Cost and Management Accounting Model Test Paper - 1 (Answers) - CA Intermediate PDF Download

 Page 1


ANSWER OF MODEL TEST PAPER 1 
INTERMEDIATE: GROUP – II 
PAPER – 4: COST AND MANAGEMENT ACCOUNTING 
Suggested Answers/ Solution 
PART I – Case Scenario based MCQs 
1. i. D 
Inflow into process Litres Outflow from process Litres 
Opening WIP 500 Transferred to finished 
goods 
3,400 
Quantity introduced 
(Balancing figure) 
3,800 Total loss 800 
Closing WIP 100 
4,300 4,300 
ii. A
Total loss 800 litres 
Normal loss (10% of fresh input i.e. 3,800) 380 litres 
Abnormal loss 420 litres 
iii. B
Calculation of Equivalent production units 
Input Details Units 
Output 
Particulars 
Units 
Equivalent Production 
Material Labour Overheads 
% Units % Units % Units 
Opening WIP 500 From 
Opening WIP 
500 - - 20 100 40 200 
Fresh inputs 3,800 From fresh 
units 
2900 100 2900 100 2900 100 2900 
Normal loss 380 - - - 
Closing WIP 100 100 100 20 20 10 10 
Abnormal 
loss 
420 100 420 100 420 100 420 
4,300 4,300 3,420 3,440 3,530 
Value of raw materials introduced during the month 
Equivalent 
units 
Cost per EU 
(`) 
Total cost 
(`) 
Total value of raw material 3420 300 10,26,000 
Add: Scrap value of normal 
loss 
380 20 7,600 
Value of raw material 
introduced 
10,33,600 
273
Page 2


ANSWER OF MODEL TEST PAPER 1 
INTERMEDIATE: GROUP – II 
PAPER – 4: COST AND MANAGEMENT ACCOUNTING 
Suggested Answers/ Solution 
PART I – Case Scenario based MCQs 
1. i. D 
Inflow into process Litres Outflow from process Litres 
Opening WIP 500 Transferred to finished 
goods 
3,400 
Quantity introduced 
(Balancing figure) 
3,800 Total loss 800 
Closing WIP 100 
4,300 4,300 
ii. A
Total loss 800 litres 
Normal loss (10% of fresh input i.e. 3,800) 380 litres 
Abnormal loss 420 litres 
iii. B
Calculation of Equivalent production units 
Input Details Units 
Output 
Particulars 
Units 
Equivalent Production 
Material Labour Overheads 
% Units % Units % Units 
Opening WIP 500 From 
Opening WIP 
500 - - 20 100 40 200 
Fresh inputs 3,800 From fresh 
units 
2900 100 2900 100 2900 100 2900 
Normal loss 380 - - - 
Closing WIP 100 100 100 20 20 10 10 
Abnormal 
loss 
420 100 420 100 420 100 420 
4,300 4,300 3,420 3,440 3,530 
Value of raw materials introduced during the month 
Equivalent 
units 
Cost per EU 
(`) 
Total cost 
(`) 
Total value of raw material 3420 300 10,26,000 
Add: Scrap value of normal 
loss 
380 20 7,600 
Value of raw material 
introduced 
10,33,600 
273
iv. A
Value of labour and overhead in closing Work in process
Cost elements Equivalent 
units 
Cost per EU 
(`) 
Total cost 
(`) 
Labour 20 200 4,000 
Overheads 10 160 1,600 
v. C
Value of output transferred to finished goods
Output transferred (Units) × Equivalent cost per unit
3,400 Litres × `660 = `22,44,000
2. i. D
ii. C Please refer cost sheet below for cost of production 
Cost of production per manshift = 
Cost of production ÷ Total manshift 
` 7,87,28,000 ÷ 46,800 = `1,682.22 
iii. A Car hire charges including GST @5%, please refer the cost sheet 
iv. B Selling and distribution cost includes the following: 
Maintenance cost for weighing bridge 12,000 
