Cost and Management Accounting Model Test Paper - 7 (Questions) | Model Test Papers for CA Intermediate PDF Download

 Page 1


MODEL TEST PAPER 7 
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. 
Case Scenario I 
A truck driver, named Raju, owns a truck which can carry 5 tonne of material at a 
time. Raju has no other truck and he has listed himself with various carriage 
services agencies, to offer his services. He gets his work from these agencies and 
they pay him as per the load and the distance. Raju has one condition that he must 
be paid for at least 75% of his total capacity. Raju charges freight at ` 10 per tonne-
km.  
He received a work contract, from one of these agencies, where he has to take 4 
tonne from Delhi in the morning and drop it off at Chandigarh. After that he will 
move to Ludhiana, where he again loads 3 tonne and come back to Delhi by 
evening. This contract is for nearly 3 months. 
Raju is excited to accept the order but it is not physically possible for Raju to 
complete this project alone. He decides to hire a helper cum driver who will assist 
him in this work contract and will also drive in turns with Raju. Thus, such a long 
contract will be managed comfortably. This helper will take ` 15,000 per month.  
The contract will start from 15
th
 June, 2024 and will run till 14
th
 September, 2024. 
Throughout this time period there are only 2 days holidays, both falling in August 
(1 for Independence Day and 1 for Raksha Bandhan).  
73
Page 2


MODEL TEST PAPER 7 
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. 
Case Scenario I 
A truck driver, named Raju, owns a truck which can carry 5 tonne of material at a 
time. Raju has no other truck and he has listed himself with various carriage 
services agencies, to offer his services. He gets his work from these agencies and 
they pay him as per the load and the distance. Raju has one condition that he must 
be paid for at least 75% of his total capacity. Raju charges freight at ` 10 per tonne-
km.  
He received a work contract, from one of these agencies, where he has to take 4 
tonne from Delhi in the morning and drop it off at Chandigarh. After that he will 
move to Ludhiana, where he again loads 3 tonne and come back to Delhi by 
evening. This contract is for nearly 3 months. 
Raju is excited to accept the order but it is not physically possible for Raju to 
complete this project alone. He decides to hire a helper cum driver who will assist 
him in this work contract and will also drive in turns with Raju. Thus, such a long 
contract will be managed comfortably. This helper will take ` 15,000 per month.  
The contract will start from 15
th
 June, 2024 and will run till 14
th
 September, 2024. 
Throughout this time period there are only 2 days holidays, both falling in August 
(1 for Independence Day and 1 for Raksha Bandhan).  
73
Some information about the Truck and its associated costs: 
• Truck was purchased on 1
st
 April, 2021 by taking a loan of ` 20,00,000 @ 
10% p.a. from Punjab national bank for 5 years. Raju mortgaged jewellery of 
his wife to get this loan.  
• Every year-end he has to pay ` 5,27,595 as instalment.  
• Scrap value after 10 years is expected to be ` 500,000. 
• Depreciation is charged on straight-line method. 
• Services and maintenance charges each month is ` 80,000. 
• Truck runs on diesel and its running average is 8kms/ litre.  
• Diesel cost per litre: 
June 80.30 
July 80.50 
August 81.25 
September 80.90 
Yearly interest amount of loan and yearly depreciation is charged to a work contract 
on the basis of days worked in a year in the contract. 
Distance between these places: 
(1) Delhi to Chandigarh = 250 kms 
(2) Chandigarh to Ludhiana = 100 kms 
(3) Ludhiana to Delhi = 150 kms 
Answer the following questions (MCQs 1 to 5): 
1. What would be the amount of profit Raju would have earned if he had no 
minimum charges limit of 75% of total capacity on absolute Tonne-km 
basis? (If the vehicle runs empty then he would only charge for Diesel 
expenses). 
A. 3,34,249 
B. 4,43,249 
C. 5,96,977 
D. 4,34,249 
2. If payment was made on commercial Tonne-km basis and Raju had no 
minimum charges limit of 75%, how much he would have lost due to no 
minimum requirement?  
A. ` 6,37,500 
B. ` 5,93,750 
C. ` 4,92,438 
D. ` 3,91,126 
74
Page 3


MODEL TEST PAPER 7 
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. 
