Examination [C-B.R.T. 16 NOW 2013 Series: |QML |subject_|cost AND MGT. ACCY Max marks | 100|No. of tems dropped: [NIL items to be taken for scoring 100] 7 [elo [stall ole| elmlalayc 2 |e}i[ec|sz|ala7|clez| ol7|slez| a 3] 8] %| 8/33) B]4| cle] se [rel eles] A 4 [d|te} alsa] c]a|B|es| 8] 79] 0] e4[ D 3 |s}2{cl|3s|cl|so| cles] Ala] c| 5] A 6 [Al2}|B/36| 0] s1| cles] oe] [eel A 7_|o]2{c}37|o|s2|B|e7| ele] Aler[c e [o}2{alss|elss| cles] Ales] c [esl a 9 |c|[a@{alss|c{sa|o]eo|c]|ea| B | o9[ A 70 | ¢|2/e]40[B|55| 0 | 70] 0 [asd | 100[ D 11 | d]2{ala|o|ss| elm cles] 6 | 101] 0 1 [Ala7|c|42|cl|s7| al zz] 0 |e] ¢ [to2[ 0 7% [D]|2|[c]43{clse| al7s| 6 | ee] 6 | 103[ 0 14 |B] 29[D | 44] -c| s9/ Cc | 74] D | aa| D | 104/ 0 15 TAs, A [45] B] 60] A] 75] A| 90] A | 105[ 0\o Post Gt Baxr Piveeter (Cae) Clo a-4 May Yay) hud on 16112013 1 As per Ministry of Corporate Affairs General Circular No. 68 / 2011 dated 30" November 2011, a Cost Auditor cannot render any services to the company whether acting individually, or through the same firm or through other group firms, where he or any partner has any common interest, relating to: (a) certifying the compliance report (b) accepting tax consultancy (c) designing and implementation of cost accounting system (4) converting the Cost Audit Report in XBRL form 2 ‘The following data pertain to operations of Q td. Throughput time 4hrs Delivery cycle time 8 hrs Process time 1br Queue time 2 hrs The combined inspection and move time for this operation would be: fa) 4 hrs. (b) Thr (©) 2hrs (d) 6 hrs 3. All Cost Records, Cost Statements and Reconciliation statements maintained under the (Cost Accounting Records)Rules, 2011 are required to be preserved for not less than: (a) 5 financial years (b) 8 financial years (c) 10 financial years (d) 16 financial years 4 ‘The Companies (Cost Accounting Records) Rules, 2011 shall not apply to: {a) companies engaged in the production, processing, manufacturing or mining activities (b) foreign company as defined under Section 591 of the Companies Act {c) listed companies (d) company which is a body corporate governed by any Special Act 5. Every company shall submit the Compliance Report referred to in the Companies (Cost Accounting Records) Rules, 2011 to the Central Government from the close of the company's financial year to which the Compliance Report relates: (a) within ninety days (b) within one hundred and eighty days (c) within three months: (a) within one year6 “Cost Records’ under the Companies (Cost Accounting Records) Rules, 2011 means: (a) Books of Account relating to utilization of materials, labour and other items of cost as applicable to the production, processing, manufacturing and mining activities of the company {b) Balance Sheet and Profit and Loss Account of the Company (c) Records maintained under Central Excise Act 1944 and Income Tax Act 1961 (d) Quantitative details with respect to production and sales Zz XYZ Ltd. has the following alternative planned activity levels: Level A Level B Level € Total Cost Rs. 1,00,000 Rs. 1,50,000 Rs. 2,00,000 Number of units produced 5,000 10,000 15,000 If fixed overhead remains constant over the activity range shown above, the total fixed overhead for the period is: (a) Rs. 1,00,000 (b) Rs. 75,000 {c) Rs. 60,000 (d) Rs. 50,000 8 A ceramic manufacturer sold cups last year for Rs. 7.50 each. Variable costs of manufacturing were Rs. 2.25 per unit. The company needed to sell 20,000 cups to break even. Net income was Rs. 5,040. This year, the company expects the following changes: Sales price per cup to be Rs. 9.00; variable manufacturing costs to increase 33.3%; fixed costs to increase 10%; and the income tax rate to remain at 40%. Sales in the coming year are expected to exceed last year’s sales by 1,000 units. How many units does the company expect to sell this year? (a) 21,000 {(b) 21,600 (c) 21,960 (a) 22,600 9 The following is the probability distribution of sales of X Co. Ltd. for a year: Sales volume Probability units 20,000 0.10 24,000 0.15 28,000 0.25 32,000 0.30 36,000 0.20 ‘The expected selling price is Rs. 12 per unit and variable cost Rs. 9 per unit and fixed cost is Rs. 75,000 for the year. What is the likelihood that the company will at least breakeven during the coming year? (a) 70% (b) 7436 (c) 75% (a) 15%10. A.company plans to sell its product in a new market. It estimates that an advertising programme consists fof Rs. 61,000 annually would need to be undertaken for the next three years. In addition, a sales commission @ Rs. 25.00 per unit over and above the current