AMC cost of CCTV installed at weigh bridge 8,000 
TA/ DA & hotel bill of sales manager 36,000 
56,000 
For Cost of Sale please refer the cost sheet 
v. A Manshift = 1,800 employees × 26 days = 46,800 manshifts 
Computation of earnings per manshift (EMS): 
EMS =
Total employee benefits paid
Manshift
=
` 7,04,20,000
46,800
= ` 1504.70 
Computation of Output per manshift (OMS): 
OMS =
Total Output/ Production
Manshift
=
2,34,000 Tonne
46,800
 = 5 tonnes 
274
Page 3


ANSWER OF MODEL TEST PAPER 1 
INTERMEDIATE: GROUP – II 
PAPER – 4: COST AND MANAGEMENT ACCOUNTING 
Suggested Answers/ Solution 
PART I – Case Scenario based MCQs 
1. i. D 
Inflow into process Litres Outflow from process Litres 
Opening WIP 500 Transferred to finished 
goods 
3,400 
Quantity introduced 
(Balancing figure) 
3,800 Total loss 800 
Closing WIP 100 
4,300 4,300 
ii. A
Total loss 800 litres 
Normal loss (10% of fresh input i.e. 3,800) 380 litres 
Abnormal loss 420 litres 
iii. B
Calculation of Equivalent production units 
Input Details Units 
Output 
Particulars 
Units 
Equivalent Production 
Material Labour Overheads 
% Units % Units % Units 
Opening WIP 500 From 
Opening WIP 
500 - - 20 100 40 200 
Fresh inputs 3,800 From fresh 
units 
2900 100 2900 100 2900 100 2900 
Normal loss 380 - - - 
Closing WIP 100 100 100 20 20 10 10 
Abnormal 
loss 
420 100 420 100 420 100 420 
4,300 4,300 3,420 3,440 3,530 
Value of raw materials introduced during the month 
Equivalent 
units 
Cost per EU 
(`) 
Total cost 
(`) 
Total value of raw material 3420 300 10,26,000 
Add: Scrap value of normal 
loss 
380 20 7,600 
Value of raw material 
introduced 
10,33,600 
273
iv. A
Value of labour and overhead in closing Work in process
Cost elements Equivalent 
units 
Cost per EU 
(`) 
Total cost 
(`) 
Labour 20 200 4,000 
Overheads 10 160 1,600 
v. C
Value of output transferred to finished goods
Output transferred (Units) × Equivalent cost per unit
3,400 Litres × `660 = `22,44,000
2. i. D
ii. C Please refer cost sheet below for cost of production 
Cost of production per manshift = 
Cost of production ÷ Total manshift 
` 7,87,28,000 ÷ 46,800 = `1,682.22 
iii. A Car hire charges including GST @5%, please refer the cost sheet 
iv. B Selling and distribution cost includes the following: 
Maintenance cost for weighing bridge 12,000 
AMC cost of CCTV installed at weigh bridge 8,000 
TA/ DA & hotel bill of sales manager 36,000 
56,000 
For Cost of Sale please refer the cost sheet 
v. A Manshift = 1,800 employees × 26 days = 46,800 manshifts 
Computation of earnings per manshift (EMS): 
EMS =
Total employee benefits paid
Manshift
=
` 7,04,20,000
46,800
= ` 1504.70 
Computation of Output per manshift (OMS): 
OMS =
Total Output/ Production
Manshift
=
2,34,000 Tonne
46,800
 = 5 tonnes 
274
Workings 
Cost Sheet of M Ltd. for the last month 
Particulars Amount (`) Amount (`) 
Materials consumed 50,00,000 
Wages & Salary  6,40,00,000 
Gratuity & leave encashment 64,20,000 7,04,20,000 
Power cost (13,000 kwh × `8) 1,04,000 
Diesel cost (2,000 ltr × `93) 1,86,000 2,90,000 
HEMM hiring charges 30,00,000 
Prime Cost 7,87,10,000 
