Cost and Management Accounting Model Test Paper - 5 (Questions) | Model Test Papers for CA Intermediate PDF Download

 Page 1


 MODEL TEST PAPER 5
INTERMEDIATE: GROUP – II 
PAPER – 4: COST AND MANAGEMENT ACCOUNTING 
Answers are to be given only in English except in the case of the candidates who 
have opted for Hindi medium. If a candidate has not opted for Hindi medium his/ 
her answer in Hindi will not be valued. 
Working notes should form part of the answer. 
Time Allowed – 3 Hours 
Maximum Marks – 100 
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs) for
30 marks
3. Part II comprises questions which require descriptive type answers for 70
marks.
PART I – Case Scenario based MCQs 
Part I is compulsory. 
Write the most appropriate answer to each of the following multiple-choice 
questions by choosing one of the four options given. All questions are 
compulsory. 
Mr. Vikas, a toy importer has understood the importance of manufacturing in India. He 
is backed up by the new govt. policies that motivate him to manufacture in India. As 
per the custom department any import made for the manufacturing under “Made in 
India”, custom duty will be refunded upto 80%. Vikas decided not to import toy from 
China anymore, instead import raw material from Srilanka, for the manufacturing of 
toys in India. Under an agreement of Govt. Of India with Srilankan Govt., any impo8rt 
from Srilanka will receive tax benefits.  
Vikas ordered material Xendga & material Zenga from Srilanka. Details are given 
below:- 
    Srilankan Rupees (SLR) 
Material Xendga (12,000 units * 125 SLR) 15,00,000 
Material Zenga (8,000 units * 225 SLR)  18,00,000 
     Factory cost 33,00,000 
Add: Containers cost   2,00,000 
Add: Freight upto loading shipment on ship (paid by exporter)      50,000 
F.O.B.  35,50,000 
• Ocean Freight is $ 2,000
• Insurance is $ 1,500
44
Page 2


 MODEL TEST PAPER 5
INTERMEDIATE: GROUP – II 
PAPER – 4: COST AND MANAGEMENT ACCOUNTING 
Answers are to be given only in English except in the case of the candidates who 
have opted for Hindi medium. If a candidate has not opted for Hindi medium his/ 
her answer in Hindi will not be valued. 
Working notes should form part of the answer. 
Time Allowed – 3 Hours 
Maximum Marks – 100 
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs) for
30 marks
3. Part II comprises questions which require descriptive type answers for 70
marks.
PART I – Case Scenario based MCQs 
Part I is compulsory. 
Write the most appropriate answer to each of the following multiple-choice 
questions by choosing one of the four options given. All questions are 
compulsory. 
Mr. Vikas, a toy importer has understood the importance of manufacturing in India. He 
is backed up by the new govt. policies that motivate him to manufacture in India. As 
per the custom department any import made for the manufacturing under “Made in 
India”, custom duty will be refunded upto 80%. Vikas decided not to import toy from 
China anymore, instead import raw material from Srilanka, for the manufacturing of 
toys in India. Under an agreement of Govt. Of India with Srilankan Govt., any impo8rt 
from Srilanka will receive tax benefits.  
Vikas ordered material Xendga & material Zenga from Srilanka. Details are given 
below:- 
    Srilankan Rupees (SLR) 
Material Xendga (12,000 units * 125 SLR) 15,00,000 
Material Zenga (8,000 units * 225 SLR)  18,00,000 
     Factory cost 33,00,000 
Add: Containers cost   2,00,000 
Add: Freight upto loading shipment on ship (paid by exporter)      50,000 
F.O.B.  35,50,000 
• Ocean Freight is $ 2,000
• Insurance is $ 1,500
44
When shipment reached India, it was unloaded at Chennai port. Vikas requested to 
put the goods in custom port’s warehouse. Vikas due to cash crunch was not in a 
position to pay custom duty and therefore did not file the bill of exchange (B.O.E.). 
Custom authorities charged a penalty of INR 15,000.  
Finally, after a month Vikas filled B.O.E. and paid custom duty of 20% on CIF value of 
the shipment. IGST was also applicable @ 18% on the combined value of CIF & 
custom duty paid.  
He spent further a sum of INR 12,500 to bring the imported goods to his factory. An 
inspection was done on the goods and it was found that 5% of the goods were broken. 
This came to management as a surprise because generally such rate of defects on 
imports is 8%.  
