Cost and Management Accounting Model Test Paper - 8 (Questions) - CA Intermediate PDF Download

 Page 1


MODEL TEST PAPER 8 
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. 
1. The purchase committee of A Ltd. has been entrusted to review the material 
procurement policy of the company. The chief marketing manager has 
appraised the committee that the company at present produces a single 
product X by using two raw materials A and B in the ratio of 3:2. Material A is 
perishable in nature and has to be used within 10 days from Goods received 
note (GRN) date otherwise material becomes obsolete. Material B is durable 
in nature and can be used even after one year.  Material A is purchased from 
the local market within 1 to 2 days of placing order. Material B, on the other 
hand, is purchased from neighbouring state and it takes 2 to 4 days to receive 
the material in the store.  
The purchase price of per kilogram of raw material A and B is `30 and `44 
respectively exclusive of taxes. To place an order, the company has to incur 
an administrative cost of `1,200. Carrying cost for Material A and B is 15% 
and 5% respectively. At present material A is purchased in a lot of 15,000 kg. 
to avail 10% discount on market price. GST applicable for both the materials 
is 18% and the input tax credit is availed.  
The sales department has provided an estimate that the company could sell 
30,000 kg. in January 2024 and also projected the same trend for the entire 
year.  
The ratio of input and output is 5:3. Company works for 25 days in a month 
and production is carried out evenly. 
The following queries/ calculations to be kept ready for purchase committees’ 
reference: 
86
Page 2


MODEL TEST PAPER 8 
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. 
1. The purchase committee of A Ltd. has been entrusted to review the material 
procurement policy of the company. The chief marketing manager has 
appraised the committee that the company at present produces a single 
product X by using two raw materials A and B in the ratio of 3:2. Material A is 
perishable in nature and has to be used within 10 days from Goods received 
note (GRN) date otherwise material becomes obsolete. Material B is durable 
in nature and can be used even after one year.  Material A is purchased from 
the local market within 1 to 2 days of placing order. Material B, on the other 
hand, is purchased from neighbouring state and it takes 2 to 4 days to receive 
the material in the store.  
The purchase price of per kilogram of raw material A and B is `30 and `44 
respectively exclusive of taxes. To place an order, the company has to incur 
an administrative cost of `1,200. Carrying cost for Material A and B is 15% 
and 5% respectively. At present material A is purchased in a lot of 15,000 kg. 
to avail 10% discount on market price. GST applicable for both the materials 
is 18% and the input tax credit is availed.  
The sales department has provided an estimate that the company could sell 
30,000 kg. in January 2024 and also projected the same trend for the entire 
year.  
The ratio of input and output is 5:3. Company works for 25 days in a month 
and production is carried out evenly. 
The following queries/ calculations to be kept ready for purchase committees’ 
reference: 
86
(i)  For the month of January 2024, what would be the quantity of the 
materials to be requisitioned for both material A and B: 
(a)  9,000 kg & 6,000 kg respectively 
(b)  18,000 kg & 12,000 kg respectively 
(c)  27,000 kg & 18,000 kg respectively 
(d)  30,000 kg & 20,000 kg respectively. 
(ii)  The economic order quantity (EOQ) for both the material A & B: 
(a)  13,856 kg & 16,181 kg respectively 
(b)  16,197 kg & 17,327 kg respectively  
(c)  16,181 kg & 17,165 kg respectively 
(d)  13,197 kg & 17,165 kg respectively 
(iii)  What would the maximum stock level for material A: 
(a)  18,200 kg. 
(b)  12,000 kg. 
(c)  16,000 kg. 
(d)  16,200 kg. 
(iv)  Calculate saving/ loss in purchase of Material A if the purchase order 
quantity is equal to EOQ. 
(a)  Profit of ` 3,21,201. 
(b)  Loss of ` 3,21,201. 
(c)  Profit of ` 2,52,500. 
(d)  Loss of ` 2,52,500. 
(v)  What would the minimum stock level for material A: 
(a)  1,800 kg. 
(b)  1,200 kg. 
(c)  600 kg. 
(d)  2,400 kg. (5 x 2 = 10 Marks) 
2.  During half year ending inter departmental review meeting of P Ltd., cost 
variance report was discussed and the performance of the departments were 
assessed. The following figures were presented. 
For a period of first six months of the financial year, following information were 
extracted from the books: 
Actual production overheads ` 34,08,000 
The above amount is inclusive of the following payments 
made: 
 
