x 1.35 => 244.35m (0.5 Mark)
Sales through Home Delivery = 30m Other Products = 214.35m
Sales = 600/ Delivery

No of Deliveries = 30m /600 = 50,000 Deliveries (0.5 Mark)
850,000 + 20 (50,000) = 1850,000 (0.5 Mark)
Product S.P Variable Cost CM/ Unit (1 Mark) Weight CM S.P
B 120 90 30 6 180 720
F 40 27.5 12.5 7 87.5 280
C 32 20 12 8 96 256
I 64 32 32 3 96 192
459.5 1,448
Weighted Average CM Ratio = 459.5 x 100 = 31.73% (0.5 Mark)
1,448
CM Ratio for Deliveries = 180 + 87.5 + 96 x 100 = 28.9% (0.5 Mark)
720 +280 +256
Sales CM Ratio Total CM
Individual Sales 214,350,000 x 0.3173 = 68,013,255 (0.5 Mark)
Deliveries 30,000,000 x 0.289 = 8,670,000 (0.5 Mark)
Total CM excluding Delivery Cost 76,683,255
Less Delivery Cost (1,850,000)
Less Fixed Costs (30,000,000)
Net Profit 44,833,255 (0.5 Mark)
CVP: Q16 Our Book (Asim Kamal)
Q16) Asim Kamal Company has the following summary performance over two accounting
periods:
PERIOD 1 PERIOD 2
(Rs. 000) (Rs. 000)
Sales 902.0 1108.1
Variable cost 360.8 398.9
Contribution 541.2 709.2
Fixed cost 490.5 549.0
Net profit 50.7 106.2
In period 2 selling prices were 5% higher than in period 1 and cost inflation (affecting both
variable and fixed cost) was also 5%.
At the start of period 2 production method were reorganized. This was the only factor
affecting costs between the two periods (apart from inflation and volume).
Required:
a) Calculate the percentage increase in sales volume in period 2 compared with period
1.
b) Calculate the sales (to the nearest Rs. 000) that were required in period 2 in order to
achieve the same net profit as period 1.
c) Calculate the increase in net profit in period 2 compared with period 1 due to:
i. Volume
ii. Reorganization of production methods.
(Calculation should be done at year 1 prices)
Solution CVP: Q16 Our Book (Asim Kamal)
(a) Sales in Period-2 = Sales in Period-1 x Price change x V-change

1108.1 = 902 x 105% x “X”
“X” = 117%
Volume change = 17%
𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡+𝑇.𝑝𝑟𝑜𝑓𝑖𝑡
(b) Target Sales (Rs) =
𝐶𝑚 𝑟𝑎𝑡𝑖𝑜 %
549+50.7
= 709.2
( )
1108.1
= 937,000,000
(c) i
P1 P2
Sales 902 x 1055.3
117%
v.cost (360.8) x (422.1)
117%
CM 541.2 x 633.2
117%
Fixed Cost (490.5) (490.5)
Profit 50.7 142.7
Increase in Profit (due to volume) = 142.7 – 50.7 = 92m Or
Increase in Profit = Increase in CM = 541.2 x 17% = 92m
(c) ii
P1 P2
Price = P1  Price = P2 P1
Volume = P1 Volume = P2 
P2
P.Method = P1 P.Method = P2
Sales 902 x 117% 1055.3 1108.1/105% 1055.3
v.cost (360.8) x 117% (422.1) (398.9)/105% (379.9)
CM 541.2 x 117% 633.2 709.2/105% 675.43
Fixed Cost (490.5) (490.5) (549.0)/105% (522.86)
Profit 50.7 142.7 106.2 152.57
Change in profit = 152.57 – 142.7 = 10
Standard Costing Spring 2008 – Q3(Similar to Gift HO)
Solution: Standard Costing Spring 2008 – Q3(Similar to Gift HO)
Sales (2007) = cost + profit = 140,000 +120,000 + 32,000+ 34,000 + 20,500 = 346,500
Sales (2006) = cost + profit = 100,000 + 80,000 + 30,000 + 24,000 + 10,000 = 244,000
Sales in 2007 = Sales in 2006 x Price Impact x Volume Impact
346,500 = 244,000 * 1.1 * “X”
X = Volume effect = 1.291 = +29.1% = Increase of 29.1 %
In this question, we need to take Year 2007 as Actual and Year 2006 as standard
1. Material Price Variance = (Actual Material Price – Standard Material Price) x Actual Material quantity
= (Actual Material Price x Actual Quantity) – (Standard Price x Actual Quantity)
Actual Material Cost (i.e. year 2007) Actual Material Cost at Standard Price
140,000 (Given) Means need to deflate actual cost
140,000/1.1 = 127,273
Material Price Variance =140,000 – 127,273 = 12,727 (A)
2. Material Usage Variance = (Actual Material Usage – Standard Material Usage Allowed) x Standard Price
= (Actual Material Usage x Standard Price) – (Standrad Material Usage x Standard Price)
Already calculated above in 1. Standard Material Cost
127,273 100,000 x 1.291 (Volume adjustment)
129,100
Material Usage Variance =127,273 – 129,100 = 1,827 (F)
3. Labour Rate Variance = (Actual Labour Rate – Standard Labour Rate) x Actual Labour Hours
= (Actual Labour Rate x Actual Hours) – (Standard Labour Rate x Actual Hours)
Actual Labour Cost (i.e. year 2007) Actual Labour Cost at Standard Price
120,000 (Given) Means need to deflate actual cost
120,000/1.2 = 100,000
Labour Rate Variance =140,000 – 127,273 = 12,727 (A)
4. Material Usage Variance = (Actual Material Usage – Standard Material Usage Allowed) x Standard Price
= (Actual Material Usage x Standard Price) – (Standrad Material Usage x Standard Price)
Already calculated above in 1. Standard Material Cost
127,273 100,000 x 1.291 (Volume adjustment)
129,100
Material Usage Variance =127,273 – 129,100 = 1,827 (F)
2. Labour Rate Variance = (Actual Labour Rate – Standard Labour Rate) x Actual Labour Hours
120,000
Labour Rate Variance =(x * 1.2𝑥 ) – 120,000 = 20,000(A)
3. Labour Efficiency Variance = (Actual Labour Hours – Standard Hours Allowed) x Standard Labour Rate/hr
120,000
Labour Efficiency Variance = ( - 80,000 𝑥𝑥 129.1%) * x = 3,280(F)
1.2𝑥
4. Fixed OVERHEADS Variance = (Actual Fixed Overheads cost– Budgeted Fixed Overheads cost)
Fixed OVERHEADS Variance = (32,000 – 30,000) = 2,000(A)
5. Variable OVERHEADS Variance = (Actual Variable Overheads – Budgeted Variable Overheads)