Additional Information: 
• Exchange rates:
1) 1 INR = 0.25 SLR
2) 1 USD = 75 INR
• IGST credits are available.
• Containers were refunded at INR 38,000.
• Indian and Srilankan brokers were paid commission by Vikas on factory cost.
Indian broker charged 6% whereas Srilankan broker charged 12%.
• CIF (cost, insurance and Freight) includes F.O.B (Free on Board)., Insurance &
Ocean freight.
You are required to answer the following 5 questions: 
1. What is the total cost of shipment to be recorded by Vikas?
(a) INR 13,17,000
(b) INR 13,04,500
(c) INR 13,54,500
(d) INR 13,32,500
2. What is the absorption rate of total cost per unit of Zenga?
(a) INR 90.28
(b) INR 84.44
(c) INR 93.62
(d) INR 85.77
3. What is the absorption rate of total cost per unit of Xendga?
(a) INR 52.01
(b) INR 54.24
(c) INR 58.13
(d) INR 68.65
45
Page 3


 MODEL TEST PAPER 5
INTERMEDIATE: GROUP – II 
PAPER – 4: COST AND MANAGEMENT ACCOUNTING 
Answers are to be given only in English except in the case of the candidates who 
have opted for Hindi medium. If a candidate has not opted for Hindi medium his/ 
her answer in Hindi will not be valued. 
Working notes should form part of the answer. 
Time Allowed – 3 Hours 
Maximum Marks – 100 
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs) for
30 marks
3. Part II comprises questions which require descriptive type answers for 70
marks.
PART I – Case Scenario based MCQs 
Part I is compulsory. 
Write the most appropriate answer to each of the following multiple-choice 
questions by choosing one of the four options given. All questions are 
compulsory. 
Mr. Vikas, a toy importer has understood the importance of manufacturing in India. He 
is backed up by the new govt. policies that motivate him to manufacture in India. As 
per the custom department any import made for the manufacturing under “Made in 
India”, custom duty will be refunded upto 80%. Vikas decided not to import toy from 
China anymore, instead import raw material from Srilanka, for the manufacturing of 
toys in India. Under an agreement of Govt. Of India with Srilankan Govt., any impo8rt 
from Srilanka will receive tax benefits.  
Vikas ordered material Xendga & material Zenga from Srilanka. Details are given 
below:- 
    Srilankan Rupees (SLR) 
Material Xendga (12,000 units * 125 SLR) 15,00,000 
Material Zenga (8,000 units * 225 SLR)  18,00,000 
     Factory cost 33,00,000 
Add: Containers cost   2,00,000 
Add: Freight upto loading shipment on ship (paid by exporter)      50,000 
F.O.B.  35,50,000 
• Ocean Freight is $ 2,000
• Insurance is $ 1,500
44
When shipment reached India, it was unloaded at Chennai port. Vikas requested to 
put the goods in custom port’s warehouse. Vikas due to cash crunch was not in a 
position to pay custom duty and therefore did not file the bill of exchange (B.O.E.). 
Custom authorities charged a penalty of INR 15,000.  
Finally, after a month Vikas filled B.O.E. and paid custom duty of 20% on CIF value of 
the shipment. IGST was also applicable @ 18% on the combined value of CIF & 
custom duty paid.  
He spent further a sum of INR 12,500 to bring the imported goods to his factory. An 
inspection was done on the goods and it was found that 5% of the goods were broken. 
This came to management as a surprise because generally such rate of defects on 
imports is 8%.  
Additional Information: 
• Exchange rates:
1) 1 INR = 0.25 SLR
2) 1 USD = 75 INR
• IGST credits are available.
• Containers were refunded at INR 38,000.
• Indian and Srilankan brokers were paid commission by Vikas on factory cost.
Indian broker charged 6% whereas Srilankan broker charged 12%.
• CIF (cost, insurance and Freight) includes F.O.B (Free on Board)., Insurance &
Ocean freight.
You are required to answer the following 5 questions: 
1. What is the total cost of shipment to be recorded by Vikas?
(a) INR 13,17,000
(b) INR 13,04,500
(c) INR 13,54,500
(d) INR 13,32,500
2. What is the absorption rate of total cost per unit of Zenga?
(a) INR 90.28
(b) INR 84.44
(c) INR 93.62
(d) INR 85.77
3. What is the absorption rate of total cost per unit of Xendga?
(a) INR 52.01
(b) INR 54.24
(c) INR 58.13
(d) INR 68.65
45
4. Amount of refundable taxes?
(a) INR 4,13,600
(b) INR 4,57,600
(c) INR 2,20,000
(d) INR 2,37,600
5. If loss of goods was 9% instead of 5%, what will be the amount that will be
charged to statement of profit & loss?