commission to the sales force in the new market would be required. The contribution per unit in the existing market is Rs. 225.00. How many units would have to be sold in the new market to maintain the current profit of Rs. 94,000.00? (a) 775, (b) 689 () 305 (d) 1000 a. Due to industrial depression, a plant is running at 50% of its capacity with following details: Cost of production per unit Direct material Rs. 2 Direct labour Re. 1 Variable overheads Rs. 3 Fixed overheads Rs. 2 TOTAL=8 Production per month 20,000 units Total cost of production Rs. 1,60,000 Sales price : Rs. 1,40,000 LOSS= Rs. 20,000 ‘An exporter offers to buy 5,000 units per month at the rate of Rs. 6.50 per unit. If his offer is accepted, the company’s profit (loss) will be: (a) Loss of Rs. 7,500 (b) Loss of Rs. 2,500 (c) Profit of Rs. 250 (d) Profit of Rs. 2,500 12 Improvements in Return on Investment can be achieved by: 1. Increasing sales revenue 2. Reducing costs 3. Reducing operating assets Which of the above is / are correct? (a) 1,2and3 (b) 1 and 3 only (c) 2 and 3 only (d) 2 only 23 A shop owner wishes to use a mark-up of 75 percentage on selling price. Given the cost of sales is Rs. 60, what will be the selling price? (a) Rs. 105 (b) Rs. 135 {c) Rs. 180 (a) Rs. 24014. Consider the following situations: 1. Divisions are located in different tax jurisdictions 2. Aclearly defined decentralization policy 3. Divisional manager does not have sufficient incentive to control costs In which of the above situations dual pricing is not desired? (a) 1,2and3 (b) Land 3 only (c) 2and 3 only {d) 2only 15, If there is no outside market for a component product, the best transfer price is {a) a negotiated price (b) the domestic market price (c) equivalent to full cost, {d) equivalent to variable cost 16. Consider the following equations for determining transfer price on the basis of external market price: 1. Incremental cost + sunk cost 2. Incremental cost + opportunity cost 3. Variable cost per unit + total fixed cost for the period Which of the equations given above is / are correct? (a) 1,2and3 (b) 1and 3 only (©) 2and 3 only (a) 2only v7. ‘A company forecast first quarter sales of 10,000 units, second quarter sales of 15,000 units, third {quarter sales of 12,000 units and fourth quarter sales of 9,000 units at Rs. 2 per unit. Past experience has shown that 60% of the sales will be in cash and 40% will be on credit. All credit sales are collected in the following quarter. What amount of cash is forecast to be collected in the second quarter? {a) Rs. 8,000 (b) Rs. 18,000 {c) Rs. 26,000 (a) Rs. 30,000 18. [ABC analysis of material is based on a number of attributes. Which of the followings is correct? {a) Quantity of materials and source of materials (b) Quantity of materials and value of materials (c) Value of materials and shelf life of materials (d) Source of materials and turnover of materials19. The best level of industry performance for benchmarking can be often found in: (a) competing organizations having similar process (b) organizations having diversified and dissimilar processes (c)_ among non-competing entities (a) both among competing and non-competing entities in dissimilar situations 20. ‘The difference between fixed and variable cost has a special significance in the preparation of: (2) functional budget (b) master budget (c) flexible budget (a) mix of cash and master budget 21 RS Ltd is currently preparing the production budget for Product A and the material purchase budget for material X for the forthcoming year. Each unit of product A requires 5 kg of material X. The anticipated ‘opening stock for product A is 5,000 units and the company wishes to increase the closing stock by 30% by the end of the year. The anticipated stock for material X is 50,000 kg and in order to avoid stock- outs the required closing stock would be increased to 60,000 kg. The Sales Director has confirmed a sales requirement of 70,000 units of product A. How many units of product A will need to be produced? (2) 68,500 units (b} 71,500 units (6) 76,500 units (2) 80,000 units, 22. Which one among the following is not an essential feature of a budget? (a) There is a clearly defined budget period {b) It is a combination of financial and non-financial data set by reference to key budget assumptions (c) It permits managers flexibility in terms of the policies that should be pursued to meet corporate objectives (d) ttis to be formally approved and accepted as realistic by managers 23. Which one among the following equations is used to compute flexible