 Paid as per court’s order ` 4,50,000 
87
Page 3


MODEL TEST PAPER 8 
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. 
1. The purchase committee of A Ltd. has been entrusted to review the material 
procurement policy of the company. The chief marketing manager has 
appraised the committee that the company at present produces a single 
product X by using two raw materials A and B in the ratio of 3:2. Material A is 
perishable in nature and has to be used within 10 days from Goods received 
note (GRN) date otherwise material becomes obsolete. Material B is durable 
in nature and can be used even after one year.  Material A is purchased from 
the local market within 1 to 2 days of placing order. Material B, on the other 
hand, is purchased from neighbouring state and it takes 2 to 4 days to receive 
the material in the store.  
The purchase price of per kilogram of raw material A and B is `30 and `44 
respectively exclusive of taxes. To place an order, the company has to incur 
an administrative cost of `1,200. Carrying cost for Material A and B is 15% 
and 5% respectively. At present material A is purchased in a lot of 15,000 kg. 
to avail 10% discount on market price. GST applicable for both the materials 
is 18% and the input tax credit is availed.  
The sales department has provided an estimate that the company could sell 
30,000 kg. in January 2024 and also projected the same trend for the entire 
year.  
The ratio of input and output is 5:3. Company works for 25 days in a month 
and production is carried out evenly. 
The following queries/ calculations to be kept ready for purchase committees’ 
reference: 
86
(i)  For the month of January 2024, what would be the quantity of the 
materials to be requisitioned for both material A and B: 
(a)  9,000 kg & 6,000 kg respectively 
(b)  18,000 kg & 12,000 kg respectively 
(c)  27,000 kg & 18,000 kg respectively 
(d)  30,000 kg & 20,000 kg respectively. 
(ii)  The economic order quantity (EOQ) for both the material A & B: 
(a)  13,856 kg & 16,181 kg respectively 
(b)  16,197 kg & 17,327 kg respectively  
(c)  16,181 kg & 17,165 kg respectively 
(d)  13,197 kg & 17,165 kg respectively 
(iii)  What would the maximum stock level for material A: 
(a)  18,200 kg. 
(b)  12,000 kg. 
(c)  16,000 kg. 
(d)  16,200 kg. 
(iv)  Calculate saving/ loss in purchase of Material A if the purchase order 
quantity is equal to EOQ. 
(a)  Profit of ` 3,21,201. 
(b)  Loss of ` 3,21,201. 
(c)  Profit of ` 2,52,500. 
(d)  Loss of ` 2,52,500. 
(v)  What would the minimum stock level for material A: 
(a)  1,800 kg. 
(b)  1,200 kg. 
(c)  600 kg. 
(d)  2,400 kg. (5 x 2 = 10 Marks) 
2.  During half year ending inter departmental review meeting of P Ltd., cost 
variance report was discussed and the performance of the departments were 
assessed. The following figures were presented. 
For a period of first six months of the financial year, following information were 
extracted from the books: 
Actual production overheads ` 34,08,000 
The above amount is inclusive of the following payments 
made: 
 
 Paid as per court’s order ` 4,50,000 
87
 Expenses of previous year booked in current year  ` 1,00,000 
 Paid to workers for strike period under an award ` 4,20,000 
 Obsolete stores written off ` 36,000 
Production and sales data for the six months are as under: 
Production:  
 Finished goods  1,10,000 units 
 Works-in-progress  
   (50% complete in every respect) 80,000 units 
Sale:  
 Finished goods 90,000 units 
Machine worked during the period was 3,000 hours. 
At the of preparation of revenue budget, it was estimated that a total of 
`50,40,000 would be required for budgeted machine hours of 6,000 as 
production overheads for the entire year. 
During the meeting, a data analytic report revealed that 40% of the 
over/under-absorption was due to defective production policies and the 
balance was attributable to increase in costs. 
You were also present at the meeting; the chairperson of the meeting has 
asked you to be ready with the followings for the performance appraisal of the 
departmental heads: 
(i)  How much was the budgeted machine hour rate used to recover 
overhead? 
(a)  ` 760 
(b)  ` 820 
(c)  ` 780 
(d)  ` 840 
(ii)  How much amount of production overhead has been recovered 
(absorbed) upto the end of half year end? 
(a)  ` 25,20,000 
(b)  ` 34,08,000 
(c)  ` 24,00,000 
(d)  ` 24,60,000 
(iii)  What is the amount of overhead under/ over absorbed? 
(a)  1,18,000 over-absorbed 
(b)  1,18,000 under- absorbed 
(c)  18,000 over-absorbed 
(d)  18,000 under-absorbed 
88
Page 4