(a) INR 13,045
(b) INR 19,898.4
(c) INR 14,178.4
(d) INR 24,045   (5 x 2 = 10 Marks) 
Hilfy textiles Ltd. has been a major player in the textile industry, producing high-
quality polyester mix cotton fabric. The production process is complex and involves 
multiple stages, including spinning, weaving, quality control, and packaging. The 
company has been facing challenges in controlling costs and maintaining 
profitability, mainly due to fluctuating material costs and labor inefficiencies. 
To address these challenges, the company's management has decided to 
implement a standard costing system to better manage costs, set benchmarks, 
and identify variances. The goal is to gain better control over production costs, 
improve budgeting accuracy, and enhance decision-making. 
Hilfy textiles Ltd. had prepared the following estimation for the month of April: 
Quantity/Time Rate (`) Amount (`) 
Cotton 8,000 m 50.00 4,00,000 
Polyester 6,000 m 40.00 2,40,000 
Skilled labour 1,000 hours 37.50 37,500 
Unskilled labour 800 hours 22.00 17,600 
Normal loss was expected to be 10% of total input materials and an idle labour time 
of 5% of expected labour hours was also estimated. 
At the end of the month the following information has been collected from the cost 
accounting department: 
The company has produced 14,800 m finished product by using the followings: 
Quantity/Time Rate (`) Amount (`) 
Cotton 9,000 m 48.00 4,32,000 
Polyester 6,500 m 37.00 2,40,500 
Skilled labour 1,200 hours 35.50 42,600 
Unskilled labour 860 hours 23.00 19,780 
46
Page 4


 MODEL TEST PAPER 5
INTERMEDIATE: GROUP – II 
PAPER – 4: COST AND MANAGEMENT ACCOUNTING 
Answers are to be given only in English except in the case of the candidates who 
have opted for Hindi medium. If a candidate has not opted for Hindi medium his/ 
her answer in Hindi will not be valued. 
Working notes should form part of the answer. 
Time Allowed – 3 Hours 
Maximum Marks – 100 
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs) for
30 marks
3. Part II comprises questions which require descriptive type answers for 70
marks.
PART I – Case Scenario based MCQs 
Part I is compulsory. 
Write the most appropriate answer to each of the following multiple-choice 
questions by choosing one of the four options given. All questions are 
compulsory. 
Mr. Vikas, a toy importer has understood the importance of manufacturing in India. He 
is backed up by the new govt. policies that motivate him to manufacture in India. As 
per the custom department any import made for the manufacturing under “Made in 
India”, custom duty will be refunded upto 80%. Vikas decided not to import toy from 
China anymore, instead import raw material from Srilanka, for the manufacturing of 
toys in India. Under an agreement of Govt. Of India with Srilankan Govt., any impo8rt 
from Srilanka will receive tax benefits.  
Vikas ordered material Xendga & material Zenga from Srilanka. Details are given 
below:- 
    Srilankan Rupees (SLR) 
Material Xendga (12,000 units * 125 SLR) 15,00,000 
Material Zenga (8,000 units * 225 SLR)  18,00,000 
     Factory cost 33,00,000 
Add: Containers cost   2,00,000 
Add: Freight upto loading shipment on ship (paid by exporter)      50,000 
F.O.B.  35,50,000 
• Ocean Freight is $ 2,000
• Insurance is $ 1,500
44
When shipment reached India, it was unloaded at Chennai port. Vikas requested to 
put the goods in custom port’s warehouse. Vikas due to cash crunch was not in a 
position to pay custom duty and therefore did not file the bill of exchange (B.O.E.). 
Custom authorities charged a penalty of INR 15,000.  
Finally, after a month Vikas filled B.O.E. and paid custom duty of 20% on CIF value of 
the shipment. IGST was also applicable @ 18% on the combined value of CIF & 
custom duty paid.  
He spent further a sum of INR 12,500 to bring the imported goods to his factory. An 
inspection was done on the goods and it was found that 5% of the goods were broken. 
This came to management as a surprise because generally such rate of defects on 
imports is 8%.  