Case Scenario I 
A truck driver, named Raju, owns a truck which can carry 5 tonne of material at a 
time. Raju has no other truck and he has listed himself with various carriage 
services agencies, to offer his services. He gets his work from these agencies and 
they pay him as per the load and the distance. Raju has one condition that he must 
be paid for at least 75% of his total capacity. Raju charges freight at ` 10 per tonne-
km.  
He received a work contract, from one of these agencies, where he has to take 4 
tonne from Delhi in the morning and drop it off at Chandigarh. After that he will 
move to Ludhiana, where he again loads 3 tonne and come back to Delhi by 
evening. This contract is for nearly 3 months. 
Raju is excited to accept the order but it is not physically possible for Raju to 
complete this project alone. He decides to hire a helper cum driver who will assist 
him in this work contract and will also drive in turns with Raju. Thus, such a long 
contract will be managed comfortably. This helper will take ` 15,000 per month.  
The contract will start from 15
th
 June, 2024 and will run till 14
th
 September, 2024. 
Throughout this time period there are only 2 days holidays, both falling in August 
(1 for Independence Day and 1 for Raksha Bandhan).  
73
Some information about the Truck and its associated costs: 
• Truck was purchased on 1
st
 April, 2021 by taking a loan of ` 20,00,000 @ 
10% p.a. from Punjab national bank for 5 years. Raju mortgaged jewellery of 
his wife to get this loan.  
• Every year-end he has to pay ` 5,27,595 as instalment.  
• Scrap value after 10 years is expected to be ` 500,000. 
• Depreciation is charged on straight-line method. 
• Services and maintenance charges each month is ` 80,000. 
• Truck runs on diesel and its running average is 8kms/ litre.  
• Diesel cost per litre: 
June 80.30 
July 80.50 
August 81.25 
September 80.90 
Yearly interest amount of loan and yearly depreciation is charged to a work contract 
on the basis of days worked in a year in the contract. 
Distance between these places: 
(1) Delhi to Chandigarh = 250 kms 
(2) Chandigarh to Ludhiana = 100 kms 
(3) Ludhiana to Delhi = 150 kms 
Answer the following questions (MCQs 1 to 5): 
1. What would be the amount of profit Raju would have earned if he had no 
minimum charges limit of 75% of total capacity on absolute Tonne-km 
basis? (If the vehicle runs empty then he would only charge for Diesel 
expenses). 
A. 3,34,249 
B. 4,43,249 
C. 5,96,977 
D. 4,34,249 
2. If payment was made on commercial Tonne-km basis and Raju had no 
minimum charges limit of 75%, how much he would have lost due to no 
minimum requirement?  
A. ` 6,37,500 
B. ` 5,93,750 
C. ` 4,92,438 
D. ` 3,91,126 
74
3. What should be the minimum amount charged on basis of absolute Tonne-
km if Raju wants to earn ` 2,70,000? 
A. ` 4.58 
B. ` 6.13 
C. ` 8.39 
D. ` 3.21 
4. Choose the correct amount of depreciation and interest that should be 
charged to this work contract. 
A. 56,983 & 22,588 
B. 36,986 & 22,578 
C. 63,963 & 12,568 
D. 63,953 & 12,558 
5. What is the profit as per current rate charged by Raju? (Use absolute 
Tonne-Km). 
A. 7,34,249 
B. 9,44,863 
C. 5,96,977 
D. 4,34,249  (5 x 2 Marks) 
Case Scenario II 
eSalt is the  biggest producer of sodium hydroxide in India. This main  product of 
the company has a strong reactivity with other organic compounds. It is highly 
versatile and is alkaline in nature.  However, the basic material required for the 
production of this product is salt along with the electricity.  
The manufacturing process involve electrolysis which produces Halogen as co-
product. Modern use of Halogen is widespread. However, the common use is in 
disinfection like for purifying drinking water or swimming pool water. It is also an 
important ingredient of toothpaste. Thus, the company’s management affirmed 
the simultaneous production of Halogen.  
During the previous financial year, the company purchased the base material of  
` 5,34,000. For the current year, company decided to increase the production by 
2 times. Due to increased production, the total conversion cost hiked to 3 times. 
Last year, the conversion cost accounted to ` 8,01,000 up to the point at which 
two products i.e. sodium hydroxide and Halogen are separated.  
