TU BHM 3rd Sem: Cost and Management Accountancy Past Year Question Paper

Table Of Contents

Solved Solution
Solution of Year 2016
Solution of Year 2017
Solution of Year 2018
Solution of Year 2019
Solution of Year 2021
Solution of Year 2022
Solution of Year 2023

Cost and Management Accountancy Year 2016 Question Paper

Cost and Management Accountancy Year 2017 Question Paper

Qn 7: Required to find out Break-even points in units
QN 9 : Required to to find out production units

Cost and Management Accountancy Year 2018 Question Paper

Cost and Management Accountancy Year 2019 Question Paper

Cost and Management Accountancy Year 2021 Question Paper

Question Number 4: Required – VCPU and Fixed Cost by Least Square Method

Cost and Management Accountancy Year 2022 Question Paper

Cost and Management Accountancy Year 2023 Question Paper

QN 10 – Required to find out Total Cost

Past Year Question

Food Science and Nutrition

Past Year Question

Food and Beverage Service III

Past Year Question

Front Office Operation I

Past Year Question

Food Production and Patisserie III

Solved Solution

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Solution of Year 2016

Group A

Cost accounting can be defined as the branch of accounting that deals with the recording, classification, allocation and reporting of current and prospective cost of various products and business.

In simple way, Cost accounting is a branch of accounting or a method which is used by business organization to keep track of and report on the various expenses involved in making their products or running their operations.
Management accounting, also known as managerial accounting is the branch of accounting which is concerned with all those activities which are helpful for different decision making process by management team. It is only used by the internal team of the organization, and this is the only thing which makes it different from financial accounting.

Simply, it is a process of providing financial information and resources to the managers in decision making.
Sunk cost, also known as retrospective cost can be defined as any cost that has already been spend and can’t be recovered, regardless of any future decisions or actions. For example: money or cost spent in marketing, research and development, etc.
Break Even Point (BEP) can be stated as the level or point of sales at which total revenue equals total costs / expenditure, resulting in neither profit nor loss.

Simply, it is a point where there is neither profit nor loss. For example: If you have invested Rs 1,000 in making your product, and if you generated sales of Rs 1,000 only, then your business is at BEP level meaning if you earned even a Re 1 more then you are profit and if you earned even a Re 1 less than your investment then you are at loss.
Solution:
Given,
Closing stock = 25,000 units
Production = 40,000 units
Opening stock = 10,000 units
Sales unit =?

We know,
Production unit = Sales + Closing stock – Opening stock
or, 40,000 = x + 25,000 – 10,000
or, x = 40,000 +10,000 – 25,000
or, x = 25,000

Hence, the sales unit is 25,000 units.

Solution:

Given,
High Cost= Rs. 90,000
Low Cost= Rs 80,000
High Unit= Rs. 4,000
Low Unit= Rs. 2,000

Variable Cost Per Unit (b)
= (High cost – Low Cost) / (High Unit – Low Unit)
= Rs.(90,000 – 80,000) / (4,000 – 2,000)
= Rs. 5

Hence, the variable cost per unit (VCPU) is Rs 5.
Solution:
Given:
Selling price per unit (SPPU) = Rs 20
Variable cost per unit (VCPU) = Rs 18
Profit volume ratio =?

Any benefit or opportunity which is sacrificed is known as opportunity cost.

For example: If organization has opportunity to invest in one project out of 2 project (Project A & Project B), and if the organization decided to invest in project B, the opportunity cost would be project as they will lose potential revenue and growth that could have been generated from investing in project A.
The type of cost which are not changed due to the decision of management are known as irrelevant cost.

Example of irrelevant cost are depreciation, rent, salary of manager, etc.
Menu costing can be defined as the process or method of determining the selling price and the cost of producing various menu items in a restaurant or food and beverage service establishment.

Group B

The differences between fixed cost and variable cost are:

Basis	Fixed Cost	Variable Cost
Definition	It can be defined as the cost which remains constant i.e. unchanged regardless of any volume produced.	It can be defined as the cost which changes according the change in volume or output.
Nature	Time related	Volume related
Incurred when	They are definite so they are incurred no matter there is production of any units or not. Means, production भए पनि नभए पनि हुन्छ	Variable cost are incurred only when certain amount of units are produced. Means, production भयो भनी variable cost हुन्छ नत्र हुदैन
Unit cost	Fixed cost changes in units i.e. if unit production increases, fixed cost decreases and vice versa. So fixed cost is inversely proportional to number of output produced.	Variable cost remains constant or same, as per unit.
Behavior	It remains same or constant for given time period.	It is not static. i.e. it changes with change in output level.
Example	Depreciation, rent, salary, insurance, tax, etc.	Wages, commission on sales, packing expenses, material consumed, etc.

Payback period can also be called as investment return period or payout or payoff period. It is the length of time required to get back the original invest amount from the given investment project.

Simply, it is the number of years required to recover the original cash outlay.