Additional Information: 
• Exchange rates:
1) 1 INR = 0.25 SLR
2) 1 USD = 75 INR
• IGST credits are available.
• Containers were refunded at INR 38,000.
• Indian and Srilankan brokers were paid commission by Vikas on factory cost.
Indian broker charged 6% whereas Srilankan broker charged 12%.
• CIF (cost, insurance and Freight) includes F.O.B (Free on Board)., Insurance &
Ocean freight.
You are required to answer the following 5 questions: 
1. What is the total cost of shipment to be recorded by Vikas?
(a) INR 13,17,000
(b) INR 13,04,500
(c) INR 13,54,500
(d) INR 13,32,500
2. What is the absorption rate of total cost per unit of Zenga?
(a) INR 90.28
(b) INR 84.44
(c) INR 93.62
(d) INR 85.77
3. What is the absorption rate of total cost per unit of Xendga?
(a) INR 52.01
(b) INR 54.24
(c) INR 58.13
(d) INR 68.65
45
4. Amount of refundable taxes?
(a) INR 4,13,600
(b) INR 4,57,600
(c) INR 2,20,000
(d) INR 2,37,600
5. If loss of goods was 9% instead of 5%, what will be the amount that will be
charged to statement of profit & loss?
(a) INR 13,045
(b) INR 19,898.4
(c) INR 14,178.4
(d) INR 24,045   (5 x 2 = 10 Marks) 
Hilfy textiles Ltd. has been a major player in the textile industry, producing high-
quality polyester mix cotton fabric. The production process is complex and involves 
multiple stages, including spinning, weaving, quality control, and packaging. The 
company has been facing challenges in controlling costs and maintaining 
profitability, mainly due to fluctuating material costs and labor inefficiencies. 
To address these challenges, the company's management has decided to 
implement a standard costing system to better manage costs, set benchmarks, 
and identify variances. The goal is to gain better control over production costs, 
improve budgeting accuracy, and enhance decision-making. 
Hilfy textiles Ltd. had prepared the following estimation for the month of April: 
Quantity/Time Rate (`) Amount (`) 
Cotton 8,000 m 50.00 4,00,000 
Polyester 6,000 m 40.00 2,40,000 
Skilled labour 1,000 hours 37.50 37,500 
Unskilled labour 800 hours 22.00 17,600 
Normal loss was expected to be 10% of total input materials and an idle labour time 
of 5% of expected labour hours was also estimated. 
At the end of the month the following information has been collected from the cost 
accounting department: 
The company has produced 14,800 m finished product by using the followings: 
Quantity/Time Rate (`) Amount (`) 
Cotton 9,000 m 48.00 4,32,000 
Polyester 6,500 m 37.00 2,40,500 
Skilled labour 1,200 hours 35.50 42,600 
Unskilled labour 860 hours 23.00 19,780 
46
On the basis of analysis of standard costing system, company’s management 
wants to take actions like supplier negotiation, process optimisation, employee 
training, etc.  
Being the cost manager of the company, you are required to answer the following 
five requirements of the management: 
6. Compute Material mix variance and Material Yield Variance
(a) ` 1430 (A) & 43,200 (F)
(b) ` 1430 (F) & 43,200 (F)
(c) ` 24,000 (A) & 37,500 (F)
(d) ` 19,300 (A) & 37,500 (F)
7. Compute Material Price Variance for supplier negotiation
(a) ` 18,000 (A)
(b) ` 43,200 (F)
(c) ` 37,500 (A)
(d) ` 37,500 (F)
8. Compute Material Cost Variance
(a) ` 32,500 (F)
(b) ` 24,500 (A)
(c) ` 79,270 (F)
(d) ` 79,270 (A)
9. Compute Labour Efficiency Variance and Labour Yield Variance.
(a) ` 940 (A) & 1,140 (A)
(b) ` 2,424 (A) & 1,556 (A)
(c) ` 2,424 (A) & 1,556 (A)
(d) ` 940 (A) & 1,140 (F)
10. Compute Labour Cost Variance.
(a) ` 884 (A)
(b) ` 1,556 (F)
(c) ` 884 (F)
(d) ` 1,556 (A) (5 x 2 = 10 Marks) 
11. A company’s fixed costs are ` 5,00,000, the selling price per unit is ` 200, and
the variable cost per unit is `100. How many units must the company sell to
earn the targeted profit of ` 2,00,000?