AMC cost of CCTV installed at factory 
premises 
18,000 
Cost of Production/ Cost of Goods 
Sold 
7,87,28,000 
Hiring charges of cars 66,000 
Reimbursement of diesel cost 22,000 
88,000 
Add: GST @5% on RCM basis 4,400 92,400 
Maintenance cost for weighing bridge 12,000 
AMC cost of CCTV installed at weigh 
bridge 
8,000 20,000 
TA/ DA & hotel bill of sales manager 36,000 
Cost of Sales 7,88,76,400 
3. D Labour rate variance = Standard time for actual production (SR- AR) 
7,500 (A) = (30,000 × 30 minutes/60 minutes) × (50-AR) 
AR = (7,50,000 + 7,500)/15,000 = `50.50 per hour 
Actual wages per unit = 50.50/2 = `25.25 
4. B Variable overhead for each % of level of activity  
=
40,00,000-30,00,000
75-50
 = 40,000 
Fixed cost = 30,00,000 – (40,000 × 50) = 10,00,000 
Total overheads for 60% level of activity 
= 10,00,000 + (40,000 × 60) = 34,00,000 
5. C
6. B Actual Overhead – (Actual machine hours × machine hour rate) 
5,20,000 – (17040 × 30) = 8,800 under absorbed 
7. A Optimum batch size or Economic Batch Quantity (EBQ): 
275
Page 4


ANSWER OF MODEL TEST PAPER 1 
INTERMEDIATE: GROUP – II 
PAPER – 4: COST AND MANAGEMENT ACCOUNTING 
Suggested Answers/ Solution 
PART I – Case Scenario based MCQs 
1. i. D 
Inflow into process Litres Outflow from process Litres 
Opening WIP 500 Transferred to finished 
goods 
3,400 
Quantity introduced 
(Balancing figure) 
3,800 Total loss 800 
Closing WIP 100 
4,300 4,300 
ii. A
Total loss 800 litres 
Normal loss (10% of fresh input i.e. 3,800) 380 litres 
Abnormal loss 420 litres 
iii. B
Calculation of Equivalent production units 
Input Details Units 
Output 
Particulars 
Units 
Equivalent Production 
Material Labour Overheads 
% Units % Units % Units 
Opening WIP 500 From 
Opening WIP 
500 - - 20 100 40 200 
Fresh inputs 3,800 From fresh 
units 
2900 100 2900 100 2900 100 2900 
Normal loss 380 - - - 
Closing WIP 100 100 100 20 20 10 10 
Abnormal 
loss 
420 100 420 100 420 100 420 
4,300 4,300 3,420 3,440 3,530 
Value of raw materials introduced during the month 
Equivalent 
units 
Cost per EU 
(`) 
Total cost 
(`) 
Total value of raw material 3420 300 10,26,000 
Add: Scrap value of normal 
loss 
380 20 7,600 
Value of raw material 
introduced 
10,33,600 
273
iv. A
Value of labour and overhead in closing Work in process
Cost elements Equivalent 
units 
Cost per EU 
(`) 
Total cost 
(`) 
Labour 20 200 4,000 
Overheads 10 160 1,600 
v. C
Value of output transferred to finished goods
Output transferred (Units) × Equivalent cost per unit
3,400 Litres × `660 = `22,44,000
2. i. D
ii. C Please refer cost sheet below for cost of production 
Cost of production per manshift = 
Cost of production ÷ Total manshift 
` 7,87,28,000 ÷ 46,800 = `1,682.22 
iii. A Car hire charges including GST @5%, please refer the cost sheet 
iv. B Selling and distribution cost includes the following: 
Maintenance cost for weighing bridge 12,000 
AMC cost of CCTV installed at weigh bridge 8,000 
TA/ DA & hotel bill of sales manager 36,000 
56,000 
For Cost of Sale please refer the cost sheet 
v. A Manshift = 1,800 employees × 26 days = 46,800 manshifts 