Payback period (PBP) helps in decision making as it has following advantages:

It is easy and widely used.
It focused the liquidity aspect of the project.
With the help of the PBP business organization evaluates the project, selects the project with shortest PBP project which helps to minimize their risk.

Hence, by using PBP technique any organization can calculate the required time to recover their investment because of which organization can select the project with less payback period time which makes their investment safe and speedy both. Overall, it helps in budgeting, planning and investing process to the business organization.

Solution

Pashupati Company
Income Statement under Variable Costing
For the year ended 2015

Particulars	Amount
A. Sales Revenue (20,000 * 15,000) B. Less: Variable cost of goods Variable manufacturing cost (6 * 14,000)	3,00,000 (84,000)
Add: Opening Stock (6 * 3,000 ) Variable cost of goods available for sale Less: Closing stock (6 * 2,000) Variable cost of goods sold Gross contribution Margin (A – B) Less: Variable manufacturing cost (4 * 15,000) Net contribution margin Less: Fixed manufacturing cost Fixed Non- manufacturing cost Net Income	18,000 10,2000 (12,000) 90,000 2,10,000 (60,000) 1,50,000 (80,000) (30,000) 40,000

Solution:
Given,
Fixed Cost (FC) = Rs 25,000
Variable Cost Per Unit (VCPU)= Rs 15
Selling Price Per Unit (SPPU) = 35

Here,
Contribution Margin Per Unit (CMPU) = SPPU – VCPU
= Rs 35 – 15
= Rs 20

We know,

(a) PV Ratio = CMPU / SPPU
= 20 / 35
= 0.57

(b) BEP in Sales (In Rs) = Total Fixed Cost / PV Ratio
= Rs 25,000 / 0.57
= Rs 43750

(c) Sales in Rs if desired profit is Rs 10,000
= ( Fixed Cost + Desired Profit )/ PV ratio
= (25,000 + 10,000) / 0.57
= 35,000 / 0.57
= Rs 61403.50
Net investment Outlay (NCO), also known as Initial Cash Outlay or Net investment means beginning sum of amount required for acquisition of projects or fixed assets. It refers cost of fixed assets including freight, transportation, installation, erection charge, custom duty, additional working capital, etc at present time or zero years.

The NCO in replacement project case is different than new projects. The NCO can be calculated as follows:

For New Project	Amount (Rs)
Purchase price of new assets Installation / Erection / Transportation Working capital increased / Decreased Investment tax credit	(xxx) (xxx) (xxx) or xxx xxx
NCO	(xxx)

For Replacement Project (Differential NCO)	Amount (Rs)
Purchase price of New assets Installation / Erection / Transportation Working capital increased / Decreased CSV of old assets today Tax adjustments : CSV of old assets today xxx Less: BSV of old assets today (xxx) Gain / Loss xxx or (xxx) Tax outstanding on Gain Tax saving on loss Investment tax credit	(xxx) (xxx) (xxx) or xxx xxx (xxx) xxx xxx
NCO	(xxx)

where,
CSV = Cash Salvage value
BSV = Book Salvage Value

For example: A organization is planning to buy new plant for Rs 1,00,000 and required installation Rs 10,000. The new plant required Rs 10,000 for working capital. The organization is in 20 % tax bracket and enjoys 10 % investment tax credit.
Required: NCO

Solution

Calculation of NCO (New Plant)

Particulars	Amount (Rs)
Purchase price of plant Installation Working capital increased Investment tax credit (10 % of 1,00,000)	(1,00,000) (10,000) (10,000) 10,000
NCO	(1,10,000)

Group C

Solution of Year 2017

Group A

Any two objective of financial accounting are:

a. It helps to record financial transactions.
b. It helps in decision making process both internal and external stakeholders.
Variable cost can be defined as the cost which is changed according to the changed in output but proportionately or in the same ratio. In other words, variable cost is increased if output is increased or decreased if output is decreased but in same ratio or proportionately.

For example: All the direct expenses like direct materials, direct cost, direct labour, etc. are variable cost.
Repeated from Year 2016, Question Number 4 (Please refer back to that year)
Repeated from Year 2016, Question Number 10 (Please refer back to that year)
Mixed cost is also known as semi-variable cost or semi-fixed cost, which can be defined as the combination of fixed cost and variable cost.

For example: Water charge, electricity charge, telephone charge.
Repeated from Year 2016, Question Number 9 (Please refer back to that year)
Repeated from Year 2016, Question Number 12 (Please refer back to that year)
Solution:

Given,
Variable cost per unit = Rs 40
Fixed cost = Rs 3,00,000
Selling price per unit = Rs 60

We know,
BEP (in units) = Fixed cost / (SPPU – VCPU)
= 3,00,000 / (60-40)
= Rs. 15,000
Solution:
Given,
Opening Stock = Rs 4,000 units
Sales = 60,000 units
Closing stock = 3,000 units
Production units = ?