(a) 2,000 units
(b) 5,000 units
(c) 10,000 units
47
Page 5


 MODEL TEST PAPER 5
INTERMEDIATE: GROUP – II 
PAPER – 4: COST AND MANAGEMENT ACCOUNTING 
Answers are to be given only in English except in the case of the candidates who 
have opted for Hindi medium. If a candidate has not opted for Hindi medium his/ 
her answer in Hindi will not be valued. 
Working notes should form part of the answer. 
Time Allowed – 3 Hours 
Maximum Marks – 100 
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs) for
30 marks
3. Part II comprises questions which require descriptive type answers for 70
marks.
PART I – Case Scenario based MCQs 
Part I is compulsory. 
Write the most appropriate answer to each of the following multiple-choice 
questions by choosing one of the four options given. All questions are 
compulsory. 
Mr. Vikas, a toy importer has understood the importance of manufacturing in India. He 
is backed up by the new govt. policies that motivate him to manufacture in India. As 
per the custom department any import made for the manufacturing under “Made in 
India”, custom duty will be refunded upto 80%. Vikas decided not to import toy from 
China anymore, instead import raw material from Srilanka, for the manufacturing of 
toys in India. Under an agreement of Govt. Of India with Srilankan Govt., any impo8rt 
from Srilanka will receive tax benefits.  
Vikas ordered material Xendga & material Zenga from Srilanka. Details are given 
below:- 
    Srilankan Rupees (SLR) 
Material Xendga (12,000 units * 125 SLR) 15,00,000 
Material Zenga (8,000 units * 225 SLR)  18,00,000 
     Factory cost 33,00,000 
Add: Containers cost   2,00,000 
Add: Freight upto loading shipment on ship (paid by exporter)      50,000 
F.O.B.  35,50,000 
• Ocean Freight is $ 2,000
• Insurance is $ 1,500
44
When shipment reached India, it was unloaded at Chennai port. Vikas requested to 
put the goods in custom port’s warehouse. Vikas due to cash crunch was not in a 
position to pay custom duty and therefore did not file the bill of exchange (B.O.E.). 
Custom authorities charged a penalty of INR 15,000.  
Finally, after a month Vikas filled B.O.E. and paid custom duty of 20% on CIF value of 
the shipment. IGST was also applicable @ 18% on the combined value of CIF & 
custom duty paid.  
He spent further a sum of INR 12,500 to bring the imported goods to his factory. An 
inspection was done on the goods and it was found that 5% of the goods were broken. 
This came to management as a surprise because generally such rate of defects on 
imports is 8%.  
Additional Information: 
• Exchange rates:
1) 1 INR = 0.25 SLR
2) 1 USD = 75 INR
• IGST credits are available.
• Containers were refunded at INR 38,000.
• Indian and Srilankan brokers were paid commission by Vikas on factory cost.
Indian broker charged 6% whereas Srilankan broker charged 12%.
• CIF (cost, insurance and Freight) includes F.O.B (Free on Board)., Insurance &
Ocean freight.
You are required to answer the following 5 questions: 
1. What is the total cost of shipment to be recorded by Vikas?
(a) INR 13,17,000
(b) INR 13,04,500
(c) INR 13,54,500
(d) INR 13,32,500
2. What is the absorption rate of total cost per unit of Zenga?
(a) INR 90.28
(b) INR 84.44
(c) INR 93.62
(d) INR 85.77
3. What is the absorption rate of total cost per unit of Xendga?
(a) INR 52.01
(b) INR 54.24
(c) INR 58.13
(d) INR 68.65
45
4. Amount of refundable taxes?
(a) INR 4,13,600
(b) INR 4,57,600
(c) INR 2,20,000
(d) INR 2,37,600
5. If loss of goods was 9% instead of 5%, what will be the amount that will be
charged to statement of profit & loss?
(a) INR 13,045
(b) INR 19,898.4
(c) INR 14,178.4
(d) INR 24,045   (5 x 2 = 10 Marks) 
Hilfy textiles Ltd. has been a major player in the textile industry, producing high-
quality polyester mix cotton fabric. The production process is complex and involves 
multiple stages, including spinning, weaving, quality control, and packaging. The 
company has been facing challenges in controlling costs and maintaining 
profitability, mainly due to fluctuating material costs and labor inefficiencies. 
To address these challenges, the company's management has decided to 
implement a standard costing system to better manage costs, set benchmarks, 
and identify variances. The goal is to gain better control over production costs, 
improve budgeting accuracy, and enhance decision-making. 
