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CA Intermediate Exam  >  CA Intermediate Notes  >  Cost and Management Accounting Model Test Paper - 5 (Answers)

Cost and Management Accounting Model Test Paper - 5 (Answers) - CA Intermediate PDF Download

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 Page 1


MODEL TEST PAPER 5 
INTERMEDIATE: GROUP – II 
PAPER – 4: COST AND MANAGEMENT ACCOUNTING 
Suggested Answers/ Solution 
PART I – Case Scenario based MCQs 
1. (a) Working notes:
Factory cost  (33,00,000 x 0.25)  INR 8,25,000 
Add: Freight (50,000 x 0.25)  INR 12,500 
F.O.B. (Free On Board) INR 8,37,500 
Containers (2,00,000 x 0.25)    INR 50,000 
Insurance (1,500 x 75)       INR 1,12,500 
Ocean freight (2,000 x 75)      INR 1,50,000 
CIF (Cost, Insurance and Freight) = 8,37,500 + 1,12,500 + 1,50,000 
= INR 11,00,000 
Custom duty     = 20% x 11,00,000 = INR 2,20,000 
IGST     = 18% x (11,00,000 + 2,20,000) 
= INR 2,37,600 
Penalty      = INR 15,000 
Commission   
Indian      = 6% x 8,25,000  = INR 49,500 
Srilankan     = 12% x 8,25,000  = INR 99,000 
Particulars Amount (INR) 
Factory cost 8,25,000 
Containers (50,000-38,000) 12,000 
Insurance 1,12,500 
Ocean freight 1,50,000 
Freight inwards 12,500 
Commission (49,500+99,000) 1,48,500 
Custom duty non-refundable 20%* 2,20,000 44,000 
TOTAL 13,04,500 
336
Page 2


MODEL TEST PAPER 5 
INTERMEDIATE: GROUP – II 
PAPER – 4: COST AND MANAGEMENT ACCOUNTING 
Suggested Answers/ Solution 
PART I – Case Scenario based MCQs 
1. (a) Working notes:
Factory cost  (33,00,000 x 0.25)  INR 8,25,000 
Add: Freight (50,000 x 0.25)  INR 12,500 
F.O.B. (Free On Board) INR 8,37,500 
Containers (2,00,000 x 0.25)    INR 50,000 
Insurance (1,500 x 75)       INR 1,12,500 
Ocean freight (2,000 x 75)      INR 1,50,000 
CIF (Cost, Insurance and Freight) = 8,37,500 + 1,12,500 + 1,50,000 
= INR 11,00,000 
Custom duty     = 20% x 11,00,000 = INR 2,20,000 
IGST     = 18% x (11,00,000 + 2,20,000) 
= INR 2,37,600 
Penalty      = INR 15,000 
Commission   
Indian      = 6% x 8,25,000  = INR 49,500 
Srilankan     = 12% x 8,25,000  = INR 99,000 
Particulars Amount (INR) 
Factory cost 8,25,000 
Containers (50,000-38,000) 12,000 
Insurance 1,12,500 
Ocean freight 1,50,000 
Freight inwards 12,500 
Commission (49,500+99,000) 1,48,500 
Custom duty non-refundable 20%* 2,20,000 44,000 
TOTAL 13,04,500 
336
2. (a) Good units = 8,000* (1-5%) = 7,600 UNITS
Normal loss to be absorbed in good units. No abnormal loss. 