We know,
Production unit = Sales + Closing stock – Opening stock
or, x = 60,000 + 3,000 – 4,000
or, x = 59,000 units
Hence, the production units are 59,000 units.

Repeated from Year 2016, Question Number 8(Please refer back to that year)

Group B

The difference between management accounting and cost accounting are:

Basis	Cost Accounting	Management accounting
Meaning	It is process of recording, classifying, summarizing, analyzing and interpreting the cost information and preparing report to use in cost controlling purpose.	It is process of recording, classifying, summarizing, analyzing and interpreting the different financial and non-financial information and preparing report to help in decision making process.
Objective	To determine cost as well as cost controlling.	To provide various useful information to the management for decision making purpose.
Scope	It is narrow concept than management accounting.	It is comparatively broad concept than cost accounting.
Deals with	It deals with (financial) i.e. quantitative transactions only.	It deals with both qualitative and quantitative aspects.
Nature	It mostly considers historical information.	It considers futuristic information.
Finite Principle	It follows a finite principle and procedure for the determination of cost.	It does not follow any finite principles and procedure all the times.
Dependency	It is generally considered independent.	It is generally considered dependent.

The objectives of the planning and budgeting can be listed as:

To allocate available resources to achieve business objective effectively and efficiently.
To determine standard for a specific period of time of each department of the business.
To coordinate the various departmental activities (i.e. production, purchase, finance, sales, etc.)
To combine the idea of all level of management in the preparing of the business plans .
To determine the differences between budgeted and actual performance.
To evaluate the performance of departmental manager

Solution

Production Units (X)	Cost (Y)	XY	X²
1	2	2	1
2	3	6	4
3	4	12	9
4	5	20	16
ΣX= 10	ΣY = 14	ΣXY = 40	ΣX²= 30

N= 4

Variable Cost Per Unit (b) = (NΣXY – ΣX * ΣY ) / [NΣX² – (ΣX)²]
= (4 * 40 – 10 * 14)/ [4 * 30 – (10)² ]
= Rs 1 per units

Total Fixed Cost (a) = (ΣY – b * ΣX) / N
= (14 – 1 * 10) / 4
= Rs 1

Solution
Given,
Variable Cost Per Unit (VCPU) = Rs 30
Selling Price Per Unit (SPPU) = Rs 60
Fixed Cost (FC) = Rs 70,000

Here,
Contribution Margin Per Unit (CMPU) = SPPU – VCPU
= Rs 60 – 30
= Rs 30

We know,

(a) PV Ratio = CMPU / SPPU
= 30 / 60
= 0.5

(b) BEP in Sales (In Rs) = Total Fixed Cost / PV Ratio
= Rs 70,000 / 0.5
= Rs 1,40,000

(c) BEP in Sales (in Units)
= Total Fixed Cost / CMPU
= 70,000 / 30
= 2333.33 units

Solution:

ABC Company
Income Statement under Absorption Costing

Particulars	Amount (Rs)
A. Sales Revenue (70,000 * 10,000) B. Less: Cost of goods Direct Material Cost (14 * 8,000) Direct Labour Cost (8 * 8,000) Variable Manufacturing Overhead (5 * 8,000) Fixed Manufacturing Overhead (8 * 8,000)	7,00,000 1,12,000 64,000 40,000 64,000
Total Manufacturing Cost	280,000
Add: Opening Stock (35 * 5,000) Less: Closing Stock (35 * 3,000)	175000 (1,05,000)
Cost of goods Sold before adjustment Add: Under Absorption of fixed manufacturing cost C. Cost of goods sold after adjustment Gross profit (A – C) Less: Non Manufacturing Cost / Operating Cost Fixed Selling Overhead	3,50,000 16,000 3,36,000 3,34,000 (40,000)
Net income	2,94,000

Working Note:
i. Closing Stock = Opening Stock + Production – Opening stock
= 5,000 + 8,000 – 10,000
= 3,000

ii. Fixed manufacturing Overhead Rate
= Fixed mfg overhead / Normal Capacity
= 80,000 / 10,000
= 8

Solution:

Flexible Budget

Level of Activity	Output 30,000 units	Output 70,000 units
A. Variable Cost: Direct material @ Rs 3 Direct Wages @ Rs 4 Direct expenses @ Re 1 Repair and maintenance cost @ Rs 0.2 Inspection Cost @ Rs 0.3	90,000 1,20,000 30,000 6,000 9,000	210,000 2,80,000 70,000 14,000 21,000
Total variable Cost	2,55,000	5,95,000
B. Fixed Cost Depreciation Insurance Salaries Repair and maintenance cost Inspection Cost	9,000 22,000 15,000 10,000 18,000	9,000 22,000 15,000 10,000 18,000
Total Fixed Cost	74,000	74,000
Total Cost (A + B)	2,55,000 + 74,000 = 3,29,000	5,95,000 + 74,000 = 669,000

