ICMA Questions Aug 2011

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THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH CMA AUGUST, 2011 EXAMINATION

FOUNDATION LEVEL SUBJECT: 001. PRINCIPLES OF ACCOUNTING.

Time: Three hours Full Marks: 100

All questions are to be attempted. Show computations, where necessary. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

Q. No. 1. The following trial balance and additional data are of Mr. X.

Mr. X Trial Balance

As at December 31, 2010

Accounts Titles Debit (Taka) Credit (Taka) Cash 55,000 - Accounts Receivable 60,000 - Allowance for doubtful accounts - 2,500 Office supplies inventory 5,000 - Prepaid rent 15,000 - Prepaid advertising 10,000 - Unexpired insurance 6,500 - Office Equipments 55,000 - Accumulated depreciation-Office Equipments - 6,000 Furniture and Fixture 40,000 - Accumulated depreciation-Furniture and Fixture - 4,000 Accounts Payable - 30,000 Notes Payable(1/12/2009) - 20,000 Capital - 100,000 Drawings 20,000 - Service Revenue - 200,000 Salaries Expenses 60,000 - Utilities Expenses 10,000 - Sundry Expenses 21,000 - Delivery Expenses 5,000 - Total 362,500 362,500

Additional Information: (a) Office supplies on hand at December 31, 2010 Taka 2,000. (b) Rent expenses for 2010 Taka 12,000. (c) Advertising Expenses for 2010 Taka 8,000. (d) Insurance Expenses for 2010 Taka 4,500. (e) Allowance for doubtful accounts increased upto Taka 4,000. (f) Depreciation on fixed assets @ 10%. (g) Accrued interest on notes payable 10% per year. (h) Salaries Payable Taka 8,000. Required: (i) A 10 column worksheet. (ii) Adjusting entries.

[Marks: (12+8) = 20]

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CMA AUGUST, 2011 EXAMINATION FOUNDATION LEVEL SUBJECT: 001. PRINCIPLES OF ACCOUNTING.

Q. No. 2. (a) BTI purchases motorcycles from various countries and exports them to Europe. BTI has

incurred these expenses during 2010:

Taka (i) Cost of purchases (based on vendors invoices) 2,500,000 (ii) Trade discounts on purchases 100,000 (iii) Import duties 50,000 (iv) Freight and insurance on purchases 70,000 (v) Other handling costs relating to imports 200,000 (vi) Salaries of accounting department 300,000 (vii) Brokerage commission payable to indenting agents for arranging imports 65,000 (viii) Sales commission payable to sales agents 100,000 (ix) After-sales warranty costs 400,000

Required: BTI is seeking your advice on which costs are permitted under IAS-2 to be included in cost of inventory.

(b) Jalal Printing starts business in July, with cash Taka 20,000. During the month of July, 2010 following transactions took place:

July 01 Purchased merchandise on account from Jamal and brothers Taka 8,000. FOB shipping point, terms 2/10, n/30.

July 02 Paid freight charges Taka 500 for the purchase of July 1. July 10 Received credit from Jamal for defective merchandise returned Taka 1,000. July 12 Sold merchandise on account Taka 6,000, terms 2/10, n/30. Merchandise had a cost

of Taka 5,000. July 16 Purchased merchandise on account for Taka 10,000, terms 2/10, n/30. FOB shipping

point. July 19 Paid in full for the purchase of July 1. July 20 Received a credit from the supplier of July 16 purchase for merchandise returned

Taka 2,000. July 22 Made sales on account Taka 8,000, terms 2/10, n/30, FOB destination. Merchandise

had a cost of Taka 6,500. July 24 Paid freight charges Taka 600 for the sale of July 22. July 25 Paid in full for the purchase July 16. July 30 Received part payment on account from the customers Taka 5,000.

