Cost and Management Accounting Model Test Paper - 3 (Answers) - CA Intermediate PDF Download

 Page 1


ANSWER OF MODEL TEST PAPER 3 
INTERMEDIATE: GROUP – II 
PAPER – 4: COST AND MANAGEMENT ACCOUNTING 
PART I – Case Scenario based MCQs  
1. (i) (c) Output by experienced workers in 50,000 hours =
50,000
10
= 5,000 
units
 Output by new recruits = 60% of 5,000 = 3,000 units 
Loss of output  = 5,000 – 3,000 = 2,000 units 
Total loss of output  = Due to delay recruitment + Due to 
 inexperience 
= 10,000 + 2,000 = 12,000 units 
(ii) (a) Contribution per unit = 20% of `180 = ` 36 
Total contribution lost  = `36 × 12,000 units = ` 4,32,000 
(iii) (b) Cost of repairing defective units = 3,000 units × 0.2 × ` 25
= ` 15,000 
(iv) (d) Calculation of loss of profit due to labour turnover
(`) 
Loss of Contribution 4,32,000 
Cost of repairing defective units 15,000 
Recruitment cost 1,56,340 
Training cost 1,13,180 
Settlement cost of workers leaving 1,83,480 
Profit forgone in 2022-23 9,00,000 
(v) (c) Output by experienced workers in 50,000 hours =
50,000
10
= 5,000 
units 
 Output by new recruits = 60% of 5,000 = 3,000 units 
Loss of output  = 5,000 – 3,000 = 2,000 units 
2. (i) (b) 
(ii) (a)
(iii) (b)
(iv) (c)
(v) (a)
303
Page 2


ANSWER OF MODEL TEST PAPER 3 
INTERMEDIATE: GROUP – II 
PAPER – 4: COST AND MANAGEMENT ACCOUNTING 
PART I – Case Scenario based MCQs  
1. (i) (c) Output by experienced workers in 50,000 hours =
50,000
10
= 5,000 
units
 Output by new recruits = 60% of 5,000 = 3,000 units 
Loss of output  = 5,000 – 3,000 = 2,000 units 
Total loss of output  = Due to delay recruitment + Due to 
 inexperience 
= 10,000 + 2,000 = 12,000 units 
(ii) (a) Contribution per unit = 20% of `180 = ` 36 
Total contribution lost  = `36 × 12,000 units = ` 4,32,000 
(iii) (b) Cost of repairing defective units = 3,000 units × 0.2 × ` 25
= ` 15,000 
(iv) (d) Calculation of loss of profit due to labour turnover
(`) 
Loss of Contribution 4,32,000 
Cost of repairing defective units 15,000 
Recruitment cost 1,56,340 
Training cost 1,13,180 
Settlement cost of workers leaving 1,83,480 
Profit forgone in 2022-23 9,00,000 
(v) (c) Output by experienced workers in 50,000 hours =
50,000
10
= 5,000 
units 
 Output by new recruits = 60% of 5,000 = 3,000 units 
Loss of output  = 5,000 – 3,000 = 2,000 units 
2. (i) (b) 
(ii) (a)
(iii) (b)
(iv) (c)
(v) (a)
303
 Statement of Cost of P Ltd. for the year ended 31
st 
December, 2023: 
Sl. 
No. 
