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Strategic Management Accounting - December 2010

Review of attempt 1

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Started on Tuesday, 16 November 2010,

12:42 PM

Completed

on

Tuesday, 16 November 2010,

01:34 PM

Time taken 52 mins 6 secs

Strategic Management Accounting

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Grade 45 out of a maximum of 100

(45%)

Grade Not Eligible

Question 1

Marks: 5

Gihan Ltd is a manufacturing company manufactures a product Gama. Following

information related to for the month of June 20X1 Standard cost per batch of

product Gama

Materials Materials kilos Price Per Kg-Rs Total Rs

X 20 5 100

Y 15 4 60

Z 10 7 70

45 230

Less:- standard

loss

5

Standard Yield 40

Labour Hours Rate Per hour Total Rs

Deparment X 5 12 60

Deparment B 3 7 21

81 81

311

Budgeted sales for the period are 5266kg at Rs 18 per kg. There were no budgeted

opening or closing inventories of product Gama. The actual materials and labour

used for 130 batches were as follows


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Materials Materials kilos Price Per Kg-Rs Total Rs

X 2240 5.3 11872

Y 2070 3.7 7659

Z 1088 7.5 8160

5398 27691

Less:- standard

loss

920

Standard Yield 4478

Labour Hours Rate Per hour Total Rs

Department X 750 12.7 9525

Department B 404 6.5 2626

21151 21151

39842

All of the production of Gama was sold during the period for Rs 18.85 per kilo.

What was the material yield variance ?

Choose one answer.

a. 604 Fav

b. 2309 Fav

c. 495 Adve

d. 700Fava

Incorrect


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Marks for this submission: 0/5.

Question 2

Marks: 5

Which one of the following is not a cause of variances

Choose one answer.

a. Actual resource usage is different planned resource usage.

b. Budgeted prices are different from actual prices

c. Actual production volume is different from budgeted

production volume.

d. Forecast prices are different from Actual prices

Correct


Question 3

Marks: 5

ABC Limited manufactures and sells two product, X and Y. Annual sales are expected

to be in the ratio X:1, Y:3. Total annual sales are planned to be Rs. 420,000. Product

X has a contribution to sales ratio of 40 % , whereas that of product Y is 50%. Annaul

fixed costs are estimated to be Rs 120,000

The budgeted break even sales value (to the nearest Rs 1,000):

Choose one answer.

a. Rs. 196,000

b. Rs. 200,000

c. Rs. 255,000

d. Rs. 253,000

e. Cannot be determined from the


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above

Incorrect


Question 4

Marks: 5

The following information has been extracted from a plastic manufacturing

company

which manufactures a plastic component

standard price : Rawmaterial M1- Rs 5 per kg

Rawmaterial M2- Rs 4 per kg


Standard Proportion M1 : 60%, M2 ,30% , M3 10% (by weight)

A standard process loss of 10% is anticipated

for the last period , the actual cost, usage and out put were as follows

used : 2450 kg of P1 , costing Rs, 12,200/=

1150 kg of P2 , costing Rs, 4700/=

425 kg of P3 costing Rs 1250/=

Output 3645 Kg of plastic component

scrap sales value is Rs. 0.90 per unit

Material Yield variance


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Choose one answer.

a. 110.25FAV

b. All answers are

wrong

c. 20.5 ADV

d. 110FAV

Incorrect


Question 5

Marks: 5

Supun Ltd operates a process costing system using the first in first out method of

valuation.No losses occur in the process. The following information is was available

for the last month

Units Degree of

completion

Value

Opening Work inprogress

100 60% Rs 680

Completed during

the month

900

Closing Work in

progress

150 48%

Cost per equivalent unit of production for last month Rs12/=

What was the total value of the units completed last month ?

Choose one answer.

a. Rs 12344

b. Rs 10760


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c. Rs 10800

d. Rs 12000

Incorrect


Question 6

Marks: 5

XYZ Limited has recently introduced an Activity Based Costing system. It manufactures

three products,

details of which are set

out below.

Product X Product Y Product Z

Budgeted annual

production(units)100,000 100,000 50,000

Batch size (units) 100 50 25

Machine set-ups per batch 3 4 6



Three cost pools have been idntified. Their budgeted costs for the year ending 30th June

2009

are as follows:

Machine set-ups costs Rs. 150,000

Purchasing of materials Rs.70,000

Processing Rs. 80,000


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The budgeted machine set-up cost per unit of product R is

nearest to

Choose one answer.

1. 0.5

2. 6734

3. 50000

4. 6.52

Correct


Question 7

Marks: 5

The following data relates of 200kgs of material QP in inventory and needed

immediately for a contracts.

Standards Cost Rs 3220

Replacement cost Rs 3080

Realizable vale Rs 2800

Withing the firm the 200kgs of material QP can be converted in to 200kgs of

material BP at a cost of Rs 140/=

Material BP has many uses in the firm and 200kgs costs Rs 3,080.

What cost should be included for material QP when assessing the viability of the

contracts

Choose one answer.

a. Rs 3080

b. Rs 2940


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c. Rs 2800

d. Rs 3220

Correct


Question 8

Marks: 5

Calipania Ltd has details two machines that could fulfil the company's

future production

plans. Only one of these will be purchased.

The'standard' model of costs Rs 50,000 and the Ordinary model Rs. 88,000, payable

immidiately.

Both machines would require the input of Rs. 10,000 working capital throughout their

working

lives, and both have no expected scrap value at the end of their expected working lives

of 4

years for the standard machine and 6 years for the Ordinary

machine.

The forecast pre- tax operating net cash flows (Rs.) associated with the two

machines are

Year Hence

Years 1 2 3

The'standard' model 20,500 22,860 24,210 23,410

The Ordinary model 32,030 26,110 25,380 25,940


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The discount rate for the Ordinary model is 14% per year , 2% higher than the discount rat

standard machine

The company is proposing to finance the purchase of either machine with a term loan at a

rate of 11% per year

Taxation at 35% is payable on operating cash flows one year in arrears, and capital allowan

available at 25% per year

on a reducing

balance basis.

Best option should be

Choose one answer.

a. It is recommended to purchased

the'Ordinary model

b. Cannot be determined from the above

information

c. It is recommended to purchased both the

models

d. It is recommended to purchased

the'standard' model

Incorrect


Question 9

Marks: 5

Loto Pvt Ltd mnufactures four products , A,B,C and D.The product uses a series of differentwhich causes a bottleneck.

The standard selling price and standard cost per unit for each products for the forth coming

A B C


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Rs Rs Rs

Selling Price 2000 1500 1500

Direct Materials 410 200 300

Labour 300 200 360Variable Overheads 250 200 300

Profit 680 600 330

Machine Y - hour Per Unit 2 1.667 1.1667

Direct materials is the only unit level manufacturing cost, using a through put accounting a

A B C

1 3rd 1st 2nd

2 1st 4th 3rd

3 3rd 1st 4th

4 2nd 3rd 1st

Choose one answer.

a. 1

b. 2

c. 4

d. 3

Incorrect


Question 10


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Marks: 5

The following data are supplied relating to two investment projects only one of which may

be selected

year Project-X Project-Y

Initial capital

expenditure50,000 50,000

Profit(loss) 1 25,000 10,000

2 20,000 10,000

3 15,000 14,000

4 10,000 26,000

Estimated resale

value4 10,000 10,000

The cost of

capital is 10%.