Hilfy textiles Ltd. had prepared the following estimation for the month of April: 
Quantity/Time Rate (`) Amount (`) 
Cotton 8,000 m 50.00 4,00,000 
Polyester 6,000 m 40.00 2,40,000 
Skilled labour 1,000 hours 37.50 37,500 
Unskilled labour 800 hours 22.00 17,600 
Normal loss was expected to be 10% of total input materials and an idle labour time 
of 5% of expected labour hours was also estimated. 
At the end of the month the following information has been collected from the cost 
accounting department: 
The company has produced 14,800 m finished product by using the followings: 
Quantity/Time Rate (`) Amount (`) 
Cotton 9,000 m 48.00 4,32,000 
Polyester 6,500 m 37.00 2,40,500 
Skilled labour 1,200 hours 35.50 42,600 
Unskilled labour 860 hours 23.00 19,780 
46
On the basis of analysis of standard costing system, company’s management 
wants to take actions like supplier negotiation, process optimisation, employee 
training, etc.  
Being the cost manager of the company, you are required to answer the following 
five requirements of the management: 
6. Compute Material mix variance and Material Yield Variance
(a) ` 1430 (A) & 43,200 (F)
(b) ` 1430 (F) & 43,200 (F)
(c) ` 24,000 (A) & 37,500 (F)
(d) ` 19,300 (A) & 37,500 (F)
7. Compute Material Price Variance for supplier negotiation
(a) ` 18,000 (A)
(b) ` 43,200 (F)
(c) ` 37,500 (A)
(d) ` 37,500 (F)
8. Compute Material Cost Variance
(a) ` 32,500 (F)
(b) ` 24,500 (A)
(c) ` 79,270 (F)
(d) ` 79,270 (A)
9. Compute Labour Efficiency Variance and Labour Yield Variance.
(a) ` 940 (A) & 1,140 (A)
(b) ` 2,424 (A) & 1,556 (A)
(c) ` 2,424 (A) & 1,556 (A)
(d) ` 940 (A) & 1,140 (F)
10. Compute Labour Cost Variance.
(a) ` 884 (A)
(b) ` 1,556 (F)
(c) ` 884 (F)
(d) ` 1,556 (A) (5 x 2 = 10 Marks) 
11. A company’s fixed costs are ` 5,00,000, the selling price per unit is ` 200, and
the variable cost per unit is `100. How many units must the company sell to
earn the targeted profit of ` 2,00,000?
(a) 2,000 units
(b) 5,000 units
(c) 10,000 units
47
(d) 7,000 units (2 Marks) 
12. 1200 Kg of a material were input to a process in a period. The normal loss is
8% of input
There is no opening or closing work-in-progress. Output in the period was
1100 Kg. What was the abnormal gain/loss in the period?
(a) Abnormal gain of 12 Kg
(b) Abnormal loss of 12 kg
(c) Abnormal gain of 108 Kg
(d) Abnormal loss of 4 kg (2 Marks) 
13. ABC Manufacturing allocates its factory overhead costs based on machine
hours. The total estimated overhead cost for the year is ` 6,00,000, and the
company expects to use 30,000 machine hours. During the year, job A used
300 machine hours. What amount of overhead costs should be allocated to
this job?
(a) ` 4,000
(b) ` 6,000
(c) ` 10,000
(d) ` 8,000 (2 Marks) 
14. A factory has a capacity utilization ratio of 85% and its activity ratio is 95%.
Which one of the following is the efficiency ratio?
(a) 120%
(b) 110%
(c) 112%
(d) 90% (2 Marks) 
15. A company uses batch costing and incurs a setup cost of ` 20,000 for a batch
of 300 units. If direct materials cost ` 20 per unit and direct labor costs ` 10
per unit, what is the total cost of the batch?
(a) ` 25,000
(b) ` 29,000
(c) ` 32,000
(d) ` 7,000 (2 Marks) 
PART-II – Descriptive Questions (70 Marks) 
Question No. 1 is compulsory. 
Attempt any four questions out of the remaining five questions. 
1. (a)  A skilled worker is paid a guaranteed wage rate of ` 150.00 per hour.
The standard time allowed for a job is 50 hours. He gets an effective 
hourly rate of wages of ` 180.00 under Rowan Incentive Plan due to 
saving in time. For the same saving in time, CALCULATE the hourly rate 
48