The production and sales information for current year is provided as below: 
 Sodium hydroxide Halogen 
Production/ Sales(in tonne) 24,030 16,020 
Selling price per tonne (`) 100 150 
During the current year, the management of the company pointed the extensive 
use of Vinyl which can be produced by further processing Halogen. Having selling 
75
Page 4


MODEL TEST PAPER 7 
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. 
Case Scenario I 
A truck driver, named Raju, owns a truck which can carry 5 tonne of material at a 
time. Raju has no other truck and he has listed himself with various carriage 
services agencies, to offer his services. He gets his work from these agencies and 
they pay him as per the load and the distance. Raju has one condition that he must 
be paid for at least 75% of his total capacity. Raju charges freight at ` 10 per tonne-
km.  
He received a work contract, from one of these agencies, where he has to take 4 
tonne from Delhi in the morning and drop it off at Chandigarh. After that he will 
move to Ludhiana, where he again loads 3 tonne and come back to Delhi by 
evening. This contract is for nearly 3 months. 
Raju is excited to accept the order but it is not physically possible for Raju to 
complete this project alone. He decides to hire a helper cum driver who will assist 
him in this work contract and will also drive in turns with Raju. Thus, such a long 
contract will be managed comfortably. This helper will take ` 15,000 per month.  
The contract will start from 15
th
 June, 2024 and will run till 14
th
 September, 2024. 
Throughout this time period there are only 2 days holidays, both falling in August 
(1 for Independence Day and 1 for Raksha Bandhan).  
73
Some information about the Truck and its associated costs: 
• Truck was purchased on 1
st
 April, 2021 by taking a loan of ` 20,00,000 @ 
10% p.a. from Punjab national bank for 5 years. Raju mortgaged jewellery of 
his wife to get this loan.  
• Every year-end he has to pay ` 5,27,595 as instalment.  
• Scrap value after 10 years is expected to be ` 500,000. 
• Depreciation is charged on straight-line method. 
• Services and maintenance charges each month is ` 80,000. 
• Truck runs on diesel and its running average is 8kms/ litre.  
• Diesel cost per litre: 
June 80.30 
July 80.50 
August 81.25 
September 80.90 
Yearly interest amount of loan and yearly depreciation is charged to a work contract 
on the basis of days worked in a year in the contract. 
Distance between these places: 
(1) Delhi to Chandigarh = 250 kms 
(2) Chandigarh to Ludhiana = 100 kms 
(3) Ludhiana to Delhi = 150 kms 
Answer the following questions (MCQs 1 to 5): 
1. What would be the amount of profit Raju would have earned if he had no 
minimum charges limit of 75% of total capacity on absolute Tonne-km 
basis? (If the vehicle runs empty then he would only charge for Diesel 
expenses). 
A. 3,34,249 
B. 4,43,249 
C. 5,96,977 
D. 4,34,249 
2. If payment was made on commercial Tonne-km basis and Raju had no 
minimum charges limit of 75%, how much he would have lost due to no 
minimum requirement?  
A. ` 6,37,500 
B. ` 5,93,750 
C. ` 4,92,438 
D. ` 3,91,126 
74
3. What should be the minimum amount charged on basis of absolute Tonne-
km if Raju wants to earn ` 2,70,000? 
A. ` 4.58 
B. ` 6.13 
C. ` 8.39 
D. ` 3.21 
4. Choose the correct amount of depreciation and interest that should be 
charged to this work contract. 
A. 56,983 & 22,588 
B. 36,986 & 22,578 
C. 63,963 & 12,568 
D. 63,953 & 12,558 
5. What is the profit as per current rate charged by Raju? (Use absolute 
Tonne-Km). 
A. 7,34,249 
B. 9,44,863 
C. 5,96,977 
D. 4,34,249  (5 x 2 Marks) 
Case Scenario II 
eSalt is the  biggest producer of sodium hydroxide in India. This main  product of 
the company has a strong reactivity with other organic compounds. It is highly 
versatile and is alkaline in nature.  However, the basic material required for the 
production of this product is salt along with the electricity.  