Particulars Amount (`) Amount (`) 
(i) Material Consumed:   
 - Raw materials purchased 5,00,00,000  
 - Freight inward 9,20,600  
 Add: Opening stock of raw materials 10,00,000  
 Less: Closing stock of raw materials (8,40,000) 5,10,80,600 
(ii) Direct employee (labour) cost:   
 - Wages paid to factory workers  25,20,000 
(iii) Direct expenses:   
 - Royalty paid for production 1,80,000  
 - Amount paid for power & fuel 3,50,000  
 - Job charges paid to job workers 3,10,000 8,40,000 
 Prime Cost  5,44,40,600 
(iv) Works/ Factory overheads:   
 - Stores and spares consumed 1,10,000  
 - Repairs & Maintenance paid for plant 
& machinery 
40,000  
 - Insurance premium paid for plant & 
machinery 
28,200  
 - Insurance premium paid for factory 
building 
18,800  
 - Expenses paid for pollution control 
and engineering & maintenance 36,000 2,33,000 
 Gross factory cost  5,46,73,600 
 Add: Opening value of W-I-P  8,60,000 
 Less: Closing value of W-I-P  (6,60,000) 
 Factory Cost  5,48,73,600 
(v) Quality control cost:   
 - Expenses paid for quality control 
check activities 
 18,000 
(vi) Research & development cost paid for 
improvement in production process 
 20,000 
(vii)  Less: Realisable value on sale of scrap 
and waste 
 (48,000) 
(viii) Add: Primary packing cost  46,000 
 Cost of Production  5,49,09,600 
 Add: Opening stock of finished goods  12,00,000 
 Less: Closing stock of finished goods  (10,50,000) 
304
Page 3


ANSWER OF MODEL TEST PAPER 3 
INTERMEDIATE: GROUP – II 
PAPER – 4: COST AND MANAGEMENT ACCOUNTING 
PART I – Case Scenario based MCQs  
1. (i) (c) Output by experienced workers in 50,000 hours =
50,000
10
= 5,000 
units
 Output by new recruits = 60% of 5,000 = 3,000 units 
Loss of output  = 5,000 – 3,000 = 2,000 units 
Total loss of output  = Due to delay recruitment + Due to 
 inexperience 
= 10,000 + 2,000 = 12,000 units 
(ii) (a) Contribution per unit = 20% of `180 = ` 36 
Total contribution lost  = `36 × 12,000 units = ` 4,32,000 
(iii) (b) Cost of repairing defective units = 3,000 units × 0.2 × ` 25
= ` 15,000 
(iv) (d) Calculation of loss of profit due to labour turnover
(`) 
Loss of Contribution 4,32,000 
Cost of repairing defective units 15,000 
Recruitment cost 1,56,340 
Training cost 1,13,180 
Settlement cost of workers leaving 1,83,480 
Profit forgone in 2022-23 9,00,000 
(v) (c) Output by experienced workers in 50,000 hours =
50,000
10
= 5,000 
units 
 Output by new recruits = 60% of 5,000 = 3,000 units 
Loss of output  = 5,000 – 3,000 = 2,000 units 
2. (i) (b) 
(ii) (a)
(iii) (b)
(iv) (c)
(v) (a)
303
 Statement of Cost of P Ltd. for the year ended 31
st 
December, 2023: 
Sl. 
No. 
Particulars Amount (`) Amount (`) 
(i) Material Consumed:   
 - Raw materials purchased 5,00,00,000  
 - Freight inward 9,20,600  
 Add: Opening stock of raw materials 10,00,000  
 Less: Closing stock of raw materials (8,40,000) 5,10,80,600 
(ii) Direct employee (labour) cost:   
 - Wages paid to factory workers  25,20,000 
(iii) Direct expenses:   
 - Royalty paid for production 1,80,000  
 - Amount paid for power & fuel 3,50,000  
 - Job charges paid to job workers 3,10,000 8,40,000 
 Prime Cost  5,44,40,600 
(iv) Works/ Factory overheads:   
 - Stores and spares consumed 1,10,000  
 - Repairs & Maintenance paid for plant 
& machinery 
40,000  
 - Insurance premium paid for plant & 