Working Note: Segregation of Semi- variable Cost

a. Segregation of Repair and maintenance cost
Variable Cost Per Unit (VCPU)
= (High cost – Low Cost) /(High units – Low units)
= (22,000 – 18,000) / (60,000 – 40,000)
= 4,000 / 20,000
= Rs 0.2 per unit

Fixed cost = Low cost – VCPU * Low units
= 18,000 – 0.2 * 40,000
=Rs 10,000

b. Segregation of Inspection cost
Variable Cost Per Unit (VCPU)
= (High cost – Low Cost) /(High units – Low units)
= (36,000 – 30,000) / (60,000 – 40,000)
= 6,000 / 20,000
= Rs 0.3 per unit

Fixed cost = Low cost – VCPU * Low units
= 30,000- 0.3 * 40,000
=Rs 18,000

Group C

Solution:
Cost of project / new machinery = Rs 14,00,000
Additional Installation Cost = Rs 1,00,000
Working Capital Requirement = 1,50,000

Calculation of NCO

Particulars	Amount (Rs)
Project Cost Installation Cost Working Capital Required	14,00,000 1,00,000 1,50,000
NCO	16,50,000

Calculation of CFAT

Particulars	Amount (Rs)
Sales (105 * 25,000) Less: Operating Cost (65 * 25,000) EBDT Less: Depreciation Earning Before Tax (EBT) Less: Tax (30 % of 7,12,000) Earning after tax i.e. EAT Add back: Depreciation	2625,000 (16,25,000) 10,00,000 (2,88,000) 7,12,000 (213600) 4,98,400 2,88,000
Annual CFAT	7,86,400

Calculation of Final Year CFAT

Particulars	Amount (Rs)
Annual CFAT Add: C.S.V Tax saved (30 % of 30,000) Add: Working Capital	7,86,400 30,000 9,000 1,50,000
Final Year (CFAT)	9,75,400

Calculation of NPV

Year	Amount (Rs)	DF @11%	PV
1 – 4	786400	3.1024	2439727.36
5	975400	0.5935	578899.9
			TPV = 3018627.26 NCO = (1650000) NPV = 1368627.26

TPV= Total Present Value
NPV = Net Present Value

Hence the NPV is Rs 1368627.26.

Working NOTE:
1. Calculation of Depreciation

NCO (For calculating Depreciation) = Cost of Project + Additional Installation Cost
= 14,00,000 + 1,00,000
= Rs 15,00,000

Depreciation =( Cost – B.SV / Life)
= (15,00,000 – 60,000) / 5
= Rs. 2,88,000

NOTE: If question had asked you would you select this project or not, then you can say ” In this case, we would accept the project since the NPV value is positive.”

Solution of Year 2018

Group A

Any two objectives of cost accounting are:
a. To determine the cost
b. To fix or determine the selling price
c. To analyze the cost
d. To control the cost
The cost which is constant or unchanged in different output or production is known as fixed cost. For example: Depreciation, salary, etc.
Repeated from Year 2016, Question Number 4 (Please refer back to that year)
Any two methods of pricing are:
a. Cost Plus Pricing Method
b. Gross Profit or Gross Margin Method (Cost of goods sold at base Method)
An example of high low method is:

Given,
High Cost= Rs. 40,000
Low Cost= Rs 20,000
High Unit= Rs. 3,000
Low Unit= Rs. 1,000

Variable Cost Per Unit (b)
= (High cost – Low Cost) / (High Unit – Low Unit)
= Rs.(40,000 – 20,000) / (3,000 – 1,000)
= Rs. 10

Fixed Cost (a)
= Highest Cost – High Units * b
=Rs. 40,000 – 15,000 * 2.5
=Rs. 2,500

More notes on Cost Concept, Classification and Estimation

Solution:
Given,
Variable cost per unit (VCPU) = Rs 20
Fixed cost = Rs 4,00,000
Selling Price Per Unit (SPPU) = Rs 30

We know,
BEP (in units) = FC / (SPPU – VCPU)
= 4,00,000 / (30 – 20)
= 40,000 units

Hence, the breakeven point in units is 40,000 units.
Solution:
Closing stock = 5,000 units
Production = 30,000 units
Sales = 32,000 units
Opening Stock = ?

We know,
Production unit = Sales + Closing stock – Opening stock
or, 30,000 = 32,000 + 5,000 – x
or x = 32,000 + 5,000 – 30,000
or, x = 7,000 units

Hence, the opening stock is 7,000 units.

Repeated from Year 2016, Question Number 10(Please refer back to that year)
Repeated from Year 2016, Question Number 9 (Please refer back to that year)
Repeated from Year 2016, Question Number 12 (Please refer back to that year)

Group B

Capital budgeting is related to the decision making processes regarding the purchase of fixed assets or the investment into the various investment proposals or projects.

Hence, a capital investment decision refers to the process of evaluating and selecting long-term investments in assets or projects that are expected to generate higher returns over an extended period.