What are the Net Present values

X Y

i 45860 34142

ii 42315 35212

iii -39876 -45321

iv all answers are wrong

Choose one answer.

a. ii

b. iii


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c. i

d. iv

Correct


Question 11

Marks: 5

XYZ Limited has recently introduced an Activity Based Costing system. It manufactures thr

details of which are set out

below.

Product X Product Y Produc

Budgeted annual






Three cost pools have been idntified. Their budgeted costs for the year ending 30th June 20

are as follows:




The budgeted machine set-up cost per unit of product R is nearest to

Choose one answer.


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1. 0.78

2. 0.52

3. 5.67

4. 6.52

Incorrect


Question 12

Marks: 5

Kalum Plc manufactures a product KP using raw materials A and B . Budgeted

production for the period is 1000 units per batch with 10 batches. Other budgeted

data are as follows...

Raw material % quantity Price Per Kg(Rs)

A 40% 40

B 60% 60

Direct labour % of Hours Rate per hour (Rs)

male 30% 75

female 70% 40

Total labour hours 10,000 and fixed overheads for the period was Rs 65,000/=. The

variable overheads is Rs, 5/= per kg and selling price of KP is Rs, 140 per unit.

Actual results are as follows..

Raw material used Quantity-kg Price Per Kg(Rs)

A 4200 39


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B 6800 62

Direct labour Hours Rate per hour (Rs)

male 3000 80

female 8500 35

11 batches of KP were produced and sold at Rs 145 per kg

Fixed overhead cost Rs 75,000

Variable overhead cost Rs 68,100

Operating Profit Varience ?

Choose one answer.

a. 69000F

b. 54000Adv

c. 46000F

d. All answers are

incorrect

Incorrect


Question 13

Marks: 5

FBP Ltd produces PPN. The standard ingredients of 1kg of

PPN are :

.65kg of A @Rs 4.00 per kg

.3kg of B @Rs 6.00 per kg

.2kg of C @Rs2.5per kg

1.15kg

Production of 4000kg of PPN was budgeted for January 2010. Since the Production of PPN is


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entirely automated

Production cost s attributed to PPN production comprise only direct materials

and overheads.

Overheads were budgeted for January 2010 for PPN production

operation as follows.

Actiity Total Amount

Recept of deliveries from

suppliersRs

(standard delivery quantity is

460 kg)4000

Despatch of goods to

customers

(standard despatch quantity is

100kg)8000

12000

In January 2010 , 4200kg of PPN were produced and cost details were

as follows:

Material used,

2840kg of A

1210kg of B

860kg of C

Total cost : Rs 20,380/=

Actual overhead costs

Twelve supplier deliveries(cost Rs 4,800) were made, and 38 customer despatches (cost

Rs 7,800) were

processed.


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Material usage variance

Choose one answer.

a. 151FAV

b. 190 ADV

c. All answers are

wrong

d. 100FAV

Correct


Question 14

Marks: 5

Pure Ltd has two divisions X and Y. X produces a Product X which is used in

production of Product Y at division Y. Division X also sells product X to out siders at

Rs 2000 per unit. Last month 50,000 unit of product X were sold to out siders. When

sold to outsiders product X and Product Y both gives a contribution Rs 1000 per unit

to the company. Division Y can also purchase product X at a price Rs 1500 from

outside sources. Pure Ltd proposes to transfer product X to division Y at a price ofRs 2000 per unit. Product Y has a market demand around 100,000 units per month

If the market demand for product X is 50000 unit at this price,what is the best

course of action from the point of view of Pure Ltd as a whole given the company's

capacity limited to 150,000 of units of either X, Y or both ?

Choose one answer.

a. Either Purchase out side or transfer

internally

b. Purchase out side

c. Tranfer Internally

Incorrect



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Question 15

Marks: 5

Initial cost of a new investment is Rs 43.75 million. Life time of the project is 10

years. The company is planning to produce and sell 10000 units of the products

annually at a price of Rs, 5,000/= per unit. The Variable cost of a unit is Rs 3,750/=.

Annual fixed cost inclusive of depreciation are estimated at Rs 7.5million . The

sensitivity of the project IRR if the selling price is reduced by 10%...

A). It reduces net cash flows by 5 million annually.

B). IRR is less than company's cost of capital

C). The project is highly sensitive to fall in selling price

D). The project is still feasible

What are the correct statements ?

Choose one answer.

a. A,B,C and D

b. A,B and C

c. All answers are

incorrect

d. A and C

e. B and C

Correct


Question 16

Marks: 5

ABC company uses decision tree analysis in order to evaluate potential

projects.

The company has been looking at the launch of a new product which it believe has a 70%

probability of success.

The company is however ,considering undertaking an advertising campaign costing Rs, 50,

probability of success to 95%.


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If successful the product would generate income of Rs, 200,000 otherwise Rs, 70,000

would be received.

What is the maximum that the company would be prepared to pay for the

advertising?

Choose one answer.

a. Rs17500

b. Rs50000

c. Rs29000

d. Rs32500

Correct


Question 17

Marks: 5

Baltex PLC is planning to invest funds in financially viable projects. The weighted average c

capital of the

company is 12%. Calculated IRRs of 5 projects are as follows.

Projects IRR

A 20%

B 11%

C 30%

D 14%

E 8%

What projects should be selected


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Choose one answer.

a. B,E

b. E,D,B

c. A,B,C,D

d. A,B,C,D,E

e. A,C,D

Correct


Question 18

Marks: 5

The cost of capital is 12% of the company and consideing Rs 10 million investment.The exp

each of the next four years.

Net present value of this project can be

calculated by

Choose one answer.

a. By discounting real cash flows at the nominal discounting

rate.

b. By discounting real cash flows at the real discounting rate.

c. By discounting real cash flows at tax adjusted discounting

rate.

d. By discounting real cash flows at risk and time adjusteddiscounting rate.

Correct


Question 19


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Marks: 5

The following data are supplied relating to two investment projects only one of which may

be selected


Initial capital


Profit(loss) 1 25,000 10,000

2 20,000 10,000

3 15,000 14,000

4 10,000 26,000

Estimated resale

value4 10,000 10,000

The cost of

capital is 10%.

What are the Payback periods

X Y

i 2 Years & 4 Months3 Years & 7.4

Months

ii 4 Years 4 Years

iii all answers are wrong

iv 1.5 Years 2.4 Years

Choose one answer.

a. ii

b. iii


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c. iv

d. i

Incorrect


Question 20

Marks: 5

A project has an initial outflow followed by several years of inflows. What would be

the effect on the IRR of the project and its discounted pay back period of an

increase in the company's cost of capital

Answer IRR Payback

i No Change No Change

ii Increase Increase

iii Increase No Change

iv No Change Increase

Choose one answer.

a. ii

b. i

c. iii

d. iv

Incorrect


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The Institute of Chartered Accountants of Sri Lanka

ABC Ltd manufactures four products. The unit cost , selling price and bottleneck resource details per uniare as follows

Products P Q

Rs Rs

Selling Price 56 67

Material 22 31

Labour 15 20

Variable Overhead 12 15

Fixed Overhead 4 2

Bottle neck resource time 10 10

(minutes)

Assuming that labour is a unit variable cost, if the products are ranked according to their contribution to

sales ratio, the most

profitable products is

Choose one answer.

a. R

b. S

c. p
http://222.165.133.185:8080/onlineexams/user/view.php?id=36532&course=12http://222.165.133.185:8080/onlineexams/login/logout.php?sesskey=OKQITbg0z3http://222.165.133.185:8080/onlineexams/user/view.php?id=36532&course=12http://222.165.133.185:8080/onlineexams/login/logout.php?sesskey=OKQITbg0z3


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d. Q

Incorrect


Question 2

Marks: 5Woda Plc uses a standard absorption costing system. The absorption rate is based on labour hours. The f

January 2010.