machinery 
28,200  
 - Insurance premium paid for factory 
building 
18,800  
 - Expenses paid for pollution control 
and engineering & maintenance 36,000 2,33,000 
 Gross factory cost  5,46,73,600 
 Add: Opening value of W-I-P  8,60,000 
 Less: Closing value of W-I-P  (6,60,000) 
 Factory Cost  5,48,73,600 
(v) Quality control cost:   
 - Expenses paid for quality control 
check activities 
 18,000 
(vi) Research & development cost paid for 
improvement in production process 
 20,000 
(vii)  Less: Realisable value on sale of scrap 
and waste 
 (48,000) 
(viii) Add: Primary packing cost  46,000 
 Cost of Production  5,49,09,600 
 Add: Opening stock of finished goods  12,00,000 
 Less: Closing stock of finished goods  (10,50,000) 
304
Cost of Goods Sold 5,50,59,600 
(ix) Administrative overheads: 
- Depreciation on office building 50,000 
- Salary paid to General Manager 6,40,000 
- Fee paid to independent directors 1,20,000 8,10,000 
(x) Selling overheads: 
- Repairs & Maintenance paid for
sales office building 
20,000 
- Salary paid to Manager- Sales &
Marketing
5,60,000 
- Performance bonus paid to sales
staffs 1,20,000 7,00,000 
(xi) Distribution overheads: 
- Packing cost paid for re-distribution
of finished goods 80,000 
Cost of Sales 5,66,49,600 
3. (d)
Variable Overhead Efficiency Variance: 
= Std. rate per hour × (Std. hours for actual production – Actual hours) 
= `10 (2 hours × 11,800 units – 23,200 hours) = `4,000 (F) 
Workings: 
1. Standard cost per unit = 
` 2,40,000
12,000units
 = ` 20 
2. Standard cost per hour =
` 2,40,000
12,000 units × 2 hours
 = `10 
4. (b)
Sales mix (in quantity) is 4 units of Product- A and 3 units of Product- B 
Composite contribution per unit by taking weights for the product sales 
quantity  
=Product A: ` 1 4 0 × 
4
7
+ Product B: ` ???? ×
?? ?? = ` 80 + ` 30 = ` 110 
Composite Break-even point = 
   
CommonFixed Cost
Composite Contribution per unit
= 
` 6,16,000
` 110
= 5,600 units 
Break-even units of Product- B    = 5,600×
3
7
= 2,400 units 
5. (d) 60 km
Let’s assume distance between Delhi and Manesar is ‘X’ 
Therefore: Xx39x2x3x26x12 = ` 43,80,480 
305
Page 4


ANSWER OF MODEL TEST PAPER 3 
INTERMEDIATE: GROUP – II 
PAPER – 4: COST AND MANAGEMENT ACCOUNTING 
PART I – Case Scenario based MCQs  
1. (i) (c) Output by experienced workers in 50,000 hours =
50,000
10
= 5,000 
units
 Output by new recruits = 60% of 5,000 = 3,000 units 
Loss of output  = 5,000 – 3,000 = 2,000 units 
Total loss of output  = Due to delay recruitment + Due to 
 inexperience 
= 10,000 + 2,000 = 12,000 units 
(ii) (a) Contribution per unit = 20% of `180 = ` 36 
Total contribution lost  = `36 × 12,000 units = ` 4,32,000 
(iii) (b) Cost of repairing defective units = 3,000 units × 0.2 × ` 25
= ` 15,000 
(iv) (d) Calculation of loss of profit due to labour turnover
(`) 
Loss of Contribution 4,32,000 
Cost of repairing defective units 15,000 
Recruitment cost 1,56,340 
Training cost 1,13,180 
Settlement cost of workers leaving 1,83,480 
Profit forgone in 2022-23 9,00,000 
(v) (c) Output by experienced workers in 50,000 hours =
50,000
10
= 5,000 
units 
 Output by new recruits = 60% of 5,000 = 3,000 units 
Loss of output  = 5,000 – 3,000 = 2,000 units 
2. (i) (b) 
(ii) (a)
(iii) (b)
(iv) (c)
(v) (a)
303
 Statement of Cost of P Ltd. for the year ended 31
st 
December, 2023: 
Sl. 
No. 
