|Total No. of Questions— 9]||[Total No. of Printed Pages—10|
|Time Allowed : 3 Hours||Maximum Marks : 100|
|Answers to questions are to be given only in English except in the cases of candidates who have opted for Hindi medium. If a candidate who has not opted for Hindi medium, answers in Hindi, his answers in Hindi will not be valued.|
|Question Nos.1 and 6 are compulsory.|
|Attempt three questions out of the remaining question numbers 2, 3, 4 and 5 and attempt two questions from the remaining Questions Nos. 7, 8 and 9.|
|Working notes should form part of the answer.|
|1.||(a)|| Following details are related to the work done in Process ’A‘ of XYZ Company during the month of March, 2007: |
You are required to prepare:
(i) Statement of equivalent production;
(ii) Statement of cost;
(iii) Statement of distribution cost; and
(iv) Process ’A’ Account, Normal and Abnormal Loss Accounts.
|(b)||Explain briefly each of the following categories in Activity based Costing by giving at least two examples: |
|2.||(a)||What is ‘Integrated Accounting System’? State its advantages.||4||(0)|
|(b)|| A Club runs a library for its members. As part of club policy, an annual subsidy of upto Rs. 5 per member including cost of books may be given from the general funds of the club. The management of the club has provided the following figures for its library department: |
You are required to calculate:
If the club follows a policy that all new books must be purchased out of library revenue (a) What is the maximum number of books that can be purchased per year and (b) How many excess books are being purchased by the library per year?
Also, comment on the subsidy policy of the club.
|3.||(a)||Raw materials ‘AXE’ costing Rs. 150 per kg and ‘BXE’ costing Rs. 90 per kg are mixed in equal proportions for making product ‘A’. The loss of material in processing works out to 25% of the product. The production expenses are allocated at 40% of direct material cost. The end product is priced with a margin of 20% over the total cost. |
Material ‘BXE’ is not easily available and substitute raw material ‘CXE’ had been found for ‘BXE’ costing Rs. 75 per kg. It is required to keep the proportion of the substitute material in the maxture as low as possible and at the same time maintain the selling price of the end product at existing level and ensure the same quantum of profit as at present.
You are required to compute the ratio of the mix of the raw materials ‘AXE’ and ‘CXE’.
|(b)||Answer any three of the following:||2x3=6|
|(i)||Explicit and Implicit Costs||(0)|
|(ii)||Period Costs and Discretionary Costs||(0)|
|(iii)||Efficiency Audit and Propretary Audit||(0)|
|(iv)||Bin Cards and Stock Control Cards||(0)|
|4.||(a)|| A company runs a holiday home, For this purpose, it has hired a building at a rent of Rs. 10,000 per month alongwith 5% of total talking. It has three types of suites for its customers, viz., single room, double rooms and triple rooms. |
Following information is given:
The rent of double rooms suite is to be fixed at 2.6 times of the single room suite and that of triple rooms suite as twice of the double rooms suite.
The other expenses for the year 2006 are as follows:
Provide profit @ 20% on total taking and assume 360 days in a year.
You are required to calculate the rent to be charged for each type of suite.
|(b)||‘Under the Rowan Premium Bonus system, a less efficient worker can obtain same bonus as a highly efficient worker.’ Discuss with suitable examples.||4||(0)|
|5.||(a)|| ABC Ltd. has furnished the following information from the financial books for the year ended 31st March, 2007: |
The cost sheet shows the cost of materials at Rs. 104 per unit and the labour cost at Rs. 80 per unit. The factory overheads are absorbed at 60% of labour cost and administration overheads at 20% of factory cost. Selling expenses are charged at Rs. 24 per unit. The opening stock of finished goods is valued at Rs. 180 per unit.
You are required to prepare:
(i) A statement showing profit as per Cost accounts for the year ended 31st March, 2007; and
(ii) A statement showing the reconciliation of profit as disclosed in Cost accounts with the profit shown in Financial accounts.
|(b)||Explain any two of the following:||2x2=4|
|(i)||National profit in Contract costing.||(0)|
|(ii)||Retention money in Contract costing.||(0)|
|(iii)||Economic Batch Quantity in Batch Costing.||(0)|
|6.||(a)|| The following accounting information and financial ratios of PQR Ltd. relate to the year ended 31st December, 2006: |
If value of fixed assets as on 31st December, 2005 amounted to Rs. 26 lakhs, prepare a summarised Profit and Loss account of the company for the year ended 31st December, 2006 and also the Balance Sheet as on 31st December, 2006.
|(b)||What is Debt securitisation? State the basic debt securitisation process.||4||(0)|
|7.||(a)|| JKL Ltd. is considering the revision of its credit policy with a view to increasing its sales and profit. Currently all its sales are on credit and the customers are given one month's time to settle the dues. It has a contribution of 40% on sales and it can raise additional funds at a cost of 20% per annum. The marketing manager of the company has given the following options along with estimates for considerations: |
You are required to advise the company for the best option.
|(b)||What do you mean by factoring? Describe the benefits of factoring.||4||(0)|
|8.||(a)|| You are required to determine the weighted average cost of capital of a firm using (i) book–value weights and (ii) market value weights. The following information is available for your perusal: |
Present book value of the firm's capital structure is:
All these securities are traded in the capital markets. Recent prices are: Debentures @ Rs. 110, Preference shares @ Rs. 120 and Equity shares @ Rs. 22.
Anticipated external financing opportunities are as follows:
In addition, the dividend expected on the equity share at the end of the year is Rs. 2 per share; the anticipated growth rate in dividends is 5% and the firm has the practice of paying all its earnings in the form of dividend. The corporate tax rate is 50%.
|(b)||Explain briefly the propositions made in Modigliani and Miller approach on cost of capital.||3||(0)|
|9.||(a)|| A company is considering the proposal of taking up a new project which requires an investment of Rs. 400 lakh on machinery and other assets. The project is expected to yield the following earnings (before depreciation and taxes) over the next five years: |
The cost of raising the additional capital is 12% and assets have to be depreciated at 20% on 'Written Down Value' basis. The scrap value at the end of the five years period may be taken as zero. Income–tax applicable to the company is 50%.
You are required to calculate the net present value of the project and advise the management to the appropriate decision. Also calculate the Internal Rate of Return of the Project.
Note: Present value of Re. 1 at different rates of interest are as follows:
|(b)||State the differences between Global Depository Receipts and American Depository Receipts.||4||(0)|