MODEL TEST PAPER 8 
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. 
1. The purchase committee of A Ltd. has been entrusted to review the material 
procurement policy of the company. The chief marketing manager has 
appraised the committee that the company at present produces a single 
product X by using two raw materials A and B in the ratio of 3:2. Material A is 
perishable in nature and has to be used within 10 days from Goods received 
note (GRN) date otherwise material becomes obsolete. Material B is durable 
in nature and can be used even after one year.  Material A is purchased from 
the local market within 1 to 2 days of placing order. Material B, on the other 
hand, is purchased from neighbouring state and it takes 2 to 4 days to receive 
the material in the store.  
The purchase price of per kilogram of raw material A and B is `30 and `44 
respectively exclusive of taxes. To place an order, the company has to incur 
an administrative cost of `1,200. Carrying cost for Material A and B is 15% 
and 5% respectively. At present material A is purchased in a lot of 15,000 kg. 
to avail 10% discount on market price. GST applicable for both the materials 
is 18% and the input tax credit is availed.  
The sales department has provided an estimate that the company could sell 
30,000 kg. in January 2024 and also projected the same trend for the entire 
year.  
The ratio of input and output is 5:3. Company works for 25 days in a month 
and production is carried out evenly. 
The following queries/ calculations to be kept ready for purchase committees’ 
reference: 
86
(i)  For the month of January 2024, what would be the quantity of the 
materials to be requisitioned for both material A and B: 
(a)  9,000 kg & 6,000 kg respectively 
(b)  18,000 kg & 12,000 kg respectively 
(c)  27,000 kg & 18,000 kg respectively 
(d)  30,000 kg & 20,000 kg respectively. 
(ii)  The economic order quantity (EOQ) for both the material A & B: 
(a)  13,856 kg & 16,181 kg respectively 
(b)  16,197 kg & 17,327 kg respectively  
(c)  16,181 kg & 17,165 kg respectively 
(d)  13,197 kg & 17,165 kg respectively 
(iii)  What would the maximum stock level for material A: 
(a)  18,200 kg. 
(b)  12,000 kg. 
(c)  16,000 kg. 
(d)  16,200 kg. 
(iv)  Calculate saving/ loss in purchase of Material A if the purchase order 
quantity is equal to EOQ. 
(a)  Profit of ` 3,21,201. 
(b)  Loss of ` 3,21,201. 
(c)  Profit of ` 2,52,500. 
(d)  Loss of ` 2,52,500. 
(v)  What would the minimum stock level for material A: 
(a)  1,800 kg. 
(b)  1,200 kg. 
(c)  600 kg. 
(d)  2,400 kg. (5 x 2 = 10 Marks) 
2.  During half year ending inter departmental review meeting of P Ltd., cost 
variance report was discussed and the performance of the departments were 
assessed. The following figures were presented. 
For a period of first six months of the financial year, following information were 
extracted from the books: 
Actual production overheads ` 34,08,000 
The above amount is inclusive of the following payments 
made: 
 
 Paid as per court’s order ` 4,50,000 
87
 Expenses of previous year booked in current year  ` 1,00,000 
 Paid to workers for strike period under an award ` 4,20,000 
 Obsolete stores written off ` 36,000 
Production and sales data for the six months are as under: 
Production:  
 Finished goods  1,10,000 units 
 Works-in-progress  
   (50% complete in every respect) 80,000 units 
Sale:  
 Finished goods 90,000 units 
Machine worked during the period was 3,000 hours. 
At the of preparation of revenue budget, it was estimated that a total of 
`50,40,000 would be required for budgeted machine hours of 6,000 as 
production overheads for the entire year. 
During the meeting, a data analytic report revealed that 40% of the 
over/under-absorption was due to defective production policies and the 
balance was attributable to increase in costs. 
You were also present at the meeting; the chairperson of the meeting has 
asked you to be ready with the followings for the performance appraisal of the 
departmental heads: 
(i)  How much was the budgeted machine hour rate used to recover 
overhead? 
(a)  ` 760 
(b)  ` 820 
(c)  ` 780 
(d)  ` 840 
(ii)  How much amount of production overhead has been recovered 
(absorbed) upto the end of half year end? 
(a)  ` 25,20,000 
(b)  ` 34,08,000 
(c)  ` 24,00,000 
(d)  ` 24,60,000 
(iii)  What is the amount of overhead under/ over absorbed? 
(a)  1,18,000 over-absorbed 
(b)  1,18,000 under- absorbed 
(c)  18,000 over-absorbed 
(d)  18,000 under-absorbed 
88
(iv) What is the supplementary rate for apportionment of over absorbed
overheads over WIP, Finished goods and Cost of sales?
(a) ` 0.315 per unit
(b) ` 0.472 per unit
(c) ` 0.787 per unit
(d) ` 1 per unit
(v) What is the amount of over absorbed overhead apportioned to Work in
Progress?
(a) ` 9,440
(b) ` 42,480
(c) ` 18,880
(d) ` 70,800 (5 x 2 = 10 Marks) 
3. The following details are given to you:
Raw materials consumed      2,40,000
Factory overheads       3/4 of direct wages
Quality control cost and research and development cost 20% of factory cost
Cost of production      7,50,000
The amount of direct wages will be:
(a) 2,50,000
(b) 2,20,000
(c) 2,00,000
(d) 3,00,000 (2 Marks) 
4. A hotel having 200 rooms of which 80% are normally occupied in 
summer 60% in Autumn and 25% in winter. Period of summer, autumn and 
winter be taken as 4 months each and normal days in a month be assumed 
to be 30. The total occupied room days will be
(a) 39,200 Room days
(b) 39,600 Room days
(c) 39,000 Room days
(d) 38,000 Room days (2 Marks) 
5. The following figures are extracted from the books of a company:
Budgeted overheads ?20,000 (Fixed ?12,000, Variable ?8,000) 
Budgeted output 2 ,500 units
Actual Overheads ?21,800 (Fixed ?11,800, Variable ?10,000) 
Actual output 3,000
Variable Overheads and fixed overheads cost variance will be:
89
Page 5