Particulars Amount (`) Amount (`) 
(i) Material Consumed:   
 - Raw materials purchased 5,00,00,000  
 - Freight inward 9,20,600  
 Add: Opening stock of raw materials 10,00,000  
 Less: Closing stock of raw materials (8,40,000) 5,10,80,600 
(ii) Direct employee (labour) cost:   
 - Wages paid to factory workers  25,20,000 
(iii) Direct expenses:   
 - Royalty paid for production 1,80,000  
 - Amount paid for power & fuel 3,50,000  
 - Job charges paid to job workers 3,10,000 8,40,000 
 Prime Cost  5,44,40,600 
(iv) Works/ Factory overheads:   
 - Stores and spares consumed 1,10,000  
 - Repairs & Maintenance paid for plant 
& machinery 
40,000  
 - Insurance premium paid for plant & 
machinery 
28,200  
 - Insurance premium paid for factory 
building 
18,800  
 - Expenses paid for pollution control 
and engineering & maintenance 36,000 2,33,000 
 Gross factory cost  5,46,73,600 
 Add: Opening value of W-I-P  8,60,000 
 Less: Closing value of W-I-P  (6,60,000) 
 Factory Cost  5,48,73,600 
(v) Quality control cost:   
 - Expenses paid for quality control 
check activities 
 18,000 
(vi) Research & development cost paid for 
improvement in production process 
 20,000 
(vii)  Less: Realisable value on sale of scrap 
and waste 
 (48,000) 
(viii) Add: Primary packing cost  46,000 
 Cost of Production  5,49,09,600 
 Add: Opening stock of finished goods  12,00,000 
 Less: Closing stock of finished goods  (10,50,000) 
304
Cost of Goods Sold 5,50,59,600 
(ix) Administrative overheads: 
- Depreciation on office building 50,000 
- Salary paid to General Manager 6,40,000 
- Fee paid to independent directors 1,20,000 8,10,000 
(x) Selling overheads: 
- Repairs & Maintenance paid for
sales office building 
20,000 
- Salary paid to Manager- Sales &
Marketing
5,60,000 
- Performance bonus paid to sales
staffs 1,20,000 7,00,000 
(xi) Distribution overheads: 
- Packing cost paid for re-distribution
of finished goods 80,000 
Cost of Sales 5,66,49,600 
3. (d)
Variable Overhead Efficiency Variance: 
= Std. rate per hour × (Std. hours for actual production – Actual hours) 
= `10 (2 hours × 11,800 units – 23,200 hours) = `4,000 (F) 
Workings: 
1. Standard cost per unit = 
` 2,40,000
12,000units
 = ` 20 
2. Standard cost per hour =
` 2,40,000
12,000 units × 2 hours
 = `10 
4. (b)
Sales mix (in quantity) is 4 units of Product- A and 3 units of Product- B 
Composite contribution per unit by taking weights for the product sales 
quantity  
=Product A: ` 1 4 0 × 
4
7
+ Product B: ` ???? ×
?? ?? = ` 80 + ` 30 = ` 110 
Composite Break-even point = 
   
CommonFixed Cost
Composite Contribution per unit
= 
` 6,16,000
` 110
= 5,600 units 
Break-even units of Product- B    = 5,600×
3
7
= 2,400 units 
5. (d) 60 km
Let’s assume distance between Delhi and Manesar is ‘X’ 
Therefore: Xx39x2x3x26x12 = ` 43,80,480 
305
X = 60 
6 (a) ` 11,27,000
` 
Purchase price 10,00,000 
Custom duty  2,00,000 
Octroi  5,000 
Carriage inward  12,000 
Commission on Purchase  10,000 
Total Purchase 12,27,000 
Opening stock of Raw Material  1,00,000 
Closing stock of Raw Material (2,00,000) 
Raw Material consumed 11,27,000 
7. (c)  ` 1,80,000
costs allocated to product A is 
= (60,000kg/30,000kg)*3,60,000 
= 1,80,000 
PART-II – Descriptive Questions 
1. (a)  (i) Optimum run size for empty bottle manufacture 
=
bottle per t cos holding Annual
run production per t cos up Set bottles empty of ply sup Annual 2 - ? ?
=
P 05 . 0 months 12
520 bottles 000 , 50 , 1 2
?
? ?
 = 16,125 bottles 
(ii) Interval between two consecutive optimum runs
= 
?
?
?
?
?
?
?
?
size run Optimum
production Annual
months 12
=
?
?
?
?
?
?
?
?
bottles 125 , 16
bottles 000 , 50 , 1
months 12
= 
30 . 9
months 12
= 1.29 months or 39 days 
approximately. 
