|Total No. of Questions— 8]||[Total No. of Printed Pages—5|
|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.
|All questions are compulsory.|
|Working notes should form part of the answer wherever appropriate,suitable assumptions should be made.|
|1.||Answer any five of the following:||10|
|(i)||Discuss briefly the relevant costs with examples.||(0)|
|(ii)||Calculate total passenger kilometers from the following information: |
Number of buses 6, number of days operating in a month 25, trips made by each bus per day 8, distance covered 20 kilometers (one side), capacity of bus 40 passengers, normally 80% of capacity utilization.
|(iii)||Explain the importance of an Escalation Clause in contract cost.||(0)|
|(iv)|| Calculate Efficiency and Capacity ratio from the following figures: |
|(v)||Explain Blanket overhead rate.||(0)|
|(vi)||Explain the cost accounting treatment of unsuccessful Research and Development cost.||(0)|
|2.|| KPR Limited operates a system of standard costing in respect of one of its products which is manufactured within a single cost centre. The Standard Cost Card of a product is as under: |
The production schedule for the month of June, 2007 required completion of 40,000 units. However, 40,960 units were completed during the month without opening and closing work–inprocess inventories.
Purchases during the month of June, 2007, 2,25,000 kgs of material at the rate of Rs. 4.50 per kg. Production and Sales records for the month showed the following actual results.
Selling price to be so fixed as to allow a mark-up of 20 per cent on selling price.
|3.||(a)|| ABC Limited manufactures a product ‘ZX’ by using the process namely RT. For the month of May, 2007, the following datas are available: |
Normal spoiled units are 10% of goods finished output transferred to next process.
Defects in these units are identified in their finished state. Material for the product is put in the process at the beginning of the cycle of operation, whereas labour and other indirect cost flow evenly over the year. It has no realizable value for spoiled units.
|(b)|| A machine shop cost centre contains three machines of equal capacities. Three operators are employed on each machine, payable Rs. 20 per hour each. The factory works for fortyeight hours in a week which includes 4 hours set up time. The work is jointly done by operators. The operators are paid fully for the fortyeight hours. In additions they are paid a bonus of 10 per cent of productive time. Costs are reported for this company on the basis of thirteen four-weekly period. |
The company for the purpose of computing machine hour rate includes the direct wages of the operator and also recoups the factory overheads allocated to the machines. The following details of factory overheads applicable to the cost centre are available:
|4.||Answer any three of the following:||3x3=9|
|(i)||Explain essential pre–requisites for integrated accounts.||(0)|
|(ii)||Explain, why the Last in First out (LIFO) has an edge over First in First out (FIFO) or any other method of pricing material issues.||(0)|
|(iii)||Enumerate the remedial steps to be taken to minimize the labour turnover.||(0)|
|(iv)|| A company produces single product which sells for Rs. 20 per unit. Variable cost is Rs. 15 per unit and Fixed overhead for the year is Rs. 6,30,000. |
|5.||Answer any five of the following:||5x2=10|
|(i)||Explain the concept of leveraged lease.||(0)|
|(ii)||Discuss the features of deep discount bonds.||(0)|
|(iii)||What is optimum capital structure? Explain.||(0)|
|(iv)||A firm has Sales of Rs. 40 lakhs; Variable cost of Rs. 25 lakhs; Fixed cost of Rs. 6 lakhs; 10% debt of Rs. 30 lakhs; and Equity Capital of Rs. 45 lakhs. |
Calculate operating and financial leverage.
|(v)||he demand for a certain product is random. It has been estimated that the monthly demand of the product has a normal distribution with a mean of 390 units. The unit price of product is Rs. 25. Ordering cost is Rs. 40 per order and inventory carrying cost is estimated to be 35 per cent per year. |
Calculate Economic Order Quantity (EOQ).
|(vi)||Explain the concept of Indian depository receipts.||(0)|
|6.|| The Balance Sheet of X Ltd. as on 31st March, 2007 is as follows: |
The following additional information is available:
|7.||(a)|| A newly formed company has applied to the Commercial Bank for the first time for financing its working capital requirements. The following information is available about the projections for the current year: |
Raw material in stock : average 4 weeks consumption, Work – in progress (completion stage, 50 per cent), on an average half a month. Finished goods in stock : on an average, one month.
|(b)|| XYZ Ltd. is planning to introduce a new product with a project life of 8 years. The project is to be set up in Special Economic Zone (SEZ), qualifies for one time (at starting) tax free subsidy from the State Government of Rs. 25,00,000 on capital investment. Initial equipment cost will be Rs. 1.75 crores. Additional equipment costing Rs. 12,50,000 will be purchased at the end of the third year from the cash inflow of this year. At the end of 8 years, the original equipment will have no resale value, but additional equipment can be sold for Rs. 1,25,000. A working capital of Rs. 20,00,000 will be needed and it will be released at the end of eighth year. The project will be financed with sufficient amount of equity capital. |
The sales volumes over eight years have been estimated as follows:
A sales price of Rs. 120 per unit is expected and variable expenses will amount to 60% of sales revenue. Fixed cash operating costs will amount Rs. 18,00,000 per year. The loss of any year will be set off from the profits of subsequent two years. The company is subject to 30 per cent tax rate and considers 12 per cent to be an appropriate after tax cost of capital for this project. The company follows straight line method of depreciation.
Calculate the net present value of the project and advise the management to take appropriate decision.
|8.||Answer any three of the following:||3x3=9|
|(i)||Explain the assumptions of Net Operating Income approach (NOI) theory of capital structure.||(0)|
|(ii)||Explain the limitations of profit maximization objective of Financial Management.||(0)|
|(iii)||Explain the methods of venture capital financing.||(0)|
|(iv)||Z Ltd.’s operating income (before interest and tax) is Rs. 9,00,000. The firm’s cost of debt is 10 per cent and currently firm employs Rs. 30,00,000 of debt. The overall cost of capital of firm is 12 per cent.||(0)|