The manufacturing process involve electrolysis which produces Halogen as co-
product. Modern use of Halogen is widespread. However, the common use is in 
disinfection like for purifying drinking water or swimming pool water. It is also an 
important ingredient of toothpaste. Thus, the company’s management affirmed 
the simultaneous production of Halogen.  
During the previous financial year, the company purchased the base material of  
` 5,34,000. For the current year, company decided to increase the production by 
2 times. Due to increased production, the total conversion cost hiked to 3 times. 
Last year, the conversion cost accounted to ` 8,01,000 up to the point at which 
two products i.e. sodium hydroxide and Halogen are separated.  
The production and sales information for current year is provided as below: 
 Sodium hydroxide Halogen 
Production/ Sales(in tonne) 24,030 16,020 
Selling price per tonne (`) 100 150 
During the current year, the management of the company pointed the extensive 
use of Vinyl which can be produced by further processing Halogen. Having selling 
75
price of ` 250 per tonne higher than that of the Halogen, it was decided not to sell 
Halogen and further process it into Vinyl.  The incremental processing cost took  
` 8,01,000 producing 10,012.50 tonnes of Vinyl.  
You are required to FIGURE OUT the following for managerial decision (MCQs 6 
to 10): 
6. For the current year, the amount of base material purchased and the 
conversion cost up to the point at which two products i.e. Sodium hydroxide 
and Halogen are separated would be: 
A. base material ` 10,68,000 and conversion cost ` 24,03,000 
B. base material ` 10,68,000 and conversion cost ` 16,02,000 
C. base material ` 16,02,000 and conversion cost ` 24,03,000 
D. base material ` 24,03,000 and conversion cost ` 16,02,000 
7. Joint cost to be apportioned between Sodium hydroxide and Halogen as per 
the physical unit method would be: 
A. Sodium hydroxide ` 24,03,000 and Halogen ` 10,68,000 
B. Sodium hydroxide ` 10,68,000 and Halogen ` 16,02,000 
C. Sodium hydroxide ` 16,02,000 and Halogen ` 24,03,000 
D. Sodium hydroxide ` 24,03,000 and Halogen ` 16,02,000 
8. Joint cost to be apportioned between Sodium hydroxide and Halogen as per 
the sales value at split- off point method would be: 
A. Sodium hydroxide ` 20,02,500 and Halogen ` 20,02,500 
B. Sodium hydroxide ` 16,02,000 and Halogen ` 24,03,000 
C. Sodium hydroxide ` 24,03,000 and Halogen ` 16,02,000 
D. Sodium hydroxide ` 10,68,000 and Halogen ` 20,02,500 
9. Joint cost to be apportioned between Sodium hydroxide and Halogen as per 
the estimated net realisable value method would be: 
A. Sodium hydroxide ` 23,44,390 and Halogen ` 16,60,610 
B. Sodium hydroxide ` 17,16,429 and Halogen ` 22,88,571 
C. Sodium hydroxide ` 22,88,571 and Halogen ` 17,16,429 
D. Sodium hydroxide ` 16,60,610 and Halogen ` 23,44,390 
10. Considering that the decision relating to further processing Halogen is not 
approved, suggest whether this would be in favour of the management by 
calculating incremental revenue /loss from further processing Halogen into 
Vinyl. 
A. Incremental loss would be ` 16,02,000, thus the decision of not further 
processing Halogen is correct. 
B. Incremental loss would be ` 8,01,000, thus the decision of not further 
processing Halogen is correct.  
76
Page 5


MODEL TEST PAPER 7 
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. 
Case Scenario I 
A truck driver, named Raju, owns a truck which can carry 5 tonne of material at a 
time. Raju has no other truck and he has listed himself with various carriage 
services agencies, to offer his services. He gets his work from these agencies and 
they pay him as per the load and the distance. Raju has one condition that he must 
be paid for at least 75% of his total capacity. Raju charges freight at ` 10 per tonne-
km.  
He received a work contract, from one of these agencies, where he has to take 4 
tonne from Delhi in the morning and drop it off at Chandigarh. After that he will 
move to Ludhiana, where he again loads 3 tonne and come back to Delhi by 
evening. This contract is for nearly 3 months. 
Raju is excited to accept the order but it is not physically possible for Raju to 
complete this project alone. He decides to hire a helper cum driver who will assist 
him in this work contract and will also drive in turns with Raju. Thus, such a long 
contract will be managed comfortably. This helper will take ` 15,000 per month.  