Budget Actual

Labour hours worked 10000

Standard hours

produced10000

Fixed overhead cost Rs 45000 Rs 46200

The fixed overhead efficiency variance to be reported for January 2010 is nearest to Rs,

Choose one answer.

a. 690ADV

b. 787 ADV

c. 730 ADV

d. 714ADV

IncorrectMarks for this submission: 0/5.

Question 3

Marks: 5

DPL Ltd can choose from five mutually exclusive projects. The projects will each last for one year only

will b determined by the prevailing market conditions. The forcast annual cash inflows and their associat

below.

Market Conditions Poor Good Excellent

Probability 0.2 0.5

Rs 000 Rs 000 Rs 000Project-A 500 470

Project-B 400 550

Project-C 450 400

Project-C 360 400

Project-D 600 500

The value of perfect information about the state of the market is


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Choose one answer.

a. Rs 180,000

b. Rs 40,000

c. Rs 56,000

d. Nil

e. Rs 5,000

Incorrect


Question 4

Marks: 5

The overhead costs of XY limited have been found to be accurately represented

by the formula

y= Rs 10,000 + Rs 0.25 x

where y is the monthly cost and x represents the activity level measured in machine

in hours.

Monthly activity levels, in machine hours, may be estimated using a combined

regression analysis and time series model:

a = 100,000 + 30b

where a reperesents the de- seasonalized monthly activity level and b represents

the month number.

in month 240 , when the seasonal index value is 108, the overhead cost (to the

nearest RS. 1000) is expected to beChoose one answer.

a. Rs.36,000

b. Rs. 35,000

c. Rs. 39,000

d. Rs. 40,000

Incorrect


Question 5

Marks: 5The following data are supplied relating to two investment projects only one of which may be selected


Initial capital


Profit(loss) 1 25,000 10,000


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2 20,000 10,000

3 15,000 14,000

4 10,000 26,000

Estimated resale value 4 10,000 10,000The cost of capital is

10%.

What are the Net Present values

X Y

i 45860 34142

ii 42315 35212

iii -39876 -45321

iv all answers are wrong

Choose one answer.

a. iv

b. i

c. iii

d. ii

Correct


Question 6

Marks: 5

A Ltd is planning to obtain a term loan to invest in a project. Loan amount is Rs 2,000,000/= at a fixed in

annum

and should repay in end of every year by five equal annual installments withinterest.

Value of an installment should be,

Choose one answer.

a. 640,000


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b. 554,785

c. 456,789

d. 400,000

e. 678,340

Correct


Question 7

Marks: 5

H Ltd makes leather purses.It has drawn up the following budget for its next financial period.

Selling price per unit Rs. 11.60

Variable production cost per unit Rs.3.40

Sales commission 5% of selling price

Fixed production cost Rs. 430,500

Fixed selling and administration costs Rs 198,150

Sales 90,000 units

The margin of safty

representsChoose one answer.

a. 8.3% of budgeted sales

b. 11.6% of budgeted sales

c. 5.6% of budgeted sales

d. 16.8% of budgeted sales

Incorrect


Question 8

Marks: 5


projects.

The company has been looking at the launch of a new product which it believe has a 70% probability of

success.The company is however ,considering undertaking an advertising campaign costing Rs, 50,000 which wo

success to 95%.

If successful the product would generate income of Rs, 200,000 otherwise Rs, 70,000 would be

received.


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What is the maximum that the company would be prepared to pay for the advertising?

Choose one answer.

a. Rs29000

b. Rs50000c. Rs17500

d. Rs32500

Correct


Question 9

Marks: 5

XYZ Limited has recently introduced an Activity Based Costing system. It manufactures three

products,


below.


Budgeted annual






Three cost pools have been idntified. Their budgeted costs for the year ending 30th June 2009

are as follows:





Choose one answer.

a. 0.78

b. 0.52

c. 5.67

d. 6.52

Incorrect



29/202

Question 10

Marks: 5

Apsolt Plc has two division A and B. One of the products manufactured by the A division is in

This intermediate product for which there is no external market and it is transferred to B divisi

for sale in the external market. One unit of the intermediate product is used in the production o

The expected units of the final products which the B division estimates ,it can sell at various se

Net selling Price Quantity sold Unit

Rs

100 1000

90 2000

80 3000

70 4000

60 5000

50 6000

30 7000

The cost of each division are as follows :

A division

Variable cost per unit(Rs) 11

Fixed cost Attributable to the products(Rs) 60,000

The transfer price of the intermediate product has been set at 35/= based on a full cost plus a mark-up

Apsolt Plc maximises the profit at an out put level of ,

Choose one answer.

a. 4,000

b. 7,000

c. 3,000

d. 5,000

Incorrect


Question 11Marks: 5

ABC Limited makes a product which has variable production cost and sales costs

per unit of Rs. 8 and Rs. 2 respectively. Fixed costs are Rs. 40,000/= per annum ,the

sales price is Rs.18 per unit and the current volume of output/sales is 6,000 units per


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annum.

The company is considering whether it should acquir a new machine for production.

A annual hire costs of the machine would be Rs. 10,000/= and it is expected that variableproduction costs per unit would drop to Rs.6/=.

What is the minimum quantity should be made and sold by the ABC Ltd to accept the

aquiring of the new machine

Choose one answer.

a. 4,000

b. 6,000

c. 5,000

d. 5,800

Incorrect


Question 12

Marks: 5

Calipania Ltd has details two machines that could fulfil the company's future

production


The'standard' model of costs Rs 50,000 and the Ordinary model Rs. 88,000, payable immidiately.

Both machines would require the input of Rs. 10,000 working capital throughout their working

lives, and both have no expected scrap value at the end of their expected working lives of 4

years for the standard machine and 6 years for the Ordinary machine.

The forecast pre- tax operating net cash flows (Rs.) associated with the two machines

are

Year Hence

Years 1 2 3 4

The'standard' model 20,500 22,860 24,210 23,410The Ordinary model 32,030 26,110 25,380 25,940 38

The discount rate for the Ordinary model is 14% per year , 2% higher than the discount rate for the stand


31/202

The company is proposing to finance the purchase of either machine with a term loan at a fixed interest r

year

Taxation at 35% is payable on operating cash flows one year in arrears, and capital allowances are availa

yearon a reducing balance

basis.