(iii) Minimum inventory cost per annum
= Total production run cost + Total carrying cost per annum
= 
bearings 125 , 16
bearings 000 , 50 , 1
× ` 520 + (1/2) 16125 bottles × ` 0.05 × 12 months 
= ` 4,836 + ` 4837.50 
= ` 9673.50 
306
Page 5


ANSWER OF MODEL TEST PAPER 3 
INTERMEDIATE: GROUP – II 
PAPER – 4: COST AND MANAGEMENT ACCOUNTING 
PART I – Case Scenario based MCQs  
1. (i) (c) Output by experienced workers in 50,000 hours =
50,000
10
= 5,000 
units
 Output by new recruits = 60% of 5,000 = 3,000 units 
Loss of output  = 5,000 – 3,000 = 2,000 units 
Total loss of output  = Due to delay recruitment + Due to 
 inexperience 
= 10,000 + 2,000 = 12,000 units 
(ii) (a) Contribution per unit = 20% of `180 = ` 36 
Total contribution lost  = `36 × 12,000 units = ` 4,32,000 
(iii) (b) Cost of repairing defective units = 3,000 units × 0.2 × ` 25
= ` 15,000 
(iv) (d) Calculation of loss of profit due to labour turnover
(`) 
Loss of Contribution 4,32,000 
Cost of repairing defective units 15,000 
Recruitment cost 1,56,340 
Training cost 1,13,180 
Settlement cost of workers leaving 1,83,480 
Profit forgone in 2022-23 9,00,000 
(v) (c) Output by experienced workers in 50,000 hours =
50,000
10
= 5,000 
units 
 Output by new recruits = 60% of 5,000 = 3,000 units 
Loss of output  = 5,000 – 3,000 = 2,000 units 
2. (i) (b) 
(ii) (a)
(iii) (b)
(iv) (c)
(v) (a)
303
 Statement of Cost of P Ltd. for the year ended 31
st 
December, 2023: 
Sl. 
No. 
Particulars Amount (`) Amount (`) 
(i) Material Consumed:   
 - Raw materials purchased 5,00,00,000  
 - Freight inward 9,20,600  
 Add: Opening stock of raw materials 10,00,000  
 Less: Closing stock of raw materials (8,40,000) 5,10,80,600 
(ii) Direct employee (labour) cost:   
 - Wages paid to factory workers  25,20,000 
(iii) Direct expenses:   
 - Royalty paid for production 1,80,000  
 - Amount paid for power & fuel 3,50,000  
 - Job charges paid to job workers 3,10,000 8,40,000 
 Prime Cost  5,44,40,600 
(iv) Works/ Factory overheads:   
 - Stores and spares consumed 1,10,000  
 - Repairs & Maintenance paid for plant 
& machinery 
40,000  
 - Insurance premium paid for plant & 
machinery 
28,200  
 - Insurance premium paid for factory 
building 
18,800  
 - Expenses paid for pollution control 
and engineering & maintenance 36,000 2,33,000 
 Gross factory cost  5,46,73,600 
 Add: Opening value of W-I-P  8,60,000 
 Less: Closing value of W-I-P  (6,60,000) 
 Factory Cost  5,48,73,600 
(v) Quality control cost:   
 - Expenses paid for quality control 
check activities 
 18,000 
(vi) Research & development cost paid for 
improvement in production process 
 20,000 
(vii)  Less: Realisable value on sale of scrap 
and waste 
 (48,000) 
(viii) Add: Primary packing cost  46,000 
 Cost of Production  5,49,09,600 
 Add: Opening stock of finished goods  12,00,000 
 Less: Closing stock of finished goods  (10,50,000) 
304
Cost of Goods Sold 5,50,59,600 
(ix) Administrative overheads: 
- Depreciation on office building 50,000 
- Salary paid to General Manager 6,40,000 
- Fee paid to independent directors 1,20,000 8,10,000 
(x) Selling overheads: 
- Repairs & Maintenance paid for
sales office building 
20,000 
- Salary paid to Manager- Sales &
Marketing
5,60,000 
- Performance bonus paid to sales