Capital budgeting is a long term investment decision process. So, here below are the types of investment projects or proposals:

Mutually exclusive project
Mutually related (independent) project
New project
Replacement project
Expansion project
Diversification project
Research and Development

There are various methods or techniques of evaluation of investment proposals or project. Some of them are listed below:

A. Traditional Methods:

Payback Period (PBP)
Accounting or Average Rate of Return (ARR)

B. Discounted Cash Flow Methods:

Net Present Value (NPV)
Profitability Index (PI)
Internal Rate of Return (IRR)

The difference between management accounting and financial accounting are:

Basis	Financial Accounting	Management Accounting
Focus	External	Internal
Users	External stakeholders, investors, lenders, government, suppliers	Internal management, decision-makers
Governed by	It is basically governed by the company Act of the concerned nation as well.	It is not governed by such act. Instead, it is installed with the need of management.
Purpose	Provides financial information to external parties	Helps in decision-making, planning, control
Time period	Long term	Short term
Frequency of report	Regular, usually quarterly and annually	Flexible, as needed
Focuses on	Focuses on historical financial performance	Focuses on future-oriented information
Scope	Limited to financial transactions	Broader, includes non-financial measures

Solution

Taking 1,000 as common (Note: You can continue without taking also. We did it just to reduce to length of number; however the final answer will be same. Its like dividing 1000 by 100 or 100 by 10 both will get same result.)

Production Units (X)	Cost (Y)	XY	X²
1	3	3	1
2	4	8	4
3	5	15	9
4	6	24	16
ΣX= 10	ΣY = 18	ΣXY = 50	ΣX²= 30

N= 4

Variable Cost Per Unit (b) = (NΣXY – ΣX * ΣY ) / [NΣX² – (ΣX)²]
= (4 * 50 – 10 * 18)/ [4 * 30 – (10)² ]
= Rs 1 per units

Total Fixed Cost (a) = (ΣY – b * ΣX) / N
= (18 – 1 * 10) / 4
= Rs 2

Solution
Given,
Variable Cost Per Unit (VCPU) = Rs 20
Selling Price Per Unit (SPPU) = Rs 50
Fixed Cost = Rs 60,000

Here,
Contribution Margin Per Unit (CMPU) = SPPU – VCPU
= Rs 50 – 20
= Rs 30

We know,

(a) PV Ratio = CMPU / SPPU
= 30 / 50
= 0.6

(b) BEP in Sales (In Rs) = Total Fixed Cost / PV Ratio
= Rs 60,000 / 0.6
= Rs 1,00,000

(c) BEP in Sales (In Rs) = Total Fixed Cost / CMPU
= Rs 60,000 / 30
= Rs 20,000 units
Solution
Closing Stock = Opening Stock + Production – Sales
= 3,000 + 8,000 – 10,000
= 1,000 units

Fixed Manufacturing Overhead Rate
= Fixed Manufacturing Overhead / Normal Capacity
= 80,000 / 8,000
= Rs 10

XYZ Company
Income Statement under Absorption Costing

Particulars	Amount (Rs)
A. Sales Revenue (60,000 * 10,000) B. Less: Cost of goods Direct Material Cost (12 * 8,000) Direct labour Cost (10 * 8,000) Variable Manufacturing Overhead (5 * 8,000) Fixed Manufacturing Overhead (10 * 8,000)	6,00,000 96,000 80,000 40,000 80,000
Total Manufacturing Cost	2,96,000
Add: Opening Stock (37 * 3,000) Less: Closing Stock (37 * 1,000) Cost of goods Sold before adjustment Less: Fixed Selling Overhead	111,000 (37,000) 3,70,000 40,000
Net income	3,30,000

Group C

Solution:
Here,
Cost of Machine = Rs 22,00,000
Additional Installation cost = Rs 3,00,000
Working Capital = Rs 1,00,000
Life = 5 Years
BSV = Rs 80,000
CSV = Rs 40,000

We know,
Cost = Cost of a machine + Additional installation cost
= 22,00,000 + 3,00,000
= Rs 25,00,000

NCO = Cost + Working Capital
= 25,00,000 + 1,00,000
= Rs 26,00,000

Depreciation = (Cost – BSV) / Life
= (25,00,000 – 80,000) / 5
= Rs 4,84,000

Calculation of Annual CFAT

Particulars	Amount (Rs)
Sales (100 * 30,000) Less: Operating Cost (40 * 30,000) Earning Before Depreciation and Tax (EBDT) Less: Depreciation Earning Before Tax (EBT) Less: Tax (25 % of 1,31,600) Earning After Tax (EAT) Add back : Depreciation	30,00,000 (12,00,000) 18,00,000 (4,84,000) 1,31,600 (3,29,000) 9,87,000 4,84,000
Annual CFAT	14,71,000

Calculation of Final Year CFAT

Particulars	Amount (Rs)
Annual CFAT Tax Saved Add: (25 % of 40,000) Add: CSV Add: Working Capital	14,71,000 10,000 40,000 1,00,000

Final Year CFAT	16,21,000

Calculation of NPV

Year	Amount (Rs)	PV factor @ 10 %	PV
1-4	14,71,000	3.1699	4662922.9
5	1621,000	0.6209	100648.9
			TPV = 5669401.8 Less : NCO = (26,00,000) NPV =30,69,401.8

Since the NPV is positive, the project is desirable or acceptable.