Choose one answer.

a. It is recommended to purchased the'Ordinary model

b. Cannot be determined from the above information

c. It is recommended to purchased both the models

d. It is recommended to purchased the'standard' model

Incorrect


Question 13

Marks: 5

FBP Ltd produces PPN. The standard ingredients of 1kg of PPN

are :




1.15kg

Production of 4000kg of PPN was budgeted for January 2010. Since the Production of PPN is entirely au

Production cost s attributed to PPN production comprise only direct materials and overheads.

Overheads were budgeted for January 2010 for PPN production operation as

follows.


Recept of deliveries from suppliers Rs

(standard delivery quantity is 460

kg)4000

Despatch of goods to customers(standard despatch quantity is

100kg)8000

12000

In January 2010 , 4200kg of PPN were produced and cost details were as follows:

Material used,


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2840kg of A

1210kg of B

860kg of C


Actual overhead costsTwelve supplier deliveries(cost Rs 4,800) were made, and 38 customer despatches (cost Rs 7,800)

were

processed.


Choose one answer.

a. 341 ADV

b. 457 FAVc. 235 ADV

d. 190ADV

Incorrect


Question 14

Marks: 5

The following information has been extracted from a plastic manufacturing

company










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Material mix variance

Choose one answer.

a. 112.5FAVb. 12.5 ADV

c. All answers are wrong

d. 110.25FAV

Incorrect


Question 15

Marks: 5

Halibon PLC has three products Soft, Hard , Thick. Currently sales, cost and selling price details and pro

time requirments are as follows.

Products Soft,

Annual sales(units) 600

selling Price Rs 2

Unit cost 1

Processing Time

required per unit(hour)

The factory is working at full capacity(13500 Processing hours per year). Fixed manufacturing overhead

absorbed in to unit costs by a charge of 200% of variable cost. This procedure fully absorbs the fixed ma

Assuming that


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i) Processing time can be switched from one product line to another,

ii)The demand at current selling price is ,

Soft, 11000

and

Selling prices are not to be altered.

The best production programme for the next operating period should be ?

Soft, Hard , Thick

1 11000 8000 2000

2 1500 8000 2000

3 6000 6000 750

4 11000 500 1500

5 11000 0 1250

Choose one answer.

a. 2

b. 1

c. 4

d. 3

e. 5

Incorrect


Question 16

Marks: 5

The following information has been extracted from a plastic manufacturing company




35/202












Choose one answer.

a. All answers are wrong

b. 20.5 ADV

c. 110.25FAV

d. 110FAV

Incorrect


Question 17Marks: 5

Baltex PLC is planning to invest funds in financially viable projects. The weighted average cost of capita


Projects IRR

A


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B

C

D

E

What projects should be selected

Choose one answer.

a. B,E

b. A,C,D

c. A,B,C,D,E

d. A,B,C,D

e. E,D,B

Correct


Question 18

Marks: 5

AB plc has recently developed a new product.

The nature of AB Plc 's work is

repetitives, and it is usual for there to be an

80% learning effect when a newproduct is developed.

The time taken for the the first unit was 22 minutes.

Assuming

that an 80 % learning effect applies, the time

to be taken for the fourth unit is

nearest to

Choose one answer.

a. 15.45 minutes

b. 14.08 minutes

c. 10.91 minutes

d. 9.97 minutes

e. 16.60 minutes

Correct


Question 19

Marks: 5


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annum.


A annual hire costs of the machine would be Rs. 10,000/= and it is expected that variable

production costs per unit would drop to Rs.6/=.

If the machine is acquired how many unit must be made and sold to maintain the profit at its

existing level

Choose one answer.

a. 48,000 units

b. 6,000units

c. 5,000 units

d. 5,800 units

Incorrect


Question 20Marks: 5

ABC Ltd manufactures four products. The unit cost , selling price and bottleneck resource details per uni

follows

Products P Q R S

Rs Rs Rs Rs

Selling Price 56 67 89 96

Material 22 31 38 46

Labour 15 20 18 24

Variable Overhead 12 15 18 15Fixed Overhead 4 2 8 7

Bottle neck resource time 10 10 15 15

(minutes)

If the company adopted throughput accounting and the products were ranked according to product return


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be

Choose one answer.

a. Q

b. Sc. R

d. P

Toyo Ltd manufactures components for the vehicle industry. The following annual information

regarding

three of its key customer is

available:

ROSI SOSI TOSI

Gross

Margin (Rs)1100000 1750000 1200000

General

dministration cost

(Rs)

40000 80000 30000

Unit sold 1750 2000 1500

Orders placed 1000 1000 1500

Sales Visits 110 100 170

Invoices Raised 900 1200 1500

The company uses an activity based costing system and the analysis of customer related costs is

as follows

Sales visits Rs 500 per visit

Order ProcessingRs 100 per order

placed

Dispatch Costs

Rs 100 per order

placedBilling and

Collections

Rs 175 per invoice

raised


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Using customer profitability analysis, the ranking of the customers would be:

ROSI SOSI TOSI

1 1 st 2 nd 3 rd

2 2 nd 1 st 3 rd

3 3 rd 1 st 2 nd

4 3 rd 2 nd 1 st

Choose one answer.

a. 1

b. 4

c. 3

d. 2

Incorrect


Question 2

Marks: 5

The expected inflation will be 6% in each of the next five years.

Net present value of a project can be calculated by

Choose one answer.

a. By discounting nominal cash flows at the nominal discounting rate.

b. By discounting nominal cash flows at the real discounting rate.

c. By discounting real cash flows at risk and time adjusted discounting rate.

d. By discounting real cash flows at tax adjusted discounting rate.

Correct


Question 3

Marks: 5

XYZ Company manufactures and sells two poducts P and Q . Forcast data for a year are:

Product P Product Q

Sales(units) 80,000 20,000

Sales Price(per unit) Rs. 12 Rs. 8

Variable Cost (per unit) Rs.8 Rs.3


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Annual fixed cost are estimated

at Rs 273,000.

What is the break even point in sales revenue with the current sales mix

Choose one answer.

a. Rs. 570,000b. Rs. 679,467

c. Rs. 728,000

d. Rs. 606,667

Incorrect


Question 4

Marks: 5

Ahindas plc is cosidering investing in a manufacturing project that would have a three year life span. The

an immediate cash outflow of Rs50,000 and have a zero residual value. In each of the three years, 4000 usold

The contribution per unit , based on current prices is Rs 5/=. The company has an annual cost of capital o

rate

will be 3% in each of the next three years.

If the annual inflation rate is now projected to be 4%, the maximum monetory cost of capital for this proj

to remain viable, is (to the nearest 0.5%)

Choose one answer.

a. 14.0%

b. 12.0%

c. 14.5%

d. 13.5%

e. 16.0%

Incorrect


Question 5

Marks: 5

Woda Plc uses a standard absorption costing system. The absorption rate is based on labour hours. The f

January 2010.

Budget Actual

Labour hours worked 10000

Standard hours

produced10000

Fixed overhead cost Rs 45000 Rs 46200


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The fixed overhead efficiency variance to be reported for January 2010 is nearest to Rs,

Choose one answer.

a. 730 ADV

b. 714ADV

c. 690ADV

d. 787 ADV

Correct


Question 6

Marks: 5

FBP Ltd produces PPN. The standard ingredients of 1kg of PPN are :




1.15kg



Overheads were budgeted for January 2010 for PPN production operation as follows.