Particulars Product Zenga 
(INR) 
Factory cost 4,50,000 
Other cost except commission, insurance and 
custom duty to be absorbed on the basis of quantity 
i.e. 12:8 or 3:2 (12,000+1,50,000+12,500)*2/5
69,800 
Commission, insurance and custom duty to be 
absorbed on value basis 15:18 or 5:6 
(1,48,500+1,12,500+44,000)*6/11 
1,66,363.63 
Total Cost 6,86,163.63 
Number of good units 7,600 units 
Per unit Cost 90.28 
3. (b)  Good units = 12000 * (1-5%) = 11400 units
Particulars Product Xendga 
(INR) 
Factory cost 3,75,000 
Other cost (12,000+1,50,000+12,500)*3/5 1,04,700 
Commission, insurance and custom duty 
(1,48,500+1,12,500+44,000)*5/11 
1,38,636.36 
Total Cost 618,336.36 
Number of good units 11,400 units 
Per unit Cost 54.24 
4 (a)  Custom duty 80% x 2,20,000 =  1,76,000 
Add: IGST =  2,37,600 
     4,13,600 
5. (c) Normal loss upto 8%
Abnormal loss 1% 
Total cost of xendga INR 6,18,336.36 
Total cost of zenga INR 6,86,163.63 
Particulars XENGDA (INR) ZENGA (INR) (INR) 
Normal loss of 
8% 
960 units 640 units 
Good units after 
normal loss 
11,040 units 7,360 units 
Per unit cost to 
be absorbed in 
56 
(6,18,336.36/11,040) 
93.23 
(6,86,163.63/7,360) 
337
Page 3


MODEL TEST PAPER 5 
INTERMEDIATE: GROUP – II 
PAPER – 4: COST AND MANAGEMENT ACCOUNTING 
Suggested Answers/ Solution 
PART I – Case Scenario based MCQs 
1. (a) Working notes:
Factory cost  (33,00,000 x 0.25)  INR 8,25,000 
Add: Freight (50,000 x 0.25)  INR 12,500 
F.O.B. (Free On Board) INR 8,37,500 
Containers (2,00,000 x 0.25)    INR 50,000 
Insurance (1,500 x 75)       INR 1,12,500 
Ocean freight (2,000 x 75)      INR 1,50,000 
CIF (Cost, Insurance and Freight) = 8,37,500 + 1,12,500 + 1,50,000 
= INR 11,00,000 
Custom duty     = 20% x 11,00,000 = INR 2,20,000 
IGST     = 18% x (11,00,000 + 2,20,000) 
= INR 2,37,600 
Penalty      = INR 15,000 
Commission   
Indian      = 6% x 8,25,000  = INR 49,500 
Srilankan     = 12% x 8,25,000  = INR 99,000 
Particulars Amount (INR) 
Factory cost 8,25,000 
Containers (50,000-38,000) 12,000 
Insurance 1,12,500 
Ocean freight 1,50,000 
Freight inwards 12,500 
Commission (49,500+99,000) 1,48,500 
Custom duty non-refundable 20%* 2,20,000 44,000 
TOTAL 13,04,500 
336
2. (a) Good units = 8,000* (1-5%) = 7,600 UNITS
Normal loss to be absorbed in good units. No abnormal loss. 
Particulars Product Zenga 
(INR) 
Factory cost 4,50,000 
Other cost except commission, insurance and 
custom duty to be absorbed on the basis of quantity 
i.e. 12:8 or 3:2 (12,000+1,50,000+12,500)*2/5
69,800 
Commission, insurance and custom duty to be 
absorbed on value basis 15:18 or 5:6 
(1,48,500+1,12,500+44,000)*6/11 
1,66,363.63 
Total Cost 6,86,163.63 
Number of good units 7,600 units 
Per unit Cost 90.28 
3. (b)  Good units = 12000 * (1-5%) = 11400 units
Particulars Product Xendga 
(INR) 
Factory cost 3,75,000 
Other cost (12,000+1,50,000+12,500)*3/5 1,04,700 
Commission, insurance and custom duty 
(1,48,500+1,12,500+44,000)*5/11 
1,38,636.36 