Solution of Year 2019

Group A

Repeated from Year 2016, Question Number 1(Please refer back to that year)
Financial accounting is a process of recording, classifying, summarizing, analyzing, and interpreting the different financial information in such a way that the true and fair position of the business as well as the net profit earned or loss incurred during certain time period can be known very easily through reports.
Repeated from Year 2016, Question Number 3 (Please refer back to that year) NOTE: Semi variable and mixed cost are same.
Solution:
Given,
High cost = Rs 1,400
Low cost = Rs 800
High output = 410
Low Output = 350
Variable cost Per Unit (VCPU) = ?

We know,
Variable Cost Per Unit (b)
= (High cost – Low Cost) / (High Unit – Low Unit)
= Rs.(1,400 – 800) / (410 – 350)
= Rs. 10

Repeated from Year 2017, Question Number 2 (Please refer back to that year)
Make or Buy decision is the decision regarding whether to produce the goods or provide the services within the organization or to obtain them from the outside suppliers.
Solution:
Given,
Variable Cost Per Unit (VCPU) = Rs 85
Selling Price Per Unit (SPPU) = 102
Contribution Margin (CM) = ?

We know,
Contribution Margin = SPPU + VCPU
= Rs 85 + 102
= Rs 187

The types of cost which are changed due to the decision of management are called relevant cost. For example: If management takes decision of increasing the production of output then costs of materials, labour also increases or changes.
Repeated from Year 2016, Question Number 4(Please refer back to that year)
Repeated from Year 2016, Question Number 10 (Please refer back to that year)

Group B

The difference between controllable and uncontrollable cost are:

Basis	Controllable Cost	Uncontrollable Cost
Meaning	Cost which can be controlled by the management are controllable cost.	Cost which cannot be controlled by the management are uncontrollable cost.
Includes	Generally variable costs are controllable cost.	Generally fixed costs are controllable cost.
Variability	May vary based on managerial decisions	Remains constant regardless of management actions
Examples	Labor costs, materials, utilities	Rent, property taxes, insurance premiums
Influence on Profitability	Directly affects profitability	Does not directly affect profitability

Repeated from Year 2017, Question Number 11 (Please refer back to that year)
Solution

Production Units (X)	Cost (Y)	XY	X²
110	225	24,750	12,100
100	210	21,000	10,000
140	290	40,600	19,600
130	255	33,150	16,900
120	235	28,200	14,400
ΣX= 600	ΣY = 1,215	ΣXY = 1,47,700	ΣX²= 73,000

N= 5

(a)
Variable Cost Per Unit (b) = (NΣXY – ΣX * ΣY ) / [NΣX² – (ΣX)²]
= (5 * 1,47,700 – 600 * 1,215 )/ 5 * [73,000 -(600)² ]
= Rs 2.025 per units

Total Fixed Cost (a) = (ΣY – b * ΣX) / N
= (1215 – 2.025 * 600) / 5
= Rs 0

Solution:
Given,
Fixed cost = Rs 90,000
Selling Price Per Unit = Rs 22
Variable Cost Per Unit = Rs 17

Here,
Contribution Margin Per Unit (CMPU) =SPPU – VCPU
= Rs 22 – 17
= Rs 5

We know,
(i) PV Ratio = CMPU / SPPU
= 5 / 22
= Rs 0.227

(ii) BEP Sales

(In units)
= Total Fixed Cost / CMPU
= 90,000 / 5
= 18,000 units

(In Rs)
= Total Fixed Cost / PV ratio
= 90,000 / 0.227
= Rs 396475.77

(iii) Sales volume in Rs to earn profit Rs 30,000 at current tax rate of 25%

={Fixed Cost + [Desired Profit after tax / (1 – t)] } / PV Ratio
={90,000 + [3,00,000 / (1 – 0.25)] } / 0.227
={90,000 + [3,00,000 / 0.75] } / 0.227
={90,000 + 4,00,000 } / 0.227
=4,90,000 / 0.227
= Rs. 2158590.30

Group C

Solution:
Here,
(a) Calculation of NCO
NCO = Cost of machine + Installation Cost
= 14,00,000 + 50,000
= 14,50,000

(b) Calculation of Depreciation
Depreciation = (Cost – BSV) / Life
= (14,50,000 – 80,000) / 5
= Rs 2,74,000