budget allowance for the purpose of budgetary control? {a) Budget allowance = Fixed costs + (Unit variable cost x Quantity) (b) Budget allowance = Fixed costs + (Sales Variable cost) (c) Budget allowance = Sales - (Fixed cost + Variable cost) (d) Budget allowance = Variable cost per unit + (Unit fixed cost x Quantity)24 Which one among the following is an example of Just advantage? (a) Company X has decreased the number of job classifications to just a few (b) Company B increases the number of suppliers to be less dependent on just a few (c)_ Company C has built a new large warehouse to store inventory {d) Company D tells its maintenance department to intervene only if a machine breaks down time strategy being used for competitive 25, ‘A budget designed to remain unchanged irrespective of the level of activity actually attained” may be termed as! (a) semi variable budget {b) static budget (c)_ semi fixed budget (d) zero based budget 26. ‘Activity ratio of a company is 60% and its capacity rat budgetary control purposes? {a) 54.6% (b) 50.6% (c) 56.4% (d) 60.4% is 110%. Find out its efficiency ratio for 27. ‘A budget which consolidates the organization's overall plan is called: (a) consolidated budget {b) comprehensive budget (c) master budget (d) functional budget 28, Which of the following factors is considered to determine the priority of functional budgets? {a) Principal cash flow factor (b) Principal variance factor (c) Principal budget factor (d) Prime cost factor 29, The term ‘budget slack’ refers to the: (a) extended lead time between the preparation of the functional budgets and the master budget {b) difference between the budgeted output and the breakeven output (c) additional capacity available which can be budgeted for (@) deliberate over-estimation of costs and under-estimation of revenues in a budget30, A firm has a market to book value ratio that is equivalent to the industry average and return to equity ‘that is less than the industry average. This implies that the firm: (a) has higher P/E ratio than other firm in the industry (b) is more likely to avoid acute liquidity problem in the short run than other firms in the industry (c) is more profitable than other firms in the industry (d) is utilizing its assets more efficiently than other firms in the industry 31. In horizontal analysis of a balance sheet, which of the following techniques should be used to measure “Rupee change’ of net worth? (2) Amount of net worth in the year of comparison minus amount of net worth in base year (b) Amount of net worth in base year minus amount of net worth in the year of comparison (c). (Net worth change / net worth in base year) x 100 (a) Net worth in comparison year / net worth in base year 32 The following items are reproduced from the balance sheet of XYZ Co. Ltd. as on 31.03.2013. Bills receivable Rs. 2,50,000; Bills payable Rs. 30,000 ; Buildings Rs. 90,000; Share capital Rs. 1,00,000; Bank loan Rs. 40,000; Inventories Rs. 10,000; Cash Rs. 20,000; Reserves Rs. 50,000; Intangible assets Rs. 30,000; Treasury shares Rs. 20,000; Equipment Rs. 40,000; Retained earnings Rs. 40,000. The owners’ equity of the company is: (a) Rs. 1,90,000 (b) Rs. 1,75,000 (c) Rs, 2,10,000 (a) Rs. 1,50,000 33, ‘Common Size Balance Sheets make it easier to compare firms: {a) in different industries (b) of different sizes (c) that use different valuation methods (FIFO & LIFO) (d) with different degrees of leverage 34, In conducting an index analysis, every balance sheet item is divided by: {a) total assets (b) its corresponding base year income statement item (0) its corresponding base year balance sheet item (d) owners’ equity 35. A firm's current ratio is above the industry average but the firm’s quick ratio is below the industry average. These two ratios together suggest that the firm: (2) is near technical insolvency (b) is very efficient in managing inventories (c) has relatively more total current assets and at the same time more inventory than other firms in the industry (4) has liquidity that is superior to the average firm in the industry36. For creating a common-size Balance Sheet, the original Balance Sheet needs to be transformed by: (a) Multiplying all items by the amount of debt (b) Multiplying all items by owners’ equity (c) Dividing all items by Owners’ equity (d) Dividing all items by total of Balance Sheet 37 Ina Job Order Costing System, the use of indirect materials previously purchased is normally recorded as a decrease in: {a) work-in- process inventory (b) factory overhead applied (c) raw material