Cost & Management Accounting
June 2023 Examination

Question 1:
Office Products Ltd provides the Sales and the cost data for 60,000 units as given
below. At full capacity the plant can produce 100,000 units
Sales Rs. 12,00,000
Costs:
Variable:
Material Rs. 2,40,000
Labour Rs. 3,60,000
Overheads Rs. 1,80,000
Fixed Cost Rs. 3,20,000
Total Rs.11,00,000
PROFIT Rs. 1,00,000
Prepare the Income statement under marginal costing for production at 80,000 units.
(10 marks)
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Question 2:
Nikson Ltd provides the following information relating to the activities of a production
department for the month of January 2023
Material Used Rs. 72,000
Direct wages Rs. 60,000
Machine hours20,000 hours
Labour hours 24,000 hours
Overhead chargeable to the department Rs. 48,000
The relevant data for carrying out one order in the month of February is given below:
Material used Rs. 4,000
Direct Wages Rs. 3,300
Machine hours 1,200 hours
Labour hours 1,650 hours
Using the rates of the month of January, prepare a comprehensive statement of cost for this
order by using the following absorption of overheads
1) Direct labour hours
2) Percentage of direct wages
3) Machine hour rate
(10 marks)

Question 3a
Samsung Ltd. are the manufacturers of Television. The following are the details of a
Product during the year 2022.
Ordering Cost Rs.50 per order
Inventory carrying cost 10% per annum
Cost of Product A is Rs. 500 per unit
Annual consumption of Product A is 5000 units.
Compute the Economic order quantity. What if the inventory maintained by the company
is 200 units? (5 marks)

Question 3 (b)
New Corp Ltd. incurs fixed costs of Rs. 5,00,000 per annum. The company produces a
single product with annual sales budgeted to be 70,000 units at a sales price of Rs.300 per
unit. Variable costs are Rs.280 per unit.
You are required to determine the breakeven point and explain the significance of
breakeven point. (5 marks)