MODEL TEST PAPER 8 
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. 
1. The purchase committee of A Ltd. has been entrusted to review the material 
procurement policy of the company. The chief marketing manager has 
appraised the committee that the company at present produces a single 
product X by using two raw materials A and B in the ratio of 3:2. Material A is 
perishable in nature and has to be used within 10 days from Goods received 
note (GRN) date otherwise material becomes obsolete. Material B is durable 
in nature and can be used even after one year.  Material A is purchased from 
the local market within 1 to 2 days of placing order. Material B, on the other 
hand, is purchased from neighbouring state and it takes 2 to 4 days to receive 
the material in the store.  
The purchase price of per kilogram of raw material A and B is `30 and `44 
respectively exclusive of taxes. To place an order, the company has to incur 
an administrative cost of `1,200. Carrying cost for Material A and B is 15% 
and 5% respectively. At present material A is purchased in a lot of 15,000 kg. 
to avail 10% discount on market price. GST applicable for both the materials 
is 18% and the input tax credit is availed.  
The sales department has provided an estimate that the company could sell 
30,000 kg. in January 2024 and also projected the same trend for the entire 
year.  
The ratio of input and output is 5:3. Company works for 25 days in a month 
and production is carried out evenly. 
The following queries/ calculations to be kept ready for purchase committees’ 
reference: 
86
(i)  For the month of January 2024, what would be the quantity of the 
materials to be requisitioned for both material A and B: 
(a)  9,000 kg & 6,000 kg respectively 
(b)  18,000 kg & 12,000 kg respectively 
(c)  27,000 kg & 18,000 kg respectively 
(d)  30,000 kg & 20,000 kg respectively. 
(ii)  The economic order quantity (EOQ) for both the material A & B: 
(a)  13,856 kg & 16,181 kg respectively 
(b)  16,197 kg & 17,327 kg respectively  
(c)  16,181 kg & 17,165 kg respectively 
(d)  13,197 kg & 17,165 kg respectively 
(iii)  What would the maximum stock level for material A: 
(a)  18,200 kg. 
(b)  12,000 kg. 
(c)  16,000 kg. 
(d)  16,200 kg. 
(iv)  Calculate saving/ loss in purchase of Material A if the purchase order 
quantity is equal to EOQ. 
(a)  Profit of ` 3,21,201. 
(b)  Loss of ` 3,21,201. 
(c)  Profit of ` 2,52,500. 
(d)  Loss of ` 2,52,500. 
(v)  What would the minimum stock level for material A: 
(a)  1,800 kg. 
(b)  1,200 kg. 
(c)  600 kg. 
(d)  2,400 kg. (5 x 2 = 10 Marks) 
2.  During half year ending inter departmental review meeting of P Ltd., cost 
variance report was discussed and the performance of the departments were 
assessed. The following figures were presented. 
For a period of first six months of the financial year, following information were 
extracted from the books: 
Actual production overheads ` 34,08,000 
The above amount is inclusive of the following payments 
made: 
 