Total Cost 618,336.36 
Number of good units 11,400 units 
Per unit Cost 54.24 
4 (a)  Custom duty 80% x 2,20,000 =  1,76,000 
Add: IGST =  2,37,600 
     4,13,600 
5. (c) Normal loss upto 8%
Abnormal loss 1% 
Total cost of xendga INR 6,18,336.36 
Total cost of zenga INR 6,86,163.63 
Particulars XENGDA (INR) ZENGA (INR) (INR) 
Normal loss of 
8% 
960 units 640 units 
Good units after 
normal loss 
11,040 units 7,360 units 
Per unit cost to 
be absorbed in 
56 
(6,18,336.36/11,040) 
93.23 
(6,86,163.63/7,360) 
337
good units (total 
costs/no of good 
units after 
normal loss) 
Abnormal loss in 
units 1% 
120 units 80 units 
Loss in Profit & 
Loss 
56 x 120 = 6,720 93.23 x 80= 7,458.4 14,178.4 
6. (a) Material Mix Variance (Cotton + Polyester) = {(RSQ × SP) – (AQ × SP)}
   = {7,08,570- 7,10,000} 
  = 1,430 (A) 
Material Yield Variance (Cotton + Polyester) = {(SQ × SP) – (RSQ × SP)} 
  = {7,51,770 – 7,08,570} 
  = 43,200 (F) 
7. (d) Material Price Variance (Cotton + Polyester) = {(AQ × SP) – (AQ × AP)
  = {7,10,000 – 6,72,500} 
  = 37,500 (F) 
8. (c) Material Cost Variance (Cotton + Polyester) = {(SQ × SP) – (AQ × AP)}
  = {7,51,770 – 6,72,500} 
  = 79,270 (F) 
Working Note 
Material Variances: 
Material SQ 
(WN-1) 
SP 
(`) 
SQ × SP 
(`) 
RSQ 
(WN-2) 
RSQ × SP 
(`) 
AQ AQ × SP 
(`) 
AP 
(`) 
AQ × AP 
(`) 
Cotton 9,397 m 50 4,69,850 8,857 m 4,42,850 9,000 m 4,50,000 48 4,32,000 
Polyester 7,048 m 40 2,81,920 6,643 m 2,65,720 6,500 m 2,60,000 37 2,40,500 
16,445 m 7,51,770 15,500 m 7,08,570 15,500 m 7,10,000 6,72,500 
WN-1: Standard Quantity (SQ): 
Cotton  - 
??
×
??
×
??
8,000m
14,800m
0.9 14,000m
= 9,396.8 or 9,397 m 
Polyester- 
??
×
??
×
??
6,000m
14,800m
0.9 14,000m
 = 7,047.6 or 7048 m 
WN- 2: Revised Standard Quantity (RSQ): 
Cotton - 
??
×
??
??
8,000m
15,500m
14,000m
 = 8,857.1 or 8857 m 
338
Page 4


MODEL TEST PAPER 5 
INTERMEDIATE: GROUP – II 
PAPER – 4: COST AND MANAGEMENT ACCOUNTING 
Suggested Answers/ Solution 
PART I – Case Scenario based MCQs 
1. (a) Working notes:
Factory cost  (33,00,000 x 0.25)  INR 8,25,000 
Add: Freight (50,000 x 0.25)  INR 12,500 
F.O.B. (Free On Board) INR 8,37,500 
Containers (2,00,000 x 0.25)    INR 50,000 
Insurance (1,500 x 75)       INR 1,12,500 
Ocean freight (2,000 x 75)      INR 1,50,000 
CIF (Cost, Insurance and Freight) = 8,37,500 + 1,12,500 + 1,50,000 
= INR 11,00,000 
Custom duty     = 20% x 11,00,000 = INR 2,20,000 
IGST     = 18% x (11,00,000 + 2,20,000) 
= INR 2,37,600 
Penalty      = INR 15,000 
Commission   
Indian      = 6% x 8,25,000  = INR 49,500 
Srilankan     = 12% x 8,25,000  = INR 99,000 
Particulars Amount (INR) 
Factory cost 8,25,000 
Containers (50,000-38,000) 12,000 
Insurance 1,12,500 
Ocean freight 1,50,000 
Freight inwards 12,500 
Commission (49,500+99,000) 1,48,500 
Custom duty non-refundable 20%* 2,20,000 44,000 
TOTAL 13,04,500 
336
2. (a) Good units = 8,000* (1-5%) = 7,600 UNITS
Normal loss to be absorbed in good units. No abnormal loss. 