Computation of earnings per manshift (EMS): 
EMS =
Total employee benefits paid
Manshift
=
` 7,04,20,000
46,800
= ` 1504.70 
Computation of Output per manshift (OMS): 
OMS =
Total Output/ Production
Manshift
=
2,34,000 Tonne
46,800
 = 5 tonnes 
274
Workings 
Cost Sheet of M Ltd. for the last month 
Particulars Amount (`) Amount (`) 
Materials consumed 50,00,000 
Wages & Salary  6,40,00,000 
Gratuity & leave encashment 64,20,000 7,04,20,000 
Power cost (13,000 kwh × `8) 1,04,000 
Diesel cost (2,000 ltr × `93) 1,86,000 2,90,000 
HEMM hiring charges 30,00,000 
Prime Cost 7,87,10,000 
AMC cost of CCTV installed at factory 
premises 
18,000 
Cost of Production/ Cost of Goods 
Sold 
7,87,28,000 
Hiring charges of cars 66,000 
Reimbursement of diesel cost 22,000 
88,000 
Add: GST @5% on RCM basis 4,400 92,400 
Maintenance cost for weighing bridge 12,000 
AMC cost of CCTV installed at weigh 
bridge 
8,000 20,000 
TA/ DA & hotel bill of sales manager 36,000 
Cost of Sales 7,88,76,400 
3. D Labour rate variance = Standard time for actual production (SR- AR) 
7,500 (A) = (30,000 × 30 minutes/60 minutes) × (50-AR) 
AR = (7,50,000 + 7,500)/15,000 = `50.50 per hour 
Actual wages per unit = 50.50/2 = `25.25 
4. B Variable overhead for each % of level of activity  
=
40,00,000-30,00,000
75-50
 = 40,000 
Fixed cost = 30,00,000 – (40,000 × 50) = 10,00,000 
Total overheads for 60% level of activity 
= 10,00,000 + (40,000 × 60) = 34,00,000 
5. C
6. B Actual Overhead – (Actual machine hours × machine hour rate) 
5,20,000 – (17040 × 30) = 8,800 under absorbed 
7. A Optimum batch size or Economic Batch Quantity (EBQ): 
275
EBQ  = 
2DS
C
=
2 80,000 3,500
12
??
 = 6,832 units.
Number of Optimum runs = 80,000 ÷ 6,832 = 11.70 or 12 run 
PART-II 
1. (a) (i) Production Budget (in units) for the year ended 31
st
 March 
2025 
Product X Product Y 
Budgeted sales (units) 28,000 13,000 
Add: Increase in closing stock 320 160 
No. good units to be produced 28,320 13,160 
Post production rejection rate 4% 6% 
No. of units to be produced 29,500 
28,320
0.96
??
??
??
14,000 
13,160
0.94
??
??
??
(ii) Calculation of Economic Order Quantity for Material Z
EOQ =v
2×2,52,310×15,600
72×11%
= v
5,04,620×15,600
72×11%
 = 31,526.95 kg. 
(b) Purchase budget (in kgs and value) for Material Z
Product X Product 
Y 
No. of units to be produced 29,500 14,000 
Usage of Material Z per unit of 
production 
5 kg. 6 kg. 
Material needed for production 1,47,500 kg. 84,000 kg. 
Materials to be purchased 1,63,889 kg. 
1,47,500
0.90
??
??
??
88,421 kg. 
84,000
0.95
??
??
??
Total quantity to be purchased 2,52,310 kg. 
Rate per kg. of Material Z `72 
Total purchase price `1,81,66,320 
(c) Since, the maximum number of orders per year cannot be more than 40
orders and the maximum quantity per order that can be purchased is
4,000 kg. Hence, the total quantity of Material Z that can be available for
production:
= 4,000 kg. × 40 orders =1,60,000 kg.
Product X Product Y 
Material needed for 
production to maintain 
the same production mix 
1,03,929 kg. 
1,63,889
1,60,000
2,52,310
?
??
??
??
56,071 kg. 
88,421
1,60,000
2,52,310
?
??
??
??