(standard delivery quantity is 460 kg) 4000

Despatch of goods to customers

(standard despatch quantity is 100kg) 8000

12000


Material used,

2840kg of A

1210kg of B

860kg of C



Twelve supplier deliveries(cost Rs 4,800) were made, and 38 customer despatches (cost Rs 7,800) were


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processed.

Overhead Expenditure variance

Choose one answer.

a. 600ADV

b. 190ADV

c. 300FAV

d. 400 ADV

Incorrect


Question 7

Marks: 5

FBP Ltd produces PPN. The standard ingredients of 1kg of PPN

are :




1.15kg



Overheads were budgeted for January 2010 for PPN production operation as

follows.



(standard delivery quantity is 460

kg)4000

Despatch of goods to customers

(standard despatch quantity is

100kg)8000

12000


Material used,

2840kg of A

1210kg of B

860kg of C



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Twelve supplier deliveries(cost Rs 4,800) were made, and 38 customer despatches (cost Rs 7,800)

were

processed.


Choose one answer.

a. 341 ADV

b. 457 FAV

c. 190ADV

d. 235 ADV

Correct


Question 8

Marks: 5

Baltex PLC is planning to invest funds in financially viable projects. The

weighted average cost of capital of the


Projects IRR

A20

%

B

11

%

C30

%

D14

%

E 8%

What projects should be selectedChoose one answer.

a. A,B,C,D

b. E,D,B

c. A,B,C,D,E

d. B,E


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e. A,C,D

Correct


Question 9

Marks: 5Nazdaz Ltd regularly uses material K and currently has in stock 600kg , for which it paid Rs 1500 two m

If this were to be sold as raw material it could be sold today for Rs 2 per kg and 5% trade discount also a

You are aware that the material can be bought on the open market for Rs 3.25 per kg but it must be purch

What is the relevent cost of 600kg of material K to be used in a job for a customer.

Choose one answer.

a. 1200

b. 3250

c. 1140

d. 1950e. 1325

Correct


Question 10

Marks: 5

Calipania Ltd has details two machines that could fulfil the company's future production



Both machines would require the input of Rs. 10,000 working capital throughout their workinglives, and both have no expected scrap value at the end of their expected working lives of 4


The forecast pre- tax operating net cash flows (Rs.) associated with the two machines are

Year Hence

Years 1 2

The'standard' model 20,500 22,860 24,210

The Ordinary model 32,030 26,110 25,380




on a reducing balance basis.


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Payback periods should be approximately years

The'standard' model The Ordinary model

i 2 4

ii 4 3

iii 3 4

iv 3 3

Choose one answer.

a. iv

b. i

c. ii

d. iii

Incorrect

Marks for this submission: 0/5.Question 11

Marks: 5

A company P sells 3 products P,Q and R. Sales information for May 2009 was as

follows

Budeted Sales Budgeted Price Actual Sales Actual Price

Units per unit-Rs units per unit-Rs

P 100 100 108 104

Q 150 50 165 47R 250 35 221 37

The expected size of the market for May 2009 was 2500 units.The actual market size was 2650 units.

Sales Mix Variance

Choose one answer.

a. 1690 Fav

b. 850Fav

c. 850 Adv

d. 1690 Adv

Correct


Question 12


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Marks: 5

KMN PLC is about to launch a new product. Facilities will allow the company to produce up to 20 unit p

The

marketing department has estimated that at a price of Rs 8000/= no unit will be sold, but for each Rs 150

additional

unit per week will be sold. Fixed costs associated with manufacture are expected to be Rs 12000/= per w

Variable costs are expected to beRs, 4000/= per unit for each of the first 10 units

thereafter each unit will cost Rs 400/= more than preceeing one

The most profitable level of output per week for the new product is

Choose one answer.

a. 13 Units

b. 14Units

c. 20 Unitd. 11 Units

e. 10 Units

Incorrect


Question 13

Marks: 5

The following data are supplied relating to two investment projects only one of which may be selected


Initial capital


Profit(loss) 1 25,000 10,000

2 20,000 10,000

3 15,000 14,000

4 10,000 26,000

Estimated resale value 4 10,000 10,000

The cost of capital is

10%.

What is the best project


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Choose one answer.

a. X

b. X & Y Both are best

c. Y

d. None is best

Incorrect


Question 14

Marks: 5

A Plc makes a single product which it sells for Rs. 16 per unit. Fixed costs are Rs. 76,800 per

month and the product has a contribution to sales ratio of 40%.

In a period when actual sales were Rs. 224,000. A Plc's margin of saftey , in units was

Choose one answer.a. 2000

b. 14000

c. 12000

d. 6000

e. 8000

Incorrect


Question 15

Marks: 5

X Plc operates a single retail outlet selling direct to the public. Profit statements for

October and

November are as follows:

October November

Rs Rs

Sales 80,000 90,000

Cost of sales 50,000 55,000

Gross profit 30,000 35,000

Less:

Selling and distribution 8,000 9,000

Administration 15,000 15,000

Net Profit 7,000


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If the selling price is increased by 10% in December, monthly break even sales should be

Choose one answer.

a. 55,000

b. 110,000

c. 62,500

d. 50,000

Correct


Question 16

Marks: 5


This intermediate product for which there is no external market and it is transferred to B divisifor sale in the external market. One unit of the intermediate product is used in the production o



Rs

100 1000

90 2000

80 3000

70 4000

60 500050 6000

30 7000


A division



The transfer price of the intermediate product has been set at 35/= based on a full cost plus a mark-upWhat is the maximum profit of B division?

Choose one answer.

a. Rs,123500

b. Rs,24000

c. Rs,26000


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d. Rs,22000

Correct


Question 17

Marks: 5A product is being considered which has the following details

(a) Capital outlay Rs. 3,000,000

(b) Annual sales 500 units

(c) Salling price Rs. 2,200 per unit

(d) Variable cost Rs. 400 per unit

(e) Fixed cost Rs. 250,000 per year

The project life is 10 years and the cost of capital is 14%.

If there is a 10% adverse variance in each of the above five elements (a) to (e)

What is the new NPV

Choose one answer.

a. (819,670)

b. (1,119,670)

c. (587,375)

d. 187,576

Incorrect


Question 18

Marks: 5






Rs100 1000

90 2000

80 3000

70 4000

60 5000

50 6000

30 7000


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A division




The A division maximises the profit at an out put level of ,

Choose one answer.

a. 6,000

b. 3,000

c. 7,000

d. 5,000

Incorrect


Question 19

Marks: 5

Y plc currently sells products " P","Q" and "R" in equal quantities and at the same selling

price per unit. The contribution to sales ratio for product P is 40%: for product Q it is

50% and the total is 48%. If fixed costs are unaffected by mix and currently 20% of sales, the

effect of changing the product mix to:

P 4

Q 2

R 3

is that the total contribution /total sales ratio change to

Choose one answer.