Particulars Product Zenga 
(INR) 
Factory cost 4,50,000 
Other cost except commission, insurance and 
custom duty to be absorbed on the basis of quantity 
i.e. 12:8 or 3:2 (12,000+1,50,000+12,500)*2/5
69,800 
Commission, insurance and custom duty to be 
absorbed on value basis 15:18 or 5:6 
(1,48,500+1,12,500+44,000)*6/11 
1,66,363.63 
Total Cost 6,86,163.63 
Number of good units 7,600 units 
Per unit Cost 90.28 
3. (b)  Good units = 12000 * (1-5%) = 11400 units
Particulars Product Xendga 
(INR) 
Factory cost 3,75,000 
Other cost (12,000+1,50,000+12,500)*3/5 1,04,700 
Commission, insurance and custom duty 
(1,48,500+1,12,500+44,000)*5/11 
1,38,636.36 
Total Cost 618,336.36 
Number of good units 11,400 units 
Per unit Cost 54.24 
4 (a)  Custom duty 80% x 2,20,000 =  1,76,000 
Add: IGST =  2,37,600 
     4,13,600 
5. (c) Normal loss upto 8%
Abnormal loss 1% 
Total cost of xendga INR 6,18,336.36 
Total cost of zenga INR 6,86,163.63 
Particulars XENGDA (INR) ZENGA (INR) (INR) 
Normal loss of 
8% 
960 units 640 units 
Good units after 
normal loss 
11,040 units 7,360 units 
Per unit cost to 
be absorbed in 
56 
(6,18,336.36/11,040) 
93.23 
(6,86,163.63/7,360) 
337
good units (total 
costs/no of good 
units after 
normal loss) 
Abnormal loss in 
units 1% 
120 units 80 units 
Loss in Profit & 
Loss 
56 x 120 = 6,720 93.23 x 80= 7,458.4 14,178.4 
6. (a) Material Mix Variance (Cotton + Polyester) = {(RSQ × SP) – (AQ × SP)}
   = {7,08,570- 7,10,000} 
  = 1,430 (A) 
Material Yield Variance (Cotton + Polyester) = {(SQ × SP) – (RSQ × SP)} 
  = {7,51,770 – 7,08,570} 
  = 43,200 (F) 
7. (d) Material Price Variance (Cotton + Polyester) = {(AQ × SP) – (AQ × AP)
  = {7,10,000 – 6,72,500} 
  = 37,500 (F) 
8. (c) Material Cost Variance (Cotton + Polyester) = {(SQ × SP) – (AQ × AP)}
  = {7,51,770 – 6,72,500} 
  = 79,270 (F) 
Working Note 
Material Variances: 
Material SQ 
(WN-1) 
SP 
(`) 
SQ × SP 
(`) 
RSQ 
(WN-2) 
RSQ × SP 
(`) 
AQ AQ × SP 
(`) 
AP 
(`) 
AQ × AP 
(`) 
Cotton 9,397 m 50 4,69,850 8,857 m 4,42,850 9,000 m 4,50,000 48 4,32,000 
Polyester 7,048 m 40 2,81,920 6,643 m 2,65,720 6,500 m 2,60,000 37 2,40,500 
16,445 m 7,51,770 15,500 m 7,08,570 15,500 m 7,10,000 6,72,500 
WN-1: Standard Quantity (SQ): 
Cotton  - 
??
×
??
×
??
8,000m
14,800m
0.9 14,000m
= 9,396.8 or 9,397 m 
Polyester- 
??
×
??
×
??
6,000m
14,800m
0.9 14,000m
 = 7,047.6 or 7048 m 
WN- 2: Revised Standard Quantity (RSQ): 
Cotton - 
??
×
??
??
8,000m
15,500m
14,000m
 = 8,857.1 or 8857 m 
338
Polyester  - 
??
×
??
??