staffs 1,20,000 7,00,000 
(xi) Distribution overheads: 
- Packing cost paid for re-distribution
of finished goods 80,000 
Cost of Sales 5,66,49,600 
3. (d)
Variable Overhead Efficiency Variance: 
= Std. rate per hour × (Std. hours for actual production – Actual hours) 
= `10 (2 hours × 11,800 units – 23,200 hours) = `4,000 (F) 
Workings: 
1. Standard cost per unit = 
` 2,40,000
12,000units
 = ` 20 
2. Standard cost per hour =
` 2,40,000
12,000 units × 2 hours
 = `10 
4. (b)
Sales mix (in quantity) is 4 units of Product- A and 3 units of Product- B 
Composite contribution per unit by taking weights for the product sales 
quantity  
=Product A: ` 1 4 0 × 
4
7
+ Product B: ` ???? ×
?? ?? = ` 80 + ` 30 = ` 110 
Composite Break-even point = 
   
CommonFixed Cost
Composite Contribution per unit
= 
` 6,16,000
` 110
= 5,600 units 
Break-even units of Product- B    = 5,600×
3
7
= 2,400 units 
5. (d) 60 km
Let’s assume distance between Delhi and Manesar is ‘X’ 
Therefore: Xx39x2x3x26x12 = ` 43,80,480 
305
X = 60 
6 (a) ` 11,27,000
` 
Purchase price 10,00,000 
Custom duty  2,00,000 
Octroi  5,000 
Carriage inward  12,000 
Commission on Purchase  10,000 
Total Purchase 12,27,000 
Opening stock of Raw Material  1,00,000 
Closing stock of Raw Material (2,00,000) 
Raw Material consumed 11,27,000 
7. (c)  ` 1,80,000
costs allocated to product A is 
= (60,000kg/30,000kg)*3,60,000 
= 1,80,000 
PART-II – Descriptive Questions 
1. (a)  (i) Optimum run size for empty bottle manufacture 
=
bottle per t cos holding Annual
run production per t cos up Set bottles empty of ply sup Annual 2 - ? ?
=
P 05 . 0 months 12
520 bottles 000 , 50 , 1 2
?
? ?
 = 16,125 bottles 
(ii) Interval between two consecutive optimum runs
= 
?
?
?
?
?
?
?
?
size run Optimum
production Annual
months 12
=
?
?
?
?
?
?
?
?
bottles 125 , 16
bottles 000 , 50 , 1
months 12
= 
30 . 9
months 12
= 1.29 months or 39 days 
approximately. 
(iii) Minimum inventory cost per annum
= Total production run cost + Total carrying cost per annum
= 
bearings 125 , 16
bearings 000 , 50 , 1
× ` 520 + (1/2) 16125 bottles × ` 0.05 × 12 months 
= ` 4,836 + ` 4837.50 
= ` 9673.50 
306
(b) Working Notes:
1. Depreciation per annum:=
Purchase price - Scrap value
Estimated life
= 
4,00,000 - 10,000
5 years
` ` 
 = ` 78,000 
2. Total distance travelled by mini-bus in 25 days:
= Length of the route (two -sides) × No. of trips per day × No. of
days
= 60 km × 6 trips × 25 days = 9,000 km
3. Total Passenger-Km:
= Total distance travelled by mini-bus in 25 days × No. of seats
= 9,000 km × 20 seats = 1,80,000 passenger-km
Statement suggesting fare per passenger-km 
Particulars Cost per 
annum 
` 
Cost per 
month 
` 
Fixed expenses: 
Insurance 15,000 
Garage rent 9,000 
Road tax 3,000 
Administrative charges 5,000 
Depreciation 78,000 
Interest on loan 10,000 
1,20,000 10,000 
Running expenses: 
Repair and maintenance 15,000 1,250 
Replacement of tyre-tube 3,600 300 
Diesel and oil cost (9,000 km × ` 5) - 45,000 
Driver and conductor’s salary - 5,000 
Total cost (per month) 61,550.00 
Add: Profit 20% of total revenue cost or 
25% of total cost 
15,387.50 
Total revenue 76,937.50 
Rate per passenger-km ` 76,937.50/1,80,000 passenger km 
= 0.42743 i.e., = 0.43 i.e., 43 paise 
307