(c) Annual Cash Flow

Particulars	Amount (Rs)
Sales (85 * 11,000) Less : Operating Expenses Earning before Depreciation and Tax (EBDT) Less: Depreciation Earning before Tax (EBT) Less: Tax (25 % of 4,11,000) Earning after tax (EAT) Add back : Depreciation	9,35,000 (2,50,000) 6,85,000 (2,74,000) 4,11,000 (102750) 308250 2,74,000
Annual CFAT	5,82,250

Calculation of Final Year CFAT

Particulars	Amount (Rs)
Annual CFAT Add: Tax (25 % of 30,000) Add: CSV	5,82,250 7,500 50,000
Final Year CFAT	6,39,750

Calculation of NPV

Year	Amount (Rs)	PV factor @ 10 %	PV
1-4	5,82,250	3.1699	1845674.275
5	6,39,750	0.6209	397220.775
			TPV = 2242895.05 Less : NCO = (14,50,000) NPV =792895.05

Since the NPV is positive, the machine is desirable.

Solution of Year 2021

Group A

Repeated from Year 2016 and 2018, Question Number 1(Please refer back to that year)
Repeated from Year 2016, Question Number 11 (Please refer back to that year)

Solution:
Given,
Fixed Cost (FC) = Rs 18,000
Variable Cost (VC) = Rs 15
Selling Price Per Unit (SPPU) = Rs 25

We know,

CMPU = SPPU – VCPU
= Rs 25 – 15
= Rs 10

Now,
(a) PV Ratio = CMPU / SPPU
= 10 / 25
= 0.4

(b) BEP in Sales
(In units)
= Total Fixed Cost / CMPU
= 18,000 / 10
= 1800 units

(In Rs)
= Total Fixed Cost / PV ratio
= 18,000 / 0.4
= Rs 45,000

(c) Sales to earn Rs 10,000 profit
=( Fixed Cost + Desired Profit) / PV ratio
= (18,000 + 10,000 )/ 0.4
= Rs 70,000

Solution:
Net Cash Outlay (NCO) = Cost of plant + Installation charge
= Rs 5,50,000 + 50,000
= Rs 6,00,000

Depreciation = (Cost – BSV ) / Life
= (6,00,000 – 50,000)/ 5
= Rs 1,10,000

Calculation of Annual CFAT

Particulars	Amount (Rs)
Sales (100 * 9,000) Less: Cost of Sales (50 * 9,000) Earning Before Depreciation and Tax (EBDT) Less: Depreciation Earning Before tax (EBT) Less: Tax (25 % of 34,00,000) Earning after Tax (EAT) Add back : Depreciation	9,00,000 (4,50,000) 4,50,000 (110000) 340000 (85,000) 2,55,000 110000
Annual CFAT	3,65,000

Calculation of Final Year CFAT

Particulars	Amount (Rs)
Annual CFAT Add: Tax (25 % of 10,000) Add: CSV	3,65,000 2,500 40,000
Final Year CFAT	4,07,500

Calculation of NPV

Year	Amount (Rs)	PV factor @ 10 %	PV
1 to 4	3,65,000	3.1699	1157013.5
5	407500	0.6209	253016.75
			TPV = 1410030.25 NCO = 6,00,000 NPV = 810030.25

Since, the NPV of this project is positive, this investment proposal is beneficial.

Solution of Year 2022

Group A

Repeated from Year 2018, Question Number 1 (Please refer back to that year)
Repeated from Year 2019, Question Number 2(Please refer back to that year)
Repeated from Year 2017, Question Number 2 (Please refer back to that year)
Solution:
Given,
High cost = Rs 12,000
Low cost = Rs 11,000
High output = 700
Low Output = 600
Variable cost Per Unit (VCPU) = ?

We know,
Variable Cost Per Unit (b)
= (High cost – Low Cost) / (High Unit – Low Unit)
= Rs.(12,000- 11,000) / (700 – 600)
= Rs. 10

Repeated from Year 2018, Question Number 2 (Please refer back to that year)
Margin of Safety (MOS) simply represent the range of sales where business organization is generally safe in regards of profit i.e. the additional amount of sales is capable to earn amount of profit.

Formula to calculate MOS can be listed as follow:

MOS = Actual or Budgeted Sales – Break Even Sales
or, MOS = Profit / PV Ratio

MOS Ratio= Margin of Safety in rupees / Total budgeted or actual sales
Solution:
Given,
Opening Stock = 7,000 units
Closing Stock = 3,000 units
Sales = 14,000 units

We know,
Production unit = Sales + Closing stock – Opening stock
= 14,000 + 3,000 – 7,000
= 10,000 units

Hence, the production units is 10,000 units.

