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Bank
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CA Saurav Jindal
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 COST YOUTUBE QUESTIONS 1

BUDGETARY CONTROL
Question‐ 1
PCT Ltd. provides you the following information at 80% capacity:

Production and Sales ₹ 2,000 units

Direct Material ₹ 1.00 per unit
Direct Labour ₹ 1.00 per unit
Direct Expenses ₹ 0.80 per unit
Production Overheads (15% variable) ₹ 2.00 per unit
Administrative Overheads (80% fixed) ₹ 2.00 per unit
Selling & Distribution Overheads (25% variable) ₹ 2.00 per unit
Total Cost ₹ 8.80 per unit
Profit per unit ₹ 1.20 per unit
Selling Price ₹ 10.00 per unit

Required: Draw up a Flexible Budget at 60% and 90% capacity.

Question‐ 2
P.C.T. Ltd. provides you the following figures for the year I:
Particulars Product A Product B
st
Sales (in units): I Quarter 1,250 1,600
nd
II Quarter 2,950 800
rd
III Quarter 2,700 1,000
th
IV Quarter 3,100 600
Selling Price per unit ₹ 24 ₹ 50
Target for the year II:
Sales Quantity increase (decrease) (20%) 25%
Selling Price increase (decrease) 25% (20%)

Sales area X, Y and Z respectively produce 10%, 20% & 70% of Product ‘A’ sales and 70%,
20% & 10% of Product ‘B’ sales.
Required: Prepare Sales Budget for the year II

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 COST YOUTUBE QUESTIONS 2

Question‐ 3
PCT Ltd. provides you the following information:
Particulars Product A Product B
Sales (in units) as per Sales Budget:
1st Quarter 2014 1,000 2,000
2nd Quarter 2014 2,360 1,000
3rd Quarter 2014 2,160 1,250
4th Quarter 2014 2,480 750
Stock Position as on 01.01.2014:
Percentage of 1st Quarter 2014 sales 20% 100%
Stock Position ending 1st, 2nd and 3rd Quarter:
Percentage of Next Quarter’s sales 50% 50%
Stock Position on 31.12.2014 2,200 1,000
Required: Prepare Production Budget for the year 2014.

Question‐ 4
Three articles X, Y and Z are produced in a factory. They are through two cost centers A
and B. From the data furnished, compile a statement for Budgeted Machine Utilization in
both the centers.
(A) SALES BUDGET FOR THE YEAR
Product Annual Budgeted Opening Stock of Closing Stock of finished
Sales (units) finished products (units) Products
X 4,800 600 Equivalent to 2 month’s Sales
Y 2,400 300 Equivalent to 2 month’s Sales
Z 2,400 800 Equivalent to 2 month’s Sales

(B) MACHINE HOURS PER UNIT OF PRODUCTS

Machine Hour (per unit) Cost Centers
Product
A B
X 30 70
Y 200 100
Z 30 20

(C) TOTAL NO. OF MACHINES

Cost Centers No.
A 284
B 256
540

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 COST YOUTUBE QUESTIONS 3

Question‐ 5
A manufacturing company provides you the following information:
Particulars Product A Product B
Material X @ ₹ 3 per unit 2 units 4 units
Material Y @ ₹ 1 per unit 1 unit 2 units
Units to be purchased as per production Budget 10,000 4,000

Inventory of Raw Material:

Particulars Material X Material Y
Opening Stock as on 01.01.2014 12,000 units 2,000 units
Estimated Closing Stock as on 31.12.2014 16,000 units 4,000 units
Required: Prepare Direct Material Usage and Purchase Budget for the year 2014.

Question‐ 6
A factory works 8 hours per day, 6 days in a week and budget period is one year and during
each quarter, lost hours due to leave, holidays and other causes are estimated to be 124
hours.
Particulars Product ‘A’ Product ‘B’
Direct Labour per unit
In P Dept. @ ₹ 1 2 hours 1 hour
In Q Dept @ ₹ 3 1 hours 2 hours
Units to be produced as per production budget 10,000 4,000

Required: Prepare (a) Man‐Power Budget, showing Direct Labour hours and number of
workers; and (b) Man‐Power Budget showing Labour Cost.

Question‐ 7
Factory Overheads are applied on the basis of direct labour hours:
Particulars Dept. P (₹) Dept. Q (₹)
Fixed Overheads 48,000 18,000
Variable Overheads per labour hour 0.50 1.50
Direct Labour hour required as per direct labour hours budget:
For Product A 20,000 10,000
For Product B 4,000 8,000
Required: Prepare factory Overhead Cost Budget.

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 COST YOUTUBE QUESTIONS 4

Question‐ 8
X Ltd. provides you the following information:
Particulars Product A Product B
Direct Materials:
X @ ₹ 3 per unit 2 units 4 units
Y @ ₹ 1 per unit 1 unit 2 units
Direct Labour per unit:
In P Dept. 2 hours @ ₹ 1 per hour 1 hour @ ₹ 2 per hour
In Q Dept. 1 hour @ ₹ 3 per hour 1 hour @ ₹ 3 per hour
Production Overheads:
Fixed @ ₹ 1.63 per hour @ ₹ 1.63 per hour
Variable @ ₹ 0.87 per hour @ ₹ 0.87 per hour
Units to be produced as per Production 10,000 4,000
Budget
Estimated Closing Stock of Finished 2,200 1,000
Goods
Opening Stock of Finished Goods 200 2,000
Valuation of Opening Stock @ ₹ 25 @ ₹ 37.5

Required: Prepare Cost of Goods Sold Budget.

Question‐ 9
Y Ltd. provides you the following information:
Particulars Product A (₹) Product B (₹)
Actual Cost of goods sold 1,57,100 1,47,000
Sales (in units) 8,000 5,000
Selling price per unit 30 40
Standard Cost per unit 19.50 24
@ 10% on Standard @ 10% on Standard
Sales Manager’s Commission
Gross Profit Gross Profit

Other Selling expenses ₹ 22,000

Distribution Expenses ₹ 13,000
Office & Administration Expenses ₹ 8,900
Income Tax @ 50%

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 COST YOUTUBE QUESTIONS 5

Notes:

(i) Other Selling Expenses to be allocated to Product ‘A’ and ‘B’ in their sales revenue
ratio.
(ii) Distribution Expenses to be allocated to Product ‘A’ and ‘B’ in their Sales units ratio.
(iii) Office and Administrative Expenses to be allocated equally to both the products.

Required: Prepare Budgeted Income Statement.

Question‐ 10
Tulsian Ltd. manufactures two products X and Y. Product X requires 5 hours to produce
while 5 units of product Y can be produced in one hour. In July, of 24 effective working
days of 8 hours a day, 3000 units of X and 15,000 units of Y were produced. The company
employs 100 workers in the production department to produce X and Y. There were 25
working days specified in the budget. Maximum possible working hours in July are 24,000
hours.
Required: Calculate

(a) Efficiency Ratio

(b) Activity Ratio
(c) Capacity Ratio
(d) Calendar Ratio
(e) Idle Capacity Ratio
(f) Standard Capacity Usage Ratio and
(g) Actual Usage of Maximum Capacity Ratio.

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