inventory (d) factory supplies inventory 38, Given the following information, determine the total Non- Value-Added Costs for a certain product: Materials & Labour for servicing machine tools Rs. 8,00,000; Rework costs Rs. 1,25,000; Break down maintenance costs Rs, 65,000; Materials handling costs Rs. 60,000 (a) Rs. 10,50,000 {b) Rs. 1,90,000 (o) Rs. 1,25,000 (a) Rs. 9,25,000 39. {firm has developed a new educational DVD. It is trying to determine the target cost of the DVD if the selling price of each DVD is going to be set at Rs. 55.00 and the firm wants to earn a target operating income of 12% on sales. What will be the target cost per unit for the new DVD? (a) Rs. 6.60 (b) Rs. 11.00 (c) Rs..48.40 {d) Rs. 55.00 40, A system that tracks and accumulates actual costs attributable to products from the time they are originally conceived until the time they are finally abandoned. This refers to: {a) Life cycle budgeting (b) Life cycle costing (c) Total product costing (d) Total absorption costing a. Under a Job Order Costing System, the rupee amount transferred from work in process to finished goods is the sum of the costs charged to all jobs: (a) started in process during the period {b) in process during the period (c) completed and sold during the period (4) completed during the period42 Which one among the following industries would most likely use a Process Costing System? (a) Ship builder (b) Movie studio (c) Oil refinery (a) Hospital 43, Which one among the following is not a benefit that can be derived from implementation of a Life Cycle Costing System (LCC)? (a) Helps managers to understand acquisition costs vs. operating and support costs (b) Traces non production costs to individual products or processes over complete life cycles (c) Helps in determining precisely the short term profitability of a project (4) Helps to report individual product or process costs compared to revenues to be generated 4a, X Ltd is committed to supply 2,40,000 medicine bottles per annum to Y Ltd. The estimated costs for inventory holding per bottle per month is Rs. 0.10 and the set up cost per run of bottle manufacture is, Rs, 360, The optimum run size for bottle manufacture is (a) 12,500 bottles (b) 12,200 botties (c) 12,000 bottles (a) 11,200 bottles 45, ABC Co Ltd. has the following materials in stock: Mx my No of units held 180 kg 250 kg Purchase cost per unit Rs.8 Rs.15 Net realizable value Rs. 12 Replacement cost Rs. 10 Rs. 16 The company has been asked to tender for a contract that requires 300 kg of M X and 200 kg of M Y. The material M X is toxic and cannot be used for the job and it will have to be disposed at a cost of Rs. 200.00.The company no longer uses M Y. What is the relevant cost of materials for the purpose of pricing the contract? (a) Rs. 5,200 (b) Rs. 3,400 (c)_ Rs. 4,400 {d) Rs. 6,500 46. Using a Job Order Costing System, factory overhead can be applied: (a) to each job at the time itis finished (b) only at the end of each accounting period for a job as it is (c) to each job as it is finished and to the partially finished units at the end of each accounting period (a) to each job as itis finished or wait until the end of the accounting period when it is applied only to the job finished during the perioda7. After inviting tenders for supply of raw materials, two quotations are received as follows: Supplier A Rs. 2.20 per unit, Supplier B Rs. 2.10 per unit plus Rs. 2000 fixed charges irrespective of the Units ordered, The order quantity for which the purchase price per unit will be the same is: (a) 22,000 units (b) 21,000 units {c) 20,000 units {d) 21,100 units 48, Which one among the following statements regarding the difference between profit under absorption costing and that under variable costing is correct? (a) When production equals sales, absorption costing profit is greater than variable costing profit {b) When production equals sales, absorption costing profit is less than variable costing profit (©) When production is greater than sales, absorption costing profit is greater than variable costing profit (d) When production is less than sales, absorption costing profit is greater than variable costing profit 49, A large margin of safety indicates: {a) over capitalization {b) the soundness of business (c) over production (d) higher rate of dividend for share holders 50. If P/V ratio is 60% and marginal cost of production is Rs. 20, what is the selling price? (a) Rs. 40 (b) Rs. 60 (c) Rs. 50 {d) Rs. 33.33 51. Angle of Incidence is the angle between the sales line and: (a) the ¥ axis (b) X axis (c) the total cost line (d) the variable cost 52 ‘A company is planning to sell 1,00,000 units of a product for Rs. 12 per unit. The fixed cost are Rs. 2,80,000. To realize a profit of Rs. 2,00,000, what would be the variable cost per unit? (a) Rs. 4.80 (b) Rs. 7.20 (c) Rs. 7.80 (d) Rs. 6.2053, ‘The cost per unit of a product manufactured in a factory amounts to Rs. 160.00 (75% variable) when the production is 10,000 units. When production increases by 25%, what will be the per unit cost of production? (a) Rs.145.00 (b) Rs. 150.00 {c) Rs. 152.00 (d) Rs. 140.00 sa, Standard costing will produce the same results as absorption or conventional costing when standard costing variances are allocated to: (a) work-in-process and finished goods inventories (b) cost of goods sold (c) cost of goods sold and inventories (d) costing profit and loss account 55. In standard costing, the difference between actual production overhead and standard production overhead, based on actual hours, is represented by: (a) Variable overhead efficiency variance (b) Variable spending variance (c) Volume variance (4) Total overhead spending variance 56. Normal rate per hour for worker A in a factory is Rs. 5.40. Standard time spent per unit for the worker is ‘one minute. Normal piece rate per unit for the worker is: (a) Rs. 0.90 (b) Rs. 0.09 (c) Rs. 0.11 (d) Rs. 0.99 57. Which one among the following statements would be a valid explanation of a favourable direct labour rate variance? (a) The standard cost overestimated a national wage agreement settlement for the production operatives in the factory (b) The standard labour time per unit was overstated as it failed to incorporate production efficiencies made possible by new machinery (c) There was a cost saving as a result of a strike in the factory during the year {d) The standard cost did not take into account changes in the product specification which meant that in practice, less time per unit was needed for assembly58. ‘A product's standard cost card specifies that a unit of the product requires 4 direct labour-hours. During September, 3,350 units were made, which was 150 units less than budgeted. The total budgeted direct labour cost for September was Rs. 1,17,600. The direct labour cost actually incurred during September was Rs. 1,11,850 and 13,450 labour ~hours were worked. The direct labour efficiency variance for the month of September was’ {a) Rs. 420.00 (A) (b) Rs. 420.00 (F) (c) Rs. 415.80 (A) (d) Rs. 415.80 (F) 59. ‘A company provides the following information relating to a job: Direct materials used Rs. 10,000; Direct labour hourly rate Rs 10; Direct labour hour used 150; Machine hour used 60; Factory overhead recovery rate per machine hour Rs. 30 ‘What is the conversion cost for the job? {a) Rs. 6,000 (b) Rs. 4,300 (c) Rs. 3,300 (d) Rs. 13,300 60. Standard price of material is Rs. 20.00 per kg, standard usage per unit of production is 5 kg. Actual usage of producing 100 units is 520 kg, all of which was purchased at the rate of Rs.22.00 per kg. Material usage variance i (a) Rs. 400.00 (A) (b)_ Rs. 400.00 (F) (c)_Rs.1,040 (A) (d) Rs. 1,040 (F) 61. XYZ Ltd. uses standard costing. Variance analysis has revealed an adverse total direct material variance tat the end of an operating period. Which of the following combinations of factors is the most likely reason for the adverse variance? (a) Price reductions and lower wastage (b) Price increases and greater wastage {c)_ Employing less skilled workers to lower labour costs {d) Over estimation of the material cost built into the standard cost 62. ‘A company uses several direct materials to manufacture a product. The result of obtaining an output different from the one expected based on the total quantities of direct materials used in the process is the direct materials: (a) usage variance (b) mixvariance (c) price variance (a) yield variance63, ‘An item of materials has a demand of 4,000 units per year. Ordering costs is Rs. 20 per order and holding cost is Rs. 4 per unit per year. Using the EOQ model, what will be the inventory ordering cost and carrying cost per annum? a) Rs. 400 (b) Rs. 800 (c) Rs. 1,200 (2) Rs. 1,600 64, HD Ltd currently uses absorption costing to report profits. During the last period, the fixed production overhead absorption rate was Rs. 25 per unit. There were 500 units of opening stock for the period and 350 units of closing stock. If marginal costing principles had been used, the profit for the period compared to the absorption costing profit would have been: (a) Rs. 3,750 lower (b) Rs. 3,750 higher (0) Rs. 8,750 lower (4) Rs. 8,750 higher 65 After careful planning, X manufacturing concern had decided to switch to a just-in-time inventory system. At the beginning of this switch, x has 30 units of product in inventory and has 2,000 labour hours available in the first month of this switch. These hours could produce 500 units of product. Customer demand for this first month is 400 units. If just-in-time principles are followed, how many Units should X plan to produce in the first month of the switch? (a) 370 (b) 400 (c) 430 (a) 470 66. Which of the following statements about ABC analysis of materials is false? (2) ABC analysis is based on the presumption that controlling the few most important items produces most inventory savings (b) In ABC analysis ‘A’ items are tightly controlled, have accurate records and receive regular review by major decision makers {c) In ABC analysis ‘C’ items have minimal records, periodic review and simple control (d) ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings 67. In relation to just-in-time (J!T) model for inventory management, which one among the following statements is true? {a) JIT purchasing is solely guided by the E0Q model (b) The quality of materials and timely deliveries are important considerations for planning inventory (c) JIT models emphasizes on trade off between carrying costs and ordering costs (4) JIT requires organizations to restructure their relationship with suppliers and place larger and less frequent orders68, For an ‘A’ category items, for which purchasing is done on the basis of EOQ model, what will happen to the original order quantity ifthe cost of placing order doubles (all other variables remaining same)? (a) Increase by 41.4% {b) Increase by 99.9% (c) Increase by 125.4% (a) Increase by 141.4% 69, Managers must determine which products should be prioritised when the plant is operating at full capacity. This is known as: (a) an individual product decision {b) a production scheduling analysis (0) a product mix decision (d) ashort run focus decision 70, Sunk cost is a cost that (a) may be saved by not adopting an alternative (b) may be shifted to the future with little or no effect on current operations {c) has already been incurred and is relevant to the decision making process (a) has already been incurred but is not relevant to the current decision making process 71, Which one among the following is the basic requirement of inter-firm comparison? (a) Mandate of Institute of Cost Accountants of India (b) Direction given by the Ministry of Corporate Affairs (c) Voluntary pooling of information by participating firms through a recognized agency (4) Voluntary information sharing between Institute of Cost Accountants of India and Ministry of Corporate Affairs 2 In relevant cost analysis, decision is based on: (a) differential costs and future revenues (b) marginal costs and contributions {c) incremental costs and incremental revenues (4) future costs and revenues that will differ among the alternatives 2. Which of the following items must be known in order to compute a contribution margin? 1. Sales revenues and variable cost 2. Sales revenues, overheads and fixed cost 3. Overheads variance, fixed cost and inventory 4. Sales, variable cost and fixed cost Select the correct answer using the code given below: (a) 1,3and4 (b) 1only (o) 2and4 (a) 1and 3 only74, When a business has a limiting factor, which one among the following statements describes the correct course of action? (a) Choose the option which gives the highest unit profit (b) Choose the option which gives the highest unit contribution (c) Aim to achieve a balance of activities covering all of the options (d) Choose the option which gives the highest contribution per unit of limiting factor 7S. For decision making purposes, which of the following are relevant costs? 1. Avoidable cost 2. Future cost 3. Opportunity cost 4. Differential cost Select the correct answer using the code given below: (a) 1,2,3and4 (b) 1 and 2 only () 2and3 only (d) 1and 4 only 76. A project requiring an investment of Rs. 90,000.00 is expected to yield net income of Rs. 15,000.00 annually from year 1 to year 4 and Rs. 7,500.00 in year 5. Its accounting rate of return (on the basis of average investment) will be: (a) 30% . (b) 75% (c) 15% {d) 60% 77. When Net Present Value (NPV) and Internal Rate of Return (IRR) are used for evaluating a single project, the accept / reject decision will be the same because {a) the two methods are basically the same (b) in NPV the cost of capital