a. 47.4%

b. 45.3%c. 48.4%

d. 68.4%

e. 27.4%

Incorrect


Question 20


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Marks: 5

A fertiliser is made by mixing and processing three ingredients, A, B,and C, the standard cost data

are as follows

ingredientStandardProportion

standardcost Rs

P 50% 20

N 40%

Q 10% 42

A standard process loss of 5%

is anticipated

For the last 3month the out put was 93.1 tonnes and input were as follows:

ingredientActual

Usage

Actual

Price

Rs

P 49 tonnes16 per

tonne

N 43tonnes27 per

tonne

Q 8 tonnes48 per

tonne


Choose one answer.

a. 29 FAV

b. 24.2 FAV

c. 48.4 ADV

d. 122.75 ADV


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A fertiliser is made by mixing and processing three ingredients, A, B,and C, the standard cost data are as

ingredient Standard Prop

P

Q


For the last 3month the out put was 93.1 tonnes and input were as follows:

ingredient Actual UsageP 49 tonnes

N 43tonnes

Q 8 tonnes

Material price variance

Choose one answer.

a. 24.2 FAVb. 19.4 FAV

c. 42.6 ADV

d. 62 FAV

Incorrect


Question 2

Marks: 5

Rambo Ltd manufactures three products ,the selling price and cost details of which are given below:

Products DA DB DC

Selling price per unit 75 95 95

Direct material(Rs 5 per

kg)2Kg 1 kg 3 kg

Normal loss-Input material 30% 20%

Direct labour (Rs 4 per 16 24 20


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hour)

Variable overhead 8 12 10

Fixed Overhead 24 36 30

In a period when direct materials are restricted in supply, the most and the least profitable uses of direct m

Most Profitable Least Profitable

i DB DA

ii DB DC

iii DC DA

iv DC DB

v DA DB

Choose one answer.

a. iii

b. i

c. iv

d. v

e. ii

Correct


Question 3

Marks: 5

DPL Ltd can choose from five mutually exclusive projects. The projects will each last for one year only a



Probability 0.2 0.5

Rs 000 Rs 000 Rs 000

Project-A 500 470

Project-B 400 550

Project-C 450 400

Project-C 360 400

Project-D 600 500


Choose one answer.

a. Rs 5,000


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b. Rs 56,000

c. Rs 180,000

d. Rs 40,000

e. Nil

Correct


Question 4

Marks: 5

The following information has been extracted from the record of NYK chemical

company

which manuactures product "H"

standard price : Rawmaterial P- Rs 2 per kg

Rawmaterial Q- Rs 10 per kg

standard Mix : P : 75%, Q 25% (by weight)

standard Yield : 90%

for the last month , the actual cost, usage and out put were as follows

used : 2200 kg of P , costing Rs, 4,650/=

800 kg of Q , costing Rs, 7,850/=

Output 2850 kg of H


Choose one answer.

a. 400ADV

b. All answers are wrong

c. 667FAV


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d. 267FAV

Incorrect


Question 5

Marks: 5The following information has been extracted from a local biscuite

company

which manufactures high protein biscuite

standard price : Rawmaterial P1- Rs 5 per kg

Rawmaterial P2- Rs 4 per kg

Rawmaterial P3- Rs 3 per kg

standard Mix : P1 : 60%, P2 ,30% , P3 10% (by weight)

standard Yield : 90%





Output 3600kg of high protein biscuite



Choose one answer.

a. 25 ADV

b. 125 ADV

c. 50FAV


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d. 150 ADV

Correct


Question 6

Marks: 5ADB plc is organised on a divisional basis. Two of the divisions are the Components division and the Pr

division

The Components division produces components P, Q, R. The Components are sold to a wide variety of c

including

Product division at the same price. The Product division uses one unit of component P,Q,and R respectiv

K,L and M.

Recently Product division has been force to work below capacity because of limits in the supply of comp

from Component division. ADB's Managing Director has therefore directed component divisions to sell

product division.

Price , Cost and output data for Components division are as follows

Componant P Q R

Rs Rs Rs

Unit Selling Price 20 20

Unit variable cost 7 12

Period Fixed Cost 50000 100000

Components division has a maximum out put capacity 50,000 of which each component must number at

10,000.

Price , Cost and output data for Products division are as follows

Products K L M

Rs Rs Rs



Period Fixed Cost 100,000 100,000 200,000

product division has been forced to operate at 20,000 units below capacity because of lack of component

coming

from Component division. Product division is able to sell all the out put it can produce at the current sell

price.


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Assuming all components are supplied to Product division, What is the different component and product

that would maximise the profit of :Products division

P/K Q/L R/M

1 30,000 10,000 10,000

2 10,000 30,000 10,000

3 10,000 10,000 30,000

4 all answers are wrong

Choose one answer.

a. 1

b. 3

c. 4

d. 2

Incorrect


Question 7

Marks: 5



The'standard' model of costs Rs 50,000 and the Ordinary model Rs. 88,000, payable immidiately.Both machines would require the input of Rs. 10,000 working capital throughout their working




Year Hence

Years 1 2

The'standard' model 20,500 22,860

The Ordinary model 32,030 26,110






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Net present value should be


i 1425 1285ii 6632 6312

iii 5412 5673

iv 5136 5510

Choose one answer.

a. ii

b. i

c. iv

d. iiiIncorrect


Question 8

Marks: 5

XYZ Limited has recently introduced an Activity Based Costing system. It manufactures three

products,


below.


Budgeted annual






Three cost pools have been idntified. Their budgeted costs for the year ending 30th June 2009are as follows:






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Choose one answer.

a. 6.52

b. 6734

c. 50000

d. 0.5

Incorrect


Question 9

Marks: 5

A company is considering investing in a new project that would have a five year life span. The invest me

expected annual net inflow is Rs 1.5 million in every year end.The expected inflation will be 5% in each

years.

the cost of capital of the company is

10%.

The real discount rate should be

Choose one answer.

a. 4.76%

b. 15.00%

c. 10.00%

d. 6.85%

Incorrect


Question 10

Marks: 5




annum.





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What is the minimum quantity should be made and sold by the ABC Ltd to accept the

aquiring of the new machine

Choose one answer.

a. 5,800

b. 5,000

c. 4,000

d. 6,000

Correct


Question 11

Marks: 5KMN PLC is about to launch a new product. Facilities will allow the company to produce up to 20 unit p

The

marketing department has estimated that at a price of Rs 8000/= no unit will be sold, but for each Rs 150

additional

unit per week will be sold. Fixed costs associated with manufacture are expected to be Rs 12000/= per w

Variable costs are expected to beRs, 4000/= per unit for each of the first 10 units

thereafter each unit will cost Rs 400/= more than preceeing one

The most profitable level of output per week for the new product isChoose one answer.

a. 20 Unit

b. 11 Units

c. 14Units

d. 13 Units

e. 10 Units

Incorrect


Question 12

Marks: 5

The overhead costs of XY limited have been found to be accurately represented

by the formula

y= Rs 10,000 + Rs 0.25 x

where y is the monthly cost and x represents the activity level measured in machine


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in hours.