276
Page 5


ANSWER OF MODEL TEST PAPER 1 
INTERMEDIATE: GROUP – II 
PAPER – 4: COST AND MANAGEMENT ACCOUNTING 
Suggested Answers/ Solution 
PART I – Case Scenario based MCQs 
1. i. D 
Inflow into process Litres Outflow from process Litres 
Opening WIP 500 Transferred to finished 
goods 
3,400 
Quantity introduced 
(Balancing figure) 
3,800 Total loss 800 
Closing WIP 100 
4,300 4,300 
ii. A
Total loss 800 litres 
Normal loss (10% of fresh input i.e. 3,800) 380 litres 
Abnormal loss 420 litres 
iii. B
Calculation of Equivalent production units 
Input Details Units 
Output 
Particulars 
Units 
Equivalent Production 
Material Labour Overheads 
% Units % Units % Units 
Opening WIP 500 From 
Opening WIP 
500 - - 20 100 40 200 
Fresh inputs 3,800 From fresh 
units 
2900 100 2900 100 2900 100 2900 
Normal loss 380 - - - 
Closing WIP 100 100 100 20 20 10 10 
Abnormal 
loss 
420 100 420 100 420 100 420 
4,300 4,300 3,420 3,440 3,530 
Value of raw materials introduced during the month 
Equivalent 
units 
Cost per EU 
(`) 
Total cost 
(`) 
Total value of raw material 3420 300 10,26,000 
Add: Scrap value of normal 
loss 
380 20 7,600 
Value of raw material 
introduced 
10,33,600 
273
iv. A
Value of labour and overhead in closing Work in process
Cost elements Equivalent 
units 
Cost per EU 
(`) 
Total cost 
(`) 
Labour 20 200 4,000 
Overheads 10 160 1,600 
v. C
Value of output transferred to finished goods
Output transferred (Units) × Equivalent cost per unit
3,400 Litres × `660 = `22,44,000
2. i. D
ii. C Please refer cost sheet below for cost of production 
Cost of production per manshift = 
Cost of production ÷ Total manshift 
` 7,87,28,000 ÷ 46,800 = `1,682.22 
iii. A Car hire charges including GST @5%, please refer the cost sheet 
iv. B Selling and distribution cost includes the following: 
Maintenance cost for weighing bridge 12,000 
AMC cost of CCTV installed at weigh bridge 8,000 
TA/ DA & hotel bill of sales manager 36,000 
56,000 
For Cost of Sale please refer the cost sheet 
v. A Manshift = 1,800 employees × 26 days = 46,800 manshifts 
Computation of earnings per manshift (EMS): 
EMS =
Total employee benefits paid
Manshift
=
` 7,04,20,000
46,800
= ` 1504.70 
Computation of Output per manshift (OMS): 
OMS =
Total Output/ Production
Manshift
=
2,34,000 Tonne
46,800
 = 5 tonnes 
274
Workings 
Cost Sheet of M Ltd. for the last month 
Particulars Amount (`) Amount (`) 
Materials consumed 50,00,000 
Wages & Salary  6,40,00,000 
Gratuity & leave encashment 64,20,000 7,04,20,000 
Power cost (13,000 kwh × `8) 1,04,000 
Diesel cost (2,000 ltr × `93) 1,86,000 2,90,000 
HEMM hiring charges 30,00,000 
Prime Cost 7,87,10,000 
AMC cost of CCTV installed at factory 
premises 
18,000 
Cost of Production/ Cost of Goods 
Sold 
7,87,28,000 
Hiring charges of cars 66,000 
Reimbursement of diesel cost 22,000 
88,000 
Add: GST @5% on RCM basis 4,400 92,400 
Maintenance cost for weighing bridge 12,000 
AMC cost of CCTV installed at weigh 
bridge 
8,000 20,000 
TA/ DA & hotel bill of sales manager 36,000 
Cost of Sales 7,88,76,400 
3. D Labour rate variance = Standard time for actual production (SR- AR) 
7,500 (A) = (30,000 × 30 minutes/60 minutes) × (50-AR) 
AR = (7,50,000 + 7,500)/15,000 = `50.50 per hour 
Actual wages per unit = 50.50/2 = `25.25 
4. B Variable overhead for each % of level of activity  
=
40,00,000-30,00,000
75-50
 = 40,000 
Fixed cost = 30,00,000 – (40,000 × 50) = 10,00,000 
Total overheads for 60% level of activity 
= 10,00,000 + (40,000 × 60) = 34,00,000 
5. C
6. B Actual Overhead – (Actual machine hours × machine hour rate) 
5,20,000 – (17040 × 30) = 8,800 under absorbed 
7. A Optimum batch size or Economic Batch Quantity (EBQ): 
275
EBQ  = 
2DS
C
=
2 80,000 3,500
12
??
