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Question Paper
Cost & Management Accounting
Duration: 75
Details: Test -3 (7,8,9)
Marks: 40
Instructions:

All the questions are compulsory

Properly mention test number and page number on your answer sheet, Try to upload sheets in
arranged manner.
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compulsory wherever required in support of your solution
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Q-1. Acme Manufacturing Co. Ltd. Opens costing records, with balances as on 1 st July, 2021 as
follows:
Particular
Material control A/c
Work- in - Progress A/c
Finished Goods A/c
Production Overheads A/c
Amount (Rs.)
1,24,000
62,500
1,24,000
8,400
Administration Overhead
Selling and Distribution Overhead A/c
Amount (Rs.)
12,000
6,250
General Ledger Control A/c
3,13,150
3,25,150
3,25,150
The following are the transactions for the quarter ended 30 th September 2021:
Particulars
Amount (Rs.)
Materials Purchased
4,80,100
Materials Issued to Jobs
4,77,400
Materials to Work Maintenance
41,200
Materials to Administration Office
3,400
Materials to Selling Department
7,200
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Wages Direct
1,49,300
Wages Indirect
65,000
Transportation for incoming Materials ( taken as works overheads )
8,400
Production Overheads
2,42,250
Absorbed Overheads Production
3,59,100
Administration Overheads
74,000
Administration Allocation to production
52,900
Administration Allocation to sales
14,800
Sales Overheads
64,200
Sales Overheads Absorbed
82,000
Finished Goods Produced
9,58,400
Finished Goods Sold
9,77,300
Sales Realisation
14,43,000
Make up the various accounts as you envisage in the Cost Ledger and prepare a Trial Balance as
at 30th September, 2021.
(10 Marks)
Q-2. GHI Ltd. manufactures 'Stent' that is used by hospitals in heart surgery. As per the
estimates provided by Pharmaceutical Industry Bureau, there will be a demand of 40 Million
'Stents' in the coming year. GHI Ltd. is expected to have a market share of 2.5% of the total
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market demand of the Stents in the coming year. It is estimated that it costs Rs.1.50 as
inventory holding cost per stent per month and that the set-up cost per run of stent
manufacture is Rs. 225.
Required:
I.
What would be the optimum run size for Stent manufacture?
II.
What is the minimum inventory holding cost?
III.
Assuming that the company has a policy of manufacturing 4,000 stents per run, how much
extra costs the company would be incurring as compared to the optimum run suggested in
(i) above?
(6 Marks)
Q-3. At the end of first year on 31st march, 2021, in the books of ABC constructions Ltd. The
bridge contract account stands debited with the cost of material issued, labour, overheads
expended and plant issued and its stands credited with material at site Rs.25, 000. Material
returned Rs.15, 000 and plant at site Rs.4, 76,000 after charging deprecation at 15 percent. The
material issued, labour, overheads and plant issued debited to the contract account, are in the
ratio of 5:4:2:4. 75% of the contract has been certified by the contractee’s architect as
completed at the end of year and 90 percent of the certified work value has been received in
cash Rs.16,20,000. The accounts department informs that 2/3 of the profit on cash basis credit
to Profit and Loss account on the contract is Rs.2, 13,600.
You are required to prepare:
(i)
The Bridge contract account showing the cost of work done but uncertified.
(ii)
Work in- progress account.
(iii)
Contractee’s account.
(8 Marks)
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Q-4. As of 31st March, 2022, the following balances existed in a firm’s cost ledger, which is
maintained separately on a double entry basic:
Particulars
Debit (Rs.)
Credit (Rs.)
Stores Ledger control A/c
3,00,000
--
Work - in – Progress Control A/c
1,50,000
--
Finished Goods Control A/c
2,50,000
--
Manufacturing Overhead Control A/c
15,000
Cost Ledger Control A/c
6,85,000
7,00,000
7,00,000
During the next quarter, the following items arose:
Particular
Finished Product ( at cost )
Manufacturing overhead incurred
Raw material Purchased
Amount (Rs.)
2,25,000
85,000
1,25,000
Factory Wages
40,000
Indirect Labor
20,000
Cost of Sales
1,75,000
Material Issued to Production
1,35,000
Sales Returned (at cost )
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9,000
Material Returned to Suppliers
13,000
Manufacturing overhead charged to production
85,000
You are required to prepare the Cost Ledger control A/c, Store Ledger control A/c, Work - in –
Progress Control A/c, Finished Stock Ledger Control A/c, Manufacturing Overhead Control A/c,
Wages Control A/c, Cost of sale A/c and Trial Balance at the end of the quarter.
(8 marks)
Q-5. PVK Constructions commenced a contract on 1st April, 2019. The total contract value was
Rs 1, 00, 00,000. The contract is expected to be completed by 31st December, 2021. Actual
expenditure during the period 1st April, 2020 to 31st March, 2021 and estimated expenditure
for the period 1st April, 2021 to 31st December, 2021 are as follows:
Details of Expenses
Actual
Estimated
01.04.20 to 31.03.21
01.04.21 to 31.12.21
Materials issued
15,30,000
21,00,000
Direct Wages paid
10,12,500
12,25,000
80,000
1,15,000
Plant purchased
7,50,000
_
Expenses paid
3,25,000
5,40,000
68,000
_
3,00,000
_
Direct Wages outstanding
Prepaid expenses
Site office expenses
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A part of material procured for the contract was unsuitable and was sold for Rs 2, 40,000 (cost
being Rs 2, 55, 000) and a part of plant was scrapped and disposed of for Rs 80,000. The value
of plant at site on 31st March, 2021 was Rs 2, 50,000 and the value of material at site was Rs
73,000. Cash received on account to date was Rs 36, 00,000 representing 80% of the work
certified. The cost of work uncertified was valued at Rs 5, 40,000.
Estimated further expenditure for completion of the contract is as follows:

An additional amount of Rs 4, 62,500 would have to be spent on the plant and the residual
value of the plant on the completion of the contract would be Rs 67,500.

Site office expenses would be the same amount per month as charged in the previous year.

An amount of Rs 1, 57,500 would have to be incurred towards consultancy charges.
Prepare Contract Account and calculate estimated total profit on this contract.
(4+4=8 Marks)
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