6,000m
15,500m
14,000m
 = 6,642.8 or 6643 m 
9. (b) Labour Efficiency Variance (Skilled + Unskilled) = {(SH × SR) – (AH ×
     SR)} 
= {61,496 – 63,920} 
= 2,424 (A) 
Labour Yield Variance (Skilled + Unskilled) = {(SH × SR) – (RSH × 
  SR)} 
= {61,496 – 63,052} 
= 1,556 (A) 
10. (a) Labour Cost Variance (Skilled + Unskilled) = {(SH × SR) – (AH × 
   AR)} 
= {61,496 – 62,380} 
= 884 (A) 
Working Note 
Labour Variances: 
Labour SH 
 (WN-3) 
SR 
(`) 
SH × SR 
(`) 
RSH 
(WN-4) 
RSH × SR 
(`) 
AH AH × SR 
(`) 
AR 
(`) 
AH × AR 
(`) 
Skilled 1,116 hrs 37.50 41,850 1144 42,900 1,200 45,000 35.50 42,600 
Unskilled 893 hrs 22.00 19,646 916 20,152 860 18,920 23.00 19,780 
2,009 hrs 61,496 2,060 63,052 2,060 63,920 62,380 
WN- 3: Standard Hours (SH): 
Skilled labour-  
? ? ×
×
? ?
×
? ?
0.95 1,000hr.
14,800m.
0.90 14,000m.
 =1,115.87 or 1,116 hrs. 
Unskilled labour- 
? ? ×
×
? ?
×
? ?
0.95 800hr.
14,800m.
0.90 14,000m.
 = 892.69 or 893 hrs. 
WN- 4: Revised Standard Hours (RSH): 
Skilled labour- 
1,000hr.
2,060hr.
1,800hr.
? ?
×
? ?
? ?
 = 1,144.44 or 1,144 hrs. 
Unskilled labour- 
800hr.
2,060hr.
1,800hr.
??
×
??
??
 = 915.56 or 916 hrs. 
11. (d)  Break-even point = 
( )
Fixed Costs TargetedProfit
Selling Price per Unit  Variable Cost per Unit
+
-
= (5,00,000 + 2,00,000)/100 = 7,000 units 
339
Page 5


MODEL TEST PAPER 5 
INTERMEDIATE: GROUP – II 
PAPER – 4: COST AND MANAGEMENT ACCOUNTING 
Suggested Answers/ Solution 
PART I – Case Scenario based MCQs 
1. (a) Working notes:
Factory cost  (33,00,000 x 0.25)  INR 8,25,000 
Add: Freight (50,000 x 0.25)  INR 12,500 
F.O.B. (Free On Board) INR 8,37,500 
Containers (2,00,000 x 0.25)    INR 50,000 
Insurance (1,500 x 75)       INR 1,12,500 
Ocean freight (2,000 x 75)      INR 1,50,000 
CIF (Cost, Insurance and Freight) = 8,37,500 + 1,12,500 + 1,50,000 
= INR 11,00,000 
Custom duty     = 20% x 11,00,000 = INR 2,20,000 
IGST     = 18% x (11,00,000 + 2,20,000) 
= INR 2,37,600 
Penalty      = INR 15,000 
Commission   
Indian      = 6% x 8,25,000  = INR 49,500 
Srilankan     = 12% x 8,25,000  = INR 99,000 
Particulars Amount (INR) 
Factory cost 8,25,000 
Containers (50,000-38,000) 12,000 
Insurance 1,12,500 
Ocean freight 1,50,000 
Freight inwards 12,500 
Commission (49,500+99,000) 1,48,500 
Custom duty non-refundable 20%* 2,20,000 44,000 
TOTAL 13,04,500 
336
2. (a) Good units = 8,000* (1-5%) = 7,600 UNITS
Normal loss to be absorbed in good units. No abnormal loss. 