The contract will start from 15
th
 June, 2024 and will run till 14
th
 September, 2024. 
Throughout this time period there are only 2 days holidays, both falling in August 
(1 for Independence Day and 1 for Raksha Bandhan).  
73
Some information about the Truck and its associated costs: 
• Truck was purchased on 1
st
 April, 2021 by taking a loan of ` 20,00,000 @ 
10% p.a. from Punjab national bank for 5 years. Raju mortgaged jewellery of 
his wife to get this loan.  
• Every year-end he has to pay ` 5,27,595 as instalment.  
• Scrap value after 10 years is expected to be ` 500,000. 
• Depreciation is charged on straight-line method. 
• Services and maintenance charges each month is ` 80,000. 
• Truck runs on diesel and its running average is 8kms/ litre.  
• Diesel cost per litre: 
June 80.30 
July 80.50 
August 81.25 
September 80.90 
Yearly interest amount of loan and yearly depreciation is charged to a work contract 
on the basis of days worked in a year in the contract. 
Distance between these places: 
(1) Delhi to Chandigarh = 250 kms 
(2) Chandigarh to Ludhiana = 100 kms 
(3) Ludhiana to Delhi = 150 kms 
Answer the following questions (MCQs 1 to 5): 
1. What would be the amount of profit Raju would have earned if he had no 
minimum charges limit of 75% of total capacity on absolute Tonne-km 
basis? (If the vehicle runs empty then he would only charge for Diesel 
expenses). 
A. 3,34,249 
B. 4,43,249 
C. 5,96,977 
D. 4,34,249 
2. If payment was made on commercial Tonne-km basis and Raju had no 
minimum charges limit of 75%, how much he would have lost due to no 
minimum requirement?  
A. ` 6,37,500 
B. ` 5,93,750 
C. ` 4,92,438 
D. ` 3,91,126 
74
3. What should be the minimum amount charged on basis of absolute Tonne-
km if Raju wants to earn ` 2,70,000? 
A. ` 4.58 
B. ` 6.13 
C. ` 8.39 
D. ` 3.21 
4. Choose the correct amount of depreciation and interest that should be 
charged to this work contract. 
A. 56,983 & 22,588 
B. 36,986 & 22,578 
C. 63,963 & 12,568 
D. 63,953 & 12,558 
5. What is the profit as per current rate charged by Raju? (Use absolute 
Tonne-Km). 
A. 7,34,249 
B. 9,44,863 
C. 5,96,977 
D. 4,34,249  (5 x 2 Marks) 
Case Scenario II 
eSalt is the  biggest producer of sodium hydroxide in India. This main  product of 
the company has a strong reactivity with other organic compounds. It is highly 
versatile and is alkaline in nature.  However, the basic material required for the 
production of this product is salt along with the electricity.  
The manufacturing process involve electrolysis which produces Halogen as co-
product. Modern use of Halogen is widespread. However, the common use is in 
disinfection like for purifying drinking water or swimming pool water. It is also an 
important ingredient of toothpaste. Thus, the company’s management affirmed 
the simultaneous production of Halogen.  
During the previous financial year, the company purchased the base material of  
` 5,34,000. For the current year, company decided to increase the production by 
2 times. Due to increased production, the total conversion cost hiked to 3 times. 
Last year, the conversion cost accounted to ` 8,01,000 up to the point at which 
two products i.e. sodium hydroxide and Halogen are separated.  
The production and sales information for current year is provided as below: 
 Sodium hydroxide Halogen 
Production/ Sales(in tonne) 24,030 16,020 
Selling price per tonne (`) 100 150 
During the current year, the management of the company pointed the extensive 
use of Vinyl which can be produced by further processing Halogen. Having selling 
75
price of ` 250 per tonne higher than that of the Halogen, it was decided not to sell 
Halogen and further process it into Vinyl.  The incremental processing cost took  
` 8,01,000 producing 10,012.50 tonnes of Vinyl.  