 = 6,832 units.
Number of Optimum runs = 80,000 ÷ 6,832 = 11.70 or 12 run 
PART-II 
1. (a) (i) Production Budget (in units) for the year ended 31
st
 March 
2025 
Product X Product Y 
Budgeted sales (units) 28,000 13,000 
Add: Increase in closing stock 320 160 
No. good units to be produced 28,320 13,160 
Post production rejection rate 4% 6% 
No. of units to be produced 29,500 
28,320
0.96
??
??
??
14,000 
13,160
0.94
??
??
??
(ii) Calculation of Economic Order Quantity for Material Z
EOQ =v
2×2,52,310×15,600
72×11%
= v
5,04,620×15,600
72×11%
 = 31,526.95 kg. 
(b) Purchase budget (in kgs and value) for Material Z
Product X Product 
Y 
No. of units to be produced 29,500 14,000 
Usage of Material Z per unit of 
production 
5 kg. 6 kg. 
Material needed for production 1,47,500 kg. 84,000 kg. 
Materials to be purchased 1,63,889 kg. 
1,47,500
0.90
??
??
??
88,421 kg. 
84,000
0.95
??
??
??
Total quantity to be purchased 2,52,310 kg. 
Rate per kg. of Material Z `72 
Total purchase price `1,81,66,320 
(c) Since, the maximum number of orders per year cannot be more than 40
orders and the maximum quantity per order that can be purchased is
4,000 kg. Hence, the total quantity of Material Z that can be available for
production:
= 4,000 kg. × 40 orders =1,60,000 kg.
Product X Product Y 
Material needed for 
production to maintain 
the same production mix 
1,03,929 kg. 
1,63,889
1,60,000
2,52,310
?
??
??
??
56,071 kg. 
88,421
1,60,000
2,52,310
?
??
??
??
276
Less: Process wastage 10,393 kg. 2,804 kg. 
Net Material available 
for production 
93,536 kg. 53,267 kg. 
Units to be produced 18,707 units 
93,536kg.
5kg.
??
??
??
8,878 units 
53,267kg.
6kg.
??
??
??
2. (a)  (i) Calculation of Absolute Ton-km for the next month: 
Journey Distance 
in km 
Weight- 
Up (in 
MT) 
Ton-km Weight- 
Down (in 
MT) 
Ton-km Total 
(a) (b) (c)=(a)×(b) (d) (e)= 
(a)×(d)
(c)+(e) 
Delhi to Kochi 2,700 14 37,800 6 16,200 54,000 
Delhi to 
Guwahati 
1,890 12 22,680 0 0 22,680 
Delhi to 
Vijayawada 
1,840 15 27,600 0 0 27,600 
Delhi to 
Varanasi 
815 10 8,150 0 0 8,150 
Delhi to Asansol 1,280 12 15,360 4 5,120 20,480 
Delhi to 
Chennai 
2,185 10 21,850 8 17,480 39,330 
Total 10,710 73 1,33,440 18 38,800 1,72,240 
Total Ton-Km = 1,72,240 ton-km 
(ii) Calculation of cost per ton-km:
Particulars Amount 
(`) 
Amount 
(`) 
A. Running cost:
- Diesel Cost {`19.20 ×
(10,710 × 2)}
4,11,264.00 
- Engine oil cost
4,200
21,420km
13,000km
?
??
??
??
`
 
6,920.31 
- Cost of loading of goods
{`180 × (73+18)}
16,380.00 
- Depreciation
{(30,00,000/720,000×21,420
km)×4}
3,57,000.00 7,91,564.31 
B. Repairs & Maintenance Cost
(36,000/10,000×21,420)
77,112.00 
C. Standing Charges
277