Particulars Product Zenga 
(INR) 
Factory cost 4,50,000 
Other cost except commission, insurance and 
custom duty to be absorbed on the basis of quantity 
i.e. 12:8 or 3:2 (12,000+1,50,000+12,500)*2/5
69,800 
Commission, insurance and custom duty to be 
absorbed on value basis 15:18 or 5:6 
(1,48,500+1,12,500+44,000)*6/11 
1,66,363.63 
Total Cost 6,86,163.63 
Number of good units 7,600 units 
Per unit Cost 90.28 
3. (b)  Good units = 12000 * (1-5%) = 11400 units
Particulars Product Xendga 
(INR) 
Factory cost 3,75,000 
Other cost (12,000+1,50,000+12,500)*3/5 1,04,700 
Commission, insurance and custom duty 
(1,48,500+1,12,500+44,000)*5/11 
1,38,636.36 
Total Cost 618,336.36 
Number of good units 11,400 units 
Per unit Cost 54.24 
4 (a)  Custom duty 80% x 2,20,000 =  1,76,000 
Add: IGST =  2,37,600 
     4,13,600 
5. (c) Normal loss upto 8%
Abnormal loss 1% 
Total cost of xendga INR 6,18,336.36 
Total cost of zenga INR 6,86,163.63 
Particulars XENGDA (INR) ZENGA (INR) (INR) 
Normal loss of 
8% 
960 units 640 units 
Good units after 
normal loss 
11,040 units 7,360 units 
Per unit cost to 
be absorbed in 
56 
(6,18,336.36/11,040) 
93.23 
(6,86,163.63/7,360) 
337
good units (total 
costs/no of good 
units after 
normal loss) 
Abnormal loss in 
units 1% 
120 units 80 units 
Loss in Profit & 
Loss 
56 x 120 = 6,720 93.23 x 80= 7,458.4 14,178.4 
6. (a) Material Mix Variance (Cotton + Polyester) = {(RSQ × SP) – (AQ × SP)}
   = {7,08,570- 7,10,000} 
  = 1,430 (A) 
Material Yield Variance (Cotton + Polyester) = {(SQ × SP) – (RSQ × SP)} 
  = {7,51,770 – 7,08,570} 
  = 43,200 (F) 
7. (d) Material Price Variance (Cotton + Polyester) = {(AQ × SP) – (AQ × AP)
  = {7,10,000 – 6,72,500} 
  = 37,500 (F) 
8. (c) Material Cost Variance (Cotton + Polyester) = {(SQ × SP) – (AQ × AP)}
  = {7,51,770 – 6,72,500} 
  = 79,270 (F) 
Working Note 
Material Variances: 
Material SQ 
(WN-1) 
SP 
(`) 
SQ × SP 
(`) 
RSQ 
(WN-2) 
RSQ × SP 
(`) 
AQ AQ × SP 
(`) 
AP 
(`) 
AQ × AP 
(`) 
Cotton 9,397 m 50 4,69,850 8,857 m 4,42,850 9,000 m 4,50,000 48 4,32,000 
Polyester 7,048 m 40 2,81,920 6,643 m 2,65,720 6,500 m 2,60,000 37 2,40,500 
16,445 m 7,51,770 15,500 m 7,08,570 15,500 m 7,10,000 6,72,500 
WN-1: Standard Quantity (SQ): 
Cotton  - 
??
×
??
×
??
8,000m
14,800m
0.9 14,000m
= 9,396.8 or 9,397 m 
Polyester- 
??
×
??
×
??
6,000m
14,800m
0.9 14,000m
 = 7,047.6 or 7048 m 
WN- 2: Revised Standard Quantity (RSQ): 
Cotton - 
??
×
??
??
8,000m
15,500m
14,000m
 = 8,857.1 or 8857 m 
338
Polyester  - 
??
×
??
??