Monthly activity levels, in machine hours, may be estimated using a combined

regression analysis and time series model:

a = 100,000 + 30b

where a reperesents the de- seasonalized monthly activity level and b represents

the month number.in month 240 , when the seasonal index value is 108, the overhead cost (to the

nearest RS. 1000) is expected to be

Choose one answer.

a. Rs. 39,000

b. Rs. 35,000

c. Rs.36,000

d. Rs. 40,000

Incorrect


Question 13

Marks: 5

ABC Limited manufactures and sells two product, X and Y. Annual sales are expected

to be in the ratio X:1, Y:3. Total annual sales are planned to be Rs. 420,000. Product

X has a contribution to sales ratio of 40 % , whereas that of product Y is 50%. Annaul

fixed costs are estimated to be Rs 120,000

The budgeted break even sales value (to the nearest Rs 1,000):

Choose one answer.

a. Rs. 255,000

b. Rs. 196,000

c. Cannot be determined from the above

d. Rs. 200,000

e. Rs. 253,000

Incorrect


Question 14Marks: 5




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1150 kg of P2 , costing Rs, 4700/=425 kg of P3 costing Rs 1250/=




Choose one answer.


b. 20.5 ADV

c. 110.25FAV

d. 110FAV

Incorrect


Marks: 5

P Ltd has 3 division the information for the year ended December 2009 is as follows

Rs (000)

Division A B C

Sales 350 420 150


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Variable Costs 280 210 120

Total fixed cost is Rs 262,500/= . General fixed overhead are allocated to each division on the basis of sa

60% of the total fixed costs incurred by the company are specific to each division been split equally betw

Using relevent costing techniques, which divisions should remain open if P Ltd wishes to maximise prof

Choose one answer.

a. A and B only

b. B only

c. A, B and c

d. B and C only

Incorrect


Question 16

Marks: 5





P 4

Q 2

R 3


Choose one answer.

a. 47.4%

b. 27.4%

c. 68.4%

d. 48.4%

e. 45.3%

Incorrect


Question 17

Marks: 5

DPL Ltd can choose from five mutually exclusive projects. The projects will each last for one year only



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below.


Probability 0.2 0.5

Rs 000 Rs 000 Rs 000

Project-A 500 470Project-B 400 550

Project-C 450 400

Project-C 360 400

Project-D 600 500


Choose one answer.

a. Rs 56,000

b. Rs 5,000

c. Rs 180,000

d. Rs 40,000

e. Nil

Correct


Question 18

Marks: 5

XYZ Company manufactures and sells two poducts P and Q . Forcast data for a year are:

Product P Product Q

Sales(units) 80,000 20,000

Sales Price(per unit) Rs. 12 Rs. 8

Variable Cost (per unit) Rs.8 Rs.3

Annual fixed cost are estimated

at Rs 273,000.

What is the break even point in sales revenue with the current sales mix

Choose one answer.

a. Rs. 606,667

b. Rs. 570,000

c. Rs. 728,000


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d. Rs. 679,467

Incorrect


Question 19

Marks: 5Taxi Service is trying to determine the optimal replacement policy for its fleet of hiring vehicles. The tot

purchase price of the fleet is Rs 220,000,million. The running cost and scrap values of the fleet at the end

Year 1 2 3 4

Running cost (Rs Million) 110000 132000 154000 165000 17600

Scrap value(Rs Million) 121000 88000 66000 55000 2500

The cost of capital is 12% per annum

The Taxi Service should replace its fleet of vehicles at the end of

Choose one answer.

a. Year-1

b. Year-4

c. Year-2

d. Year-3

e. Year-5

Correct


Question 20

Marks: 5

Calipania Ltd has details two machines that could fulfil the company's future

production






The forecast pre- tax operating net cash flows (Rs.) associated with the two machines

are

Year Hence


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Years 1 2 3 4

The'standard' model 20,500 22,860 24,210 23,410

The Ordinary model 32,030 26,110 25,380 25,940 38



yearTaxation at 35% is payable on operating cash flows one year in arrears, and capital allowances are availa

year

on a reducing balance

basis.


Choose one answer.

a. It is recommended to purchased both the models

b. It is recommended to purchased the'standard' model

c. It is recommended to purchased the'Ordinary model

d. Cannot be determined from the above information

Apsolt Plc has two division A and B. One of the products manufactured by the A division is intermediate

This intermediate product for which there is no external market and it is transferred to B division where

for sale in the external market. One unit of the intermediate product is used in the production of the final

The expected units of the final products which the B division estimates ,it can sell at various selling pric


Rs

100 1000

90 2000

80 3000

70 400060 5000

50 6000

30 7000


A division


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The B division maximises the profit at an out put level of ,

Choose one answer.

a. 6,000

b. 7,000

c. 2,000

d. 3,000

Incorrect


Question 2

Marks: 5








Year Hence

Years 1 2

The'standard' model 20,500 22,860

The Ordinary model 32,030 26,110

The discount rate for the Ordinary model is 14% per year , 2% higher than the discount rate for the standThe company is proposing to finance the purchase of either machine with a term loan at a fixed interest r



Net present value should be


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i 1425 1285

ii 6632 6312

iii 5412 5673

iv 5136 5510

Choose one answer.

a. iv

b. i

c. ii

d. iii

Correct


Question 3

Marks: 5

The cost of capital is 12% of the company and consideing Rs 10 million investment.The expected inflatio

years.

Net present value of this project can be calculated

by

Choose one answer.

a. By discounting real cash flows at tax adjusted discounting rate.

b. By discounting real cash flows at risk and time adjusted discounting rate.c. By discounting real cash flows at the real discounting rate.

d. By discounting real cash flows at the nominal discounting rate.

Incorrect


Question 4

Marks: 5








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425 kg of P3 costing Rs 1250/



Material usage variance

Choose one answer.


b. 112.5FAV

c. 97.75 FAV

d. 100FAV

Correct


Question 5

Marks: 5

P Limited used an incremental budgeting approch to setting its budgets for the

year ending 30 June 2009.

The budget for the company's power costs was determined by analysing the past

relationship between cost and activity levels and then adjusting for

inflation of 6%.The relationship between monthly cost and activity levels, before adjusting for the

6% inflation, was found to be:

Y = Rs(14,000 + 0.0025x2 )

where Y = total cost; and

x = machine hours


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In April 2009, the number of machine hours was 1525 and the actual cost incurred

was Rs. 16,423. The total power cost variance to be reported in nearest to

Choose one answer.

a. Rs.3740 (F)

b. Rs. 4580 (F)

c. Rs.4391(A)

d. Rs.3691(F)

Incorrect


Question 6

Marks: 5


projects.

The company has been looking at the launch of a new product which it believe has a 70% probability of

success.

The company is however ,considering undertaking an advertising campaign costing Rs, 50,000 which wo

success to 95%.

If successful the product would generate income of Rs, 200,000 otherwise Rs, 70,000 would be

received.

What is the maximum that the company would be prepared to pay for the advertising?

Choose one answer.

a. Rs50000

b. Rs17500

c. Rs32500

d. Rs29000

Correct


Question 7

Marks: 5

FBP Ltd produces PPN. The standard ingredients of 1kg of PPN are :




1.15kg



Overheads were budgeted for January 2010 for PPN production operation as follows.


71/202



(standard delivery quantity is 460 kg) 4000

Despatch of goods to customers(standard despatch quantity is 100kg) 8000

12000


Material used,

2840kg of A

1210kg of B

860kg of C



Twelve supplier deliveries(cost Rs 4,800) were made, and 38 customer despatches (cost Rs 7,800) were

processed.