Variable OVERHEADS Variance = (34,000 – (24,000 x 129.1%) = 3,016(A)
6. Sales Price Variance = (Actual Sales Price – Budgeted Sales Price) x Actual Sales units
346,500
Sales Price Variance = (1.1x – x) x = 31,500(F)
1.1𝑥
Sales Volume Variance = (Actual Sales units – Budgeted Sales units) x Standard Profit/unit
Sales Volume Variance = (Actual Sales units x Standard Profit/unit) – (Budgeted Sales units x Standard Profit/unit)
Flexed Profit Total Standard Profit

Sales Volume Variance = (10,000 x 129.1%) – 10,000)) = 2,910 (F)
OR
Sales Volume Variance = (Actual Sales units – Budgeted Sales units) x Standard Profit/unit
Sales Volume Variance = Change in sales units x Standard Profit/unit
Sales Volume Variance = Change in sales (%) x Total Standard Profit
Sales Volume Variance = 29.1% x 10,000
Sales Volume Variance = 2,910 (F)
Reconciliation:
Favorable Adverse Rs
-Budgeted Profit 10,000
1. Sales Price Variance 31,500 -
2. Sales Volume Variance 2,910 -
3. Material Price Variance - 12,727
4. Material Usage Variance 1,827 -
5. Labour Rate Variance - 20,000
6. Labour Efficiency Variance 3,280 -
7. VOH Variance - 3,016
8. FOH Variance (Exp) - 2,000
9. FOH Variance (Vol.)-Bal or (30,000 x 29.1%) 8,726 -
48,243 37,743
-Actual Profit 20,500
ACTIVITY BASED COSTING Summer 2012 Q5
SOLUTION

CAF 3 CMA Benchmark Questions Other Than CAF Past Papers - Sir Saud Tariq ST Academy

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

CAF 3 CMA Benchmark Questions Other Than CAF Past Papers - Sir Saud Tariq ST Academy

Uploaded by

Copyright:

Available Formats

Some must revise Questions (other than CMA Past Papers)

CAF 3 Cost and Management Accounting by ST ACADEMY

(1 Marks for preparation of Learning Table above)

(1 Mark) (1 Mark) (2 Mark) (1 Mark)

Number of Units = 4 Batches x 500 units = 2,000 Units (2)

Material Rs. 410,000

0% 30% 50% 75% 100%

Inspection Inspected Units NL % Normal Loss Actual Loss Abnormal Loss

EPU Material Conversion Cost

Cost of abnormal loss 2

Business Class First Class Economy Class TOTAL (Rs)

Wrong Approach ≠ Weight x CM weight not

Weighted Average CM Ratio = 821.5 = 45.39% (1 Mark) (Total = 3 Marks)

Deals (70%) Individual Sales (30%)

Sales through Home Delivery = 30m Other Products = 214.35m

Sales = 600/ Delivery

(a) Sales in Period-2 = Sales in Period-1 x Price change x V-change

Increase in Profit (due to volume) = 142.7 – 50.7 = 92m Or

Increase in Profit = Increase in CM = 541.2 x 17% = 92m

140,000 (Given) Means need to deflate actual cost

Material Price Variance =140,000 – 127,273 = 12,727 (A)

Already calculated above in 1. Standard Material Cost

127,273 100,000 x 1.291 (Volume adjustment)

120,000 (Given) Means need to deflate actual cost

Already calculated above in 1. Standard Material Cost

127,273 100,000 x 1.291 (Volume adjustment)

5. Variable OVERHEADS Variance = (Actual Variable Overheads – Budgeted Variable Overheads)

Flexed Profit Total Standard Profit

You might also like