 Paid as per court’s order ` 4,50,000 
87
 Expenses of previous year booked in current year  ` 1,00,000 
 Paid to workers for strike period under an award ` 4,20,000 
 Obsolete stores written off ` 36,000 
Production and sales data for the six months are as under: 
Production:  
 Finished goods  1,10,000 units 
 Works-in-progress  
   (50% complete in every respect) 80,000 units 
Sale:  
 Finished goods 90,000 units 
Machine worked during the period was 3,000 hours. 
At the of preparation of revenue budget, it was estimated that a total of 
`50,40,000 would be required for budgeted machine hours of 6,000 as 
production overheads for the entire year. 
During the meeting, a data analytic report revealed that 40% of the 
over/under-absorption was due to defective production policies and the 
balance was attributable to increase in costs. 
You were also present at the meeting; the chairperson of the meeting has 
asked you to be ready with the followings for the performance appraisal of the 
departmental heads: 
(i)  How much was the budgeted machine hour rate used to recover 
overhead? 
(a)  ` 760 
(b)  ` 820 
(c)  ` 780 
(d)  ` 840 
(ii)  How much amount of production overhead has been recovered 
(absorbed) upto the end of half year end? 
(a)  ` 25,20,000 
(b)  ` 34,08,000 
(c)  ` 24,00,000 
(d)  ` 24,60,000 
(iii)  What is the amount of overhead under/ over absorbed? 
(a)  1,18,000 over-absorbed 
(b)  1,18,000 under- absorbed 
(c)  18,000 over-absorbed 
(d)  18,000 under-absorbed 
88
(iv) What is the supplementary rate for apportionment of over absorbed
overheads over WIP, Finished goods and Cost of sales?
(a) ` 0.315 per unit
(b) ` 0.472 per unit
(c) ` 0.787 per unit
(d) ` 1 per unit
(v) What is the amount of over absorbed overhead apportioned to Work in
Progress?
(a) ` 9,440
(b) ` 42,480
(c) ` 18,880
(d) ` 70,800 (5 x 2 = 10 Marks) 
3. The following details are given to you:
Raw materials consumed      2,40,000
Factory overheads       3/4 of direct wages
Quality control cost and research and development cost 20% of factory cost
Cost of production      7,50,000
The amount of direct wages will be:
(a) 2,50,000
(b) 2,20,000
(c) 2,00,000
(d) 3,00,000 (2 Marks) 
4. A hotel having 200 rooms of which 80% are normally occupied in 
summer 60% in Autumn and 25% in winter. Period of summer, autumn and 
winter be taken as 4 months each and normal days in a month be assumed 
to be 30. The total occupied room days will be
(a) 39,200 Room days
(b) 39,600 Room days
(c) 39,000 Room days
(d) 38,000 Room days (2 Marks) 
5. The following figures are extracted from the books of a company:
Budgeted overheads ?20,000 (Fixed ?12,000, Variable ?8,000) 
Budgeted output 2 ,500 units
Actual Overheads ?21,800 (Fixed ?11,800, Variable ?10,000) 
Actual output 3,000
Variable Overheads and fixed overheads cost variance will be:
89
(a) 400 (A) and 2600 (F)
(b) 400 (A) and 200 (F)
(c) 2 ,000 (A) and 200 (F)
(d) 2 ,000 (F) and 200 (A) (2 Marks) 
6. In a particular process 28 ,000 units are introduced during a period. 5% of input is 
normal loss.  Closing work in  progress 60%  complete is 2,600 units.  24,000 
completed units are transferred to next process.  Equivalent production for  the 
period is:
(a) 25,040 units
(b) 28,000 units
(c) 25,560 units
(d) 24,000 units (2 Marks) 
7. If final sales are ` 50,000 and separable costs are ` 35,000, then net
realizable value will be
(a) 15,000
(b) 85,000
(c) 35,000
(d) 50,000 (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)  Interio Ltd. manufactures quality furniture to customers' order.  It has
three production departments A, B and C which have overhead 
absorption rates (per direct labour hour) of `12.86, `12.40 and `14.03 
respectively. 
Two pieces of furniture are to be manufactured for customer.  Direct 
costs are as follows:     
Job -XYZ Job- MNO 
Direct material  (`) 15,400 10,800 
Direct labour 
Dept.-A @ ` 76/ hour 20 hours 16 hours 
Dept.-B @ ` 70/ hour 12 hours 10 hours 
Dept.-C @ ` 68/ hour 10 hours 14 hours 
The firm quotes prices to customers that reflect a required profit of 25% 
on selling price. CALCULATE the total cost and selling price of each job. 
 (5 Marks) 
90