6,000m
15,500m
14,000m
 = 6,642.8 or 6643 m 
9. (b) Labour Efficiency Variance (Skilled + Unskilled) = {(SH × SR) – (AH ×
     SR)} 
= {61,496 – 63,920} 
= 2,424 (A) 
Labour Yield Variance (Skilled + Unskilled) = {(SH × SR) – (RSH × 
  SR)} 
= {61,496 – 63,052} 
= 1,556 (A) 
10. (a) Labour Cost Variance (Skilled + Unskilled) = {(SH × SR) – (AH × 
   AR)} 
= {61,496 – 62,380} 
= 884 (A) 
Working Note 
Labour Variances: 
Labour SH 
 (WN-3) 
SR 
(`) 
SH × SR 
(`) 
RSH 
(WN-4) 
RSH × SR 
(`) 
AH AH × SR 
(`) 
AR 
(`) 
AH × AR 
(`) 
Skilled 1,116 hrs 37.50 41,850 1144 42,900 1,200 45,000 35.50 42,600 
Unskilled 893 hrs 22.00 19,646 916 20,152 860 18,920 23.00 19,780 
2,009 hrs 61,496 2,060 63,052 2,060 63,920 62,380 
WN- 3: Standard Hours (SH): 
Skilled labour-  
? ? ×
×
? ?
×
? ?
0.95 1,000hr.
14,800m.
0.90 14,000m.
 =1,115.87 or 1,116 hrs. 
Unskilled labour- 
? ? ×
×
? ?
×
? ?
0.95 800hr.
14,800m.
0.90 14,000m.
 = 892.69 or 893 hrs. 
WN- 4: Revised Standard Hours (RSH): 
Skilled labour- 
1,000hr.
2,060hr.
1,800hr.
? ?
×
? ?
? ?
 = 1,144.44 or 1,144 hrs. 
Unskilled labour- 
800hr.
2,060hr.
1,800hr.
??
×
??
??
 = 915.56 or 916 hrs. 
11. (d)  Break-even point = 
( )
Fixed Costs TargetedProfit
Selling Price per Unit  Variable Cost per Unit
+
-
= (5,00,000 + 2,00,000)/100 = 7,000 units 
339
12. (d) Expected Output = Input Material-Normal Loss 
Expected Output = 1,200 Kg-96 Kg=1,104 kg 
Abnormal loss   = 1,104 kg – 1,100 kg = 4 kg  
13. (b) Overhead Rate = Total Estimated Machine Hours/Total Estimated 
  Overhead Cost 
= ` 6,00,000/30,000 = ` 20 
Allocated Overhead = Overhead Rate x Machine Hours Used by the Job 
 = ` 20 x 300 hrs = ` 6,000 
14. (c) Efficiency Ratio = Activity Ratio/Capacity Utilization Ratio
 = 0.95/0.85 = 1.117 or 112% 
15. (b) Total cost ` 20,000 + (300 units × (` 20 + `10)) = ` 29,000
PART-II– Descriptive Questions 
1. (a)  Increase in hourly rate of wages under Rowan Plan is ` 30 i.e.
(`180 – ` 150) 
×
TimeSaved
150
Time Allowed
`  = `30 (Please refer Working Note) 
Or, ×
TimeSaved
150
50hours
`  = ` 30 
Or, Time saved = 
1,500
150
= 10 hours 
Therefore, Time Taken is 40 hours i.e. (50 hours – 10 hours) 
Effective Hourly Rate under Halsey System: 
Time saved  = 10 hours 
Bonus @ 50% = 10 hours × 50% × ` 150  = Rs 750 
Total Wages = (`150 × 40 hours + ` 750) = Rs 6,750 
Effective Hourly Rate = ` 6,750 ÷ 40 hours = ` 168.75  
Working Note: 
Effective hourly rate  
=  
Time Taken
(Time Taken Rate per hour) Time Saved Rate per hour
Time Allowed
Time Taken
× + ××
Or, ` 180 = 
Time Taken
×Time Saved×Rate per hour
Time Taken×Rate per hour Time Allowed
+
Time Taken Time Taken
Or, ` 180 - 
Time Taken×Rate per hour
Time Taken
=
Time Taken 1
Time Saved Rate per hour
Time Allowed Time Taken
×× ×
340
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Oct 01, 2025 Last updated
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