You are required to FIGURE OUT the following for managerial decision (MCQs 6 
to 10): 
6. For the current year, the amount of base material purchased and the 
conversion cost up to the point at which two products i.e. Sodium hydroxide 
and Halogen are separated would be: 
A. base material ` 10,68,000 and conversion cost ` 24,03,000 
B. base material ` 10,68,000 and conversion cost ` 16,02,000 
C. base material ` 16,02,000 and conversion cost ` 24,03,000 
D. base material ` 24,03,000 and conversion cost ` 16,02,000 
7. Joint cost to be apportioned between Sodium hydroxide and Halogen as per 
the physical unit method would be: 
A. Sodium hydroxide ` 24,03,000 and Halogen ` 10,68,000 
B. Sodium hydroxide ` 10,68,000 and Halogen ` 16,02,000 
C. Sodium hydroxide ` 16,02,000 and Halogen ` 24,03,000 
D. Sodium hydroxide ` 24,03,000 and Halogen ` 16,02,000 
8. Joint cost to be apportioned between Sodium hydroxide and Halogen as per 
the sales value at split- off point method would be: 
A. Sodium hydroxide ` 20,02,500 and Halogen ` 20,02,500 
B. Sodium hydroxide ` 16,02,000 and Halogen ` 24,03,000 
C. Sodium hydroxide ` 24,03,000 and Halogen ` 16,02,000 
D. Sodium hydroxide ` 10,68,000 and Halogen ` 20,02,500 
9. Joint cost to be apportioned between Sodium hydroxide and Halogen as per 
the estimated net realisable value method would be: 
A. Sodium hydroxide ` 23,44,390 and Halogen ` 16,60,610 
B. Sodium hydroxide ` 17,16,429 and Halogen ` 22,88,571 
C. Sodium hydroxide ` 22,88,571 and Halogen ` 17,16,429 
D. Sodium hydroxide ` 16,60,610 and Halogen ` 23,44,390 
10. Considering that the decision relating to further processing Halogen is not 
approved, suggest whether this would be in favour of the management by 
calculating incremental revenue /loss from further processing Halogen into 
Vinyl. 
A. Incremental loss would be ` 16,02,000, thus the decision of not further 
processing Halogen is correct. 
B. Incremental loss would be ` 8,01,000, thus the decision of not further 
processing Halogen is correct.  
76
C. Incremental revenue would be ` 8,01,000, thus the decision relating to 
further processing Halogen needs to be approved. 
D. Incremental revenue would be ` 16,02,000, thus the decision relating 
to further processing Halogen needs to be approved. (5 x 2 Marks) 
11. Mr. Ben is paid higher wages than Mr. Akon. Though their normal wage rate 
is same, Mr. Ben gets higher payment as under Halsey system than that to 
Mr. Akon as under Rowan System.  
 The total time allowed to make the same product is 75 hours, however, Mr. 
Ben takes 60 hours while Mr. Akon takes 45 hours.  
 The production of the product also involve other costs that are not traced 
directly to the product like salary to quality assurance manager, factory rent, 
supplies, salary to production supervisor, electricity consumed, etc. which 
comes to ` 2,26,800 leading to factory overhead rate being ` 120 per man-
hour actually worked.  
 The total factory cost for the product produced by Mr. Akon comes to ` 
1,25,640 and by Mr. Ben comes to ` 1,29,600. 
 From the information given above, COMPUTE the normal wage rate along 
with the cost of material. 
A. Normal wage rate- ` 63 per hour and cost of material- ` 1,20,240 
B. Normal wage rate- ` 67.5 per hour and cost of material- ` 1,22,400 
C. Normal wage rate- ` 480 per hour and cost of material- ` 90,000 
D. Normal wage rate- ` 450 per hour and cost of material- ` 87,840 
 (2 Marks) 
12.  WHICH of the following is the correct journal entry as would appear in the 
cost books when there is under recovery of overheads? 
A. Cost of Sales A/c…………………………………. Dr. xxx 
  To Administrative Overhead Control A/c   xxx 
B. Production Overhead Control A/c…………………Dr. xxx 
  To  Work-in-Process Ledger Control A/c   xxx 
C. Costing Profit & Loss A/c……………………………Dr.  xxx 
  To Administrative Overhead Control A/c   xxx 
D. Work-in-Process Ledger Control A/c………………Dr. xxx 
  To Production Overhead Control A/c    xxx 
 (2 Marks) 
  
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