is used as the discounting rate and in case of IRR the same discount rate is used as the cut-off rate (c) reinvestment assumptions are the same (d) Net Cash Flows and project costs will be the same 7B. ‘At a break-even point of 400 units, the variable costs were Rs. 40,000 and the fixed costs were Rs. 20,000. What will be the amount of contribution when 401° unit is sold? (2) Rs.0 (b) Rs. 50 (0) Rs. 100 (d) Rs. 15079. M company makes three products (X, Y and Z) with the following characteristics: Product x Y Zz Selling price per unit (Rs.) 10 15 20 Variable cost per unit (RS.) 6 10 10 Machine hours per unit 2 4 10 The company has a capacity of 2,000 machine hours, but there is virtually unlimited demand for each product. In order to maximize total contribution margin, how many units of each product should the company produce? {a) 2,000 units of X, 500 units of ¥ and 200 units of Z (b) 0 units of X, 0 units of ¥ and 200 units of Z (c) units of X, 500 units of ¥ and 0 units of Z {d) 1,000 units of X, 0 units of ¥ and 0 units of Z 80. Management of MDK Corporation is deciding whether to replace a delivery van. A new delivery van ‘costing Rs. 4,00,000 can be purchased to replace the existing delivery van which cost the company Rs. 3,00,000 and has accumulated depreciation of Rs. 2,00,000. An employee of MDK Corporation has offered Rs, 1,20,000 for the old delivery van. Ignoring income taxes, which of the following correctly indicates relevant costs when making the decision whether to replace the delivery vehicle? {a) Purchase price of new van, disposal price of old van, and gain on sale of old van (b) Purchase price of new van, Purchase price of old van and gain on sale of old van (c) Purchase price of new van, disposal price of old van (d) Purchase price of new van, Purchase price of old van, accumulated depreciation of old van, gain ‘on sale of old van, disposal price of old van 81 ‘Accapital project involving a cash outlay of Rs. 12 lakh is expected to yield NCF of Rs. 8 lakh in year 1 and Rs. 5 lakh in year 2. What is its payback period? (a) 2years (b) 1 year and 8 months (c) Lyear9 months and 6 days (a) 1 year9 months and 18 days 82, Consider the following statements about accounting rate of return: 1. Itis not based on the concept of time value of money 2. {tis compatible with the objective of wealth maximization 3. Itis determined on the basis of net cash flow income Which of the statements given above is / are correct? (a) 1only (b) 1 and 2 only {c) 3only (d) 1, 2and 383, Most of the Enterprise Resource Planning packages are equipped with flow chart of a number of processes. Which of the following is / are correct in this context? 1. Event-Driven-Process-Chain-EPC 2. APO 3. XBRL 4. XBRL and SAP R/3 Select the correct answer using the code given below: (a) 2,3and4 (b) Lonly (co) 1and2 (d) 3 and 4 only 84, In respect of cost centre accounting under Enterprise Resource Planning, a wide range of methods in allocating the cost have been provided by: (a) XBRL (b) SAP R/3 (c) 4G Spectrum (d) Cost Accounting Standards 85. A client would like to implement a management information system that integrates all functional areas within an organization to allow information exchange and collaboration among all parties involved in business operations. Which one among the following systems is most effective for this application? (a) A decision support system (b) An executive support system (c)_ An office automation system (d) An enterprise resource planning system 86. Enterprise resource planning since 1990s has been extended and it embraces: (a) material resource planning but excludes human resource planning {b) material resource planning, manufacturing resource planning and all other resources of an entity in an integrated manner (c) disintegrated, disjointed material, labour, manufacturing, service processes and other resources (4) material resources, manufacturing resources and other resources in isolation without an integrated software package87 Enterprise Resource Planning is a process of integrating management information system (MIS) in an organization: 1. among the different functions integrating internal and external management information 2. among the external agencies and stakeholders 3, between all internal business functions and manage the connection to outside stakeholders 4. between the finance managers and auditors with management accountant Select the correct answer using the code given below: (a) 1, 2and 3 only (b) and 4 only (c) 1and3 only (a) 1,2, 3and4 88. Consider the following