Repeated from Year 2016, Question Number 8 (Please refer back to that year)
Repeated from Year 2016, Question Number 4 (Please refer back to that year)
Repeated from Year 2016, Question Number 12 (Please refer back to that year)

Group B

Repeated from Year 2017, Question Number 11 (Please refer back to that year)
The differences between relevant cost and irrelevant cost are:

Basis	Relevant Cost	Irrelevant Cost
Meaning	The type of costs which are changed due to the decision of management are called relevant cost.	The type of costs which are not changed due to the decision of management are called relevant cost.
Decision Impact	Influences the decision-making process	Does not influence the decision-making process
Future Relevance	Related to future events or decisions	Relates to past or sunk costs
Cost Reduction	Can potentially be reduced or eliminated to improve decision outcomes	Cannot be reduced or eliminated to affect decision outcomes
Nature	It is variable in nature.	It is fixed in nature.
Examples	Cost of materials, labour, etc.	Depreciation, Rent, Salary of manager, etc

Solution:
Given,
Selling Price Per Unit (SPPU) = Rs 92
Variable Cost Per Unit (VCPU) = Rs 57
Fixed Cost (FC)= Rs 90,000

We know,
i. CMPU = SPPU -VCPU
= Rs 92 – 57
= Rs 35

ii. P/V Ratio = CMPU / SPPU
= 35 / 92
= 0.3804

iii. BEP in Sales
(In Units)
= Total Fixed Cost / CMPU
= 90,000 / 35
= 2571.42 units

(In Rs)
= Total Fixed Cost / PV Ratio
= 90,000 / 0.3804
= Rs. 236593.05

Group C

Solution of Year 2023

Group A

Repeated from Year 2016, Question Number 2 (Please refer back to that year)
Repeated from Year 2017, Question Number 5 (Please refer back to that year)
Repeated from Year 2016, Question Number 4 (Please refer back to that year)
Repeated from Year 2016, Question Number 12 (Please refer back to that year)
Contribution Margin
Repeated from Year 2017, Question Number 12 (Please refer back to that year)
Repeated from Year 2019, Question Number 8 (Please refer back to that year)
Repeated Question
Solution:
Given,
Sales Unit = 20,000 units
Production Unit = 22,000 units
Opening Stock = 3,000 units
Closing Stock = ?

We know,
Production unit = Sales + Closing stock – Opening stock
or, 22,000 = 20,000 + x – 3,000
or, x = 22,000 – 20,000 + 3,000
or, x = 5,000

Hence, the production unit is 5,000 units.
Solution:
Given,
Fixed Cost (a) = Rs 150,000
Production Unit (x) = 15,000
Variable Cost Per Unit (b) = Rs 5

We know,
Total Cost (y)= a + b.x
= 150,000 + 5 * 15,000
= Rs 2,25,000

Hence, the total cost is Rs 2,25,000.

Group B

The difference between variable costing and absorption costing are:

Basis	Variable Costing	Absorption Costing
Treatment of fixed cost and variable cost	Variable manufacturing cost as well as fixed manufacturing cost as treated as product cost.	Only Variable manufacturing cost are treated as product cost and fixed cost is treated as period cost and charge to Profit / Loss account.
Valuation of Stock	Variable as well as fixed manufacturing cost are taken for stock valuation.	Only variable manufacturing cost are taken for stock valuation.
Measurement of profitability	Profitability is measured by profit, which is also a guiding factor for managerial decision.	Profitability is measured by contribution margin, which is also taking for decision.
Transfer of fixed cost	Fixed manufacturing cost taken for inventory valuation, thus transfer to next period with inventory.	Fixed cost are taken as period cost and not transfer to next period.
Uses	External reporting and useful for determination of tax.	Internal reporting and useful for planning controlling and decision making.

Definition -Repeated from Year 2016, Question Number 1 (Please refer back to that year)

Cost accounting is needed because of following importance or advantages:

Help in cost control
Help in Decision Making
Help in fixing the Selling Price
Help in Cost Reduction
Help in Inventory control
Helps in formulating the plans and policies
Helps in checking the accuracy of financial accounting
Reveals the profitable and unprofitable activities

Solution:

Calculation of Variable and Fixed Cost using Least Square Method

Taking 100 as common (Note: You can continue without taking also. We did it just to reduce to length of number; however the final answer will be same. Its like dividing 1000 by 100 or 100 by 10 both will get same result.)

Least Square Table

Machine Hours (X)	Supervision cost (Y)	XY	X²
2	15	30	4
4	23	92	16
6	31	186	36
8	39	312	64
10	47	470	100
ΣX= 30	ΣY = 155	ΣXY = 1090	ΣX²= 220

N= 5

(a)
Variable Cost Per Unit (b) = (NΣXY – ΣX * ΣY ) / [NΣX² – (ΣX)²]
= (5 * 1090 – 30 * 155 )/ [5 * 220 -(30)² ]
= Rs 4 per units

Total Fixed Cost (a) = (ΣY – b* ΣX) / N
= (155 – 4 * 30) / 5
= Rs 7

Next,
(b)
Total cost for month of Ashwin when machine hours are expected to be 1,200:

We know,
Total cost (y) = a + bx
= 7+ 4 * 1,200
= Rs. 4807

Group C