Overhead Capacity variance

Choose one answer.

a. 1108 FAV

b. 508FAV


d. 600 FAV

Incorrect


Question 8

Marks: 5

The following details relates to product Rotomax

Level of activity (units) 1000 unit 2000 unit

Rs Rs

Direct materials 4.00 4.00

Direct labour 3.00 3.00

Production overhead 3.50 2.50

Selling overhead 1.00 0.50


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Total 11.50 10.00

The total fixed cost and variable cost per unit are

Total fixed

cost Rs.Variable cost per unit Rs.

1 2000 1.50

2 2000 7.00

3 2000 8.50

4 3000 7.00

5 3000 8.50

Choose one answer.

a. 3

b. 1

c. 2

d. 4

e. 5

Incorrect


Marks: 5






Rs

100 100090 2000

80 3000

70 4000

60 5000

50 6000

30 7000


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A division




Apsolt Plc maximises the profit at an out put level of ,

Choose one answer.

a. 4,000

b. 7,000

c. 5,000d. 3,000

Correct


Question 10

Marks: 5

X Plc operates a single retail outlet selling direct to the public. Profit statements for October and

November are as follows:

October November

Rs Rs

Sales 80,000 90,000

Cost of sales 50,000 55,000

Gross profit 30,000 35,000

Less:

Selling and distribution 8,000 9,000

Administration 15,000 15,000

Net Profit 7,000 11,000

Total annual fixed cost is

Choose one answer.


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a. 50,000

b. 110,000

c. 300,000

d. 62,500

Correct


Question 11

Marks: 5




annum.




What would the annual profit be with the machine if the output/sales remain at 6,000 units

Choose one answer.

a. 8,000

b. 50,000

c. 60,000

d. 10,000

Correct


Question 12

Marks: 5ABC Ltd manufactures four products. The unit cost , selling price and bottleneck resource details per uni

Products P Q

Rs Rs

Selling Price 56 67

Material 22 31


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Labour 15 20

Variable Overhead 12 15

Fixed Overhead 4 2

Bottle neck resource time 10 10

(minutes)

Assuming that labour is a unit variable cost, if the products are ranked according to their contribution to

profitable products is

Choose one answer.

a. S

b. R

c. p

d. QCorrect


Question 13

Marks: 5





P 4

Q 2

R 3


Choose one answer.

a. 48.4%

b. 68.4%

c. 27.4%

d. 47.4%

e. 45.3%

Correct



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Question 14

Marks: 5

The following information has been extracted from the record of NYK chemical company

which manuactures product "H"

standard price : Rawmaterial P- Rs 2 per kg

Rawmaterial Q- Rs 10 per kg

standard Mix : P : 75%, Q 25% (by weight)

standard Yield :

for the last month , the actual cost, usage and out put were as follows

used : 2200 kg of P , costing Rs, 4,650/=

800 kg of Q , costing Rs, 7,850/=

Output 2850 kg of H

Material cost variance

Choose one answer.

a. 500 ADV

b. 100 ADV


d. 167 FAV

Correct


Marks: 5

ABC Ltd manufactures four products. The unit cost , selling price and bottleneck resource details per uni

Products P Q R

Rs Rs Rs


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Selling Price 56 67 89

Material 22 31 38

Labour 15 20 18

Variable Overhead 12 15 18

Fixed Overhead 4 2 8

Bottle neck resource time 10 10 15

(minutes)

Assuming that labour is a unit variable cost, if the budgeted unit sales are in the ratio P:2 Q:3 R:3, Z :

4 and

monthly fixed costs are budgeted to be Rs 15000, the number of units of P that would be sold at the budg

Choose one answer.

a. 283

b. 106

c. 142

d. 145

Incorrect


Question 16

Marks: 5

Ahindas plc is cosidering investing in a manufacturing project that would have a three year life span. The

an immediate cash outflow of Rs50,000 and have a zero residual value. In each of the three years, 4000 u

soldThe contribution per unit , based on current prices is Rs 5/=. The company has an annual cost of capital o

rate

will be 3% in each of the next three years.

The net present value of the project( to the nearest Rs500)

Choose one answer.

a. 5000

b. 3500

c. 4500

d. -3400

Correct


Question 17


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Marks: 5















Choose one answer.

a. 135 ADV

b. 50FAV

c. 25 ADV

d. 155ADV

Correct


Question 18


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Marks: 5

ADB plc is organised on a divisional basis. Two of the divisions are the Components division and the Pr

division

The Components division produces components P, Q, R. The Components are sold to a wide variety of c

including

Product division at the same price. The Product division uses one unit of component P,Q,and R respectivRecently Product division has been force to work below capacity because of limits in the supply of comp

from Component division. ADB's Managing Director has therefore directed component divisions to sell

division.

Price , Cost and output data for Components division are as follows

Componant P Q R

Rs Rs Rs


Unit variable cost 7 12 Period Fixed Cost 50000 100000

Components division has a maximum out put capacity 50,000 of which each component must number at

10,000.

Price , Cost and output data for Products division are as follows

Products K L MRs Rs Rs



Period Fixed Cost 100,000 100,000 200,000

product division has been forced to operate at 20,000 units below capacity because of lack of component

coming

from Component division. Product division is able to sell all the out put it can produce at the current sell

price.

Assuming all components are supplied to Product division, What is the different component and product

that would maximise the profit of :Component division


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P/K Q/L R/M

1 10,000 10,000 30,000

2 30,000 10,000 10,000

3 10,000 30,000 10,000

4 all answers are wrong

Choose one answer.

a. 2

b. 3

c. 4

d. 1

Incorrect


Question 19

Marks: 5

KMP Ltd is highly geared company that wishes to expand its operations. Six possible capital

investemnts have been identified. But the company only has access to a total of Rs 620,000.

The projects are not divisible and may not be postponed until the future period. After

theproject end it is unlikely that similar investment oppertunaties will

occur.

Expected Net Cash Inflows (including salvage value)

Project Year1 (Rs) 2 (Rs) 3 (Rs) 4 (Rs) 5 (Rs) In

P-1 70,000 70,000 70,000 70,000 70,000

P-2 75,000 87,000 64,000

P-3 48,000 48,000 63,000 73,000

P-4 62,000 62,000 62,000 62,000

P-5 40,000 50,000 60,000 70,000 40,000

P-6 35,000 80,000 82,000

Projects P-1 and P-5 are matually exclusive. All projects are believed to be of similar risk to

the companys existing capitital investments.

Any surplus funds may be invested in the money markets to earn a return of 9% peryear.

The maney market may be assumed to be an efficient market.

KMP's cost of capital is 12% per year.

Maximum NPV if the company have adequate funds


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Choose one answer.

a. 27009

b. 21519

c. 24413

d. 32415

e. 19637

Incorrect


Question 20

Marks: 5

The expected inflation will be 6% in each of the next five years.

Net present value of a project can be calculated by

Choose one answer.

a. By discounting real cash flows at tax adjusted discounting rate.

b. By discounting nominal cash flows at the real discounting rate.

c. By discounting real cash flows at risk and time adjusted discounting rate.

d. By discounting nominal cash flows at the nominal discounting rate.

1

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