statements about time-cost trade-off function analysis: 1. Cost decreases linearly as time increases 2. Cost at normal time is minimum, 3. Cost increases linearly as time increases Which of the statements given above is / are correct? (a) 2 only (b) Land 2 {c) 1only (d) 2and3 89. Generally PERT technique deals with the project of: (a) repetitive nature (b) ad-hoc nature {c) deterministic nature (4) uncertain nature 90, Which one among the following represents a method of readjusting a PERT network to achieve better project results? {a) Modify the precedence relationships so that series-connected activities can be performed at the same time (b) Reassessing the optimistic, pessimistic and most likely times forall activities on the critical path (0) Shifting resources from the critical path to non critical paths (a) Apply backward pass method for each activity 91. In PERT net work, each activity time assumes a beta distribution because: {a) it has got finite non-negative error (b) it need not be symmetrical about model value (c) it is a unimodel distribution that provides information regarding the uncertainty of time estimates of activities (4) variance and mean cannot be used to measure time needed for an activity92, When crashing a CPM network using linear programming (LP), itis true that: (a) there is one constraint generated by each activity leading into a node (b) the number of variables in the LP is equal to the number of activities in the project (0) all variables in the LP occur in the objective function (d) indirect and utility costs in project crashing are integral part 93. Consider the following statements in relation to PERT networks: 1. Each node represents the beginning or end of an activity, and each branch represents an activity 2. The network is drawn so as to indicate precedence relationships 3. The activity times are described by a probability distribution which requires the specification of three times to characterize it Which of the statements given above are correct? (a) 1,2and3 (b) 1 and 3 only () Land 2 only (4) 2. and 3 only 94 Cost of production, as per Cost Accounting Standard 4 (CAS 4) does not include: {a) Direct expenses (b) Quatity control cost (c) Administrative overheads relating to production (d) Marketing overheads 95. Cost Accounting Standard 4 (CAS 4) is to be followed for determining: (a) the cost of production to arrive at an assessable value of excisable goods for captive consumption {(b) the cost of production of goods exported (c) the cost of joint- products and by-products (d) the average transportation cost for claiming the deduction for arriving at the assessable value of excisable goods 96. Normal capacity of a manufacturing concern is: {a) practical capacity minus the loss of productive capacity due to external factors (b) volume of production achieved in relation to installed capacity (c) the difference between installed capacity and the actual capacity utilization (d) standard capacity 97. Imputed costs means: {a) cost of inputs (b) cost of inputs and input services (c) notional costs for the purpose of decision making (d) normal cost98. Idle capacity of the plant refers to the difference between the: (a) installed capacity and the capacity utilized (b) maximum capacity and practical capacity (c) practical capacity and normal capacity (d) practical capacity and achievable capacity 99. ’As per Cost Accounting Standard 12, the cost of major overhaul shall be: {a) amortized on a rational basis (b) treated asa factory overhead (c) treated asa prime cost (4) none of the above 100, Process Reengineering includes all of the following steps except: {a) constructing a diagram flowcharting the current process (b) redesigning the process (c) elimination of non-value-added activities (d) elimination of all constraints cae ELEC EDDDDPD>>IIIII PEELED PPDDDPPPPPPPDPPPPP,o [so] v fos [v [sz Tv [ool als] v [oly] a o {vot a testa lx {oles|ol|ale}al| or o feo {a feet a feet west o [elo lela) er o [zn] o fasta tatv[islolwlolezty ze o {rota [oe to Tita lestalwl[vifeztal ow Gg foorfa [seta totals |alolealseto} or v [es [a [velo Testa les |oleelvirlol 6 v [es {o fee |v [esto festa lec|viextale o {us| wv fee la [iste tesfalelolvezp~al 2 v [ofa tielafsetolistales|alizty|s v [seo fos |v [s9 9 [oso [se] o fo] a te a{tve{ale lalla lelole}vislal v [es[a tata le[otelalelalatal vfzfaluftal~lolwlvi[elolula] atie{wf[sTatieTaler[vi[rlalsto} + [oor ‘BULOOS 10) awe} 94 0} SWUATT| TUN] “Peddoup sureTjO ONJooL | SHeW XEW) A00v LOW ANY Asoo] welans| JIAO] ‘sellag) EMOZAONSH Leeo] —_voHEUUEN