Required: Prepare journal entries under net price method being perpetual inventory system. [Marks: (10+10) = 20]

Q. No. 3. (a) As an auditor, what basic features would you hope to find in your clients system of cash

control? (b) The cash account of Standard Furniture Service Inc. disclosed a balance of Tk.34,112.96 on

October, 31. 2009. The bank statements as of October, 31, showed a balance of Tk.42,418.90. Upon comparing the statement with the cash records, the following facts were developed: (i) Standards account had been charged for a customers uncollectible check amounting to

Tk.2,286 on October 26. (ii) A customers check for Tk.1,450 had been entered as Tk.1,250 both by the depositor and

the bank but was later corrected by the bank.

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Q. No. 3. (Contd..)

(iii) A two month, 9%, Tk.6,000 customers note dated August 25, discounted on October 12, had been protested October 26, and the bank had charged Standard for Tk.6,101.66, which included a protest fee of Tk.11.66.

(iv) Cheque no. 551 for Tk.2,485 had been entered in the cash book as Tk.2,449, and cheque no. 542 for Tk.65.80 had been entered as Tk.658. The company uses the voucher system.

(v) There were bank service charges for October of Tk.78.86 not yet recorded on the books. (vi) A bank memo stated that M. Sumons note for Tk.5,000 and interest of Tk.125 had been

collected on October 29, and the bank had been made a charge of Tk.13.00 (no entry had been made on the books when the note was sent to bank for collection.)

(vii) Receipt of October 29, for Tk.13,700 was deposited November 1. The following cheques were outstanding on October 31:

No. 520 ------------------------ Tk. 2,500.00 No. 571 ----------------------------- Tk. 1,465.00 521 ------------------------ Tk. 6,896.46 573 ----------------------------- Tk. 375.80 532 ------------------------ Tk. 4,810.50 575 ---------------------------- Tk. 551.44 670 ------------------------ Tk. 3,550.76 576 ----------------------------- Tk. 4,466.30

Required: (1) Construct a bank reconciliation statement, using the form where both bank and book

balances are brought to a corrected cash balance. (2) Give the journal entries where necessary.

[Marks: (5+10+5) = 20] Q. No. 4. (a) Why is it necessary to prepare formal financial statements when all of data are in the statements

column of the work sheet? (b) From the following information of Star Repairing Company you are required to prepare an

analysis of each error showing (a) the incorrect entry; (b) the correct entry and (c) correcting entry. And also prepare a (d) correct trial balance.

STAR REPAIRING COMPANY Trial Balance April 30, 2009

Dr. (Tk.) Cr. (Tk.) Cash 51,000 Accounts Receivable 32,000 Supplies 8,000 Equipment 1,06,000 Accumulated Depreciation 13,500 Accounts Payable 21,000 Salaries Payable 5,000 Unearned Fees 8,900 Star Capital 1,39,000 Fees Earned 54,500 Salaries Expenses 33,000 Administrative Expenses 4,000 Miscellaneous Expenses 2,900 Depreciation Expenses 5,000 Tk. 2,41,900 Tk. 2,41,900

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Q. No. 4. (Contd..)

A newly qualified CMA reviewed the records and found the following errors: (i) Cash received from a customer on account was recorded as Tk.6,500 instead of Tk.

5,600. (ii) The purchase, on account, of a computer costing Tk. 3,400 was recorded as a debit to

supplies and a credit to accounts Payable for Tk. 3,400. (iii) A payment of Tk. 300 for advertising expenses was entered as a debit to Miscellaneous

Expense Tk. 300 and a credit to cash Tk. 300. (iv) The first salary payment of this month was for Tk. 19,000, which included Tk. 5,000 of

salaries payable on March 31. The payment was recorded as a debit to Salaries Expenses Tk. 19,000. (No reversing entries were made on April 1)

(v) A cash payment of repair expense on equipment for Tk. 860 was recorded as a debit to equipment Tk. 680 and a credit to cash Tk. 680.

[Marks: (4+4+4+4+4) = 20] Q. No. 5. (a) Differentiate between Preferred Stock and Common Stock. (b) Explain Contingent Liabilities. (c) Zaman Corporation operates in an industry that has a high rate of bad debts. On December 31,

2010 before an year-end adjustments the balance in Zamans Accounts Receivable account was Tk.5,55,000 and the allowance for Doubtful Accounts had a credit balance of Tk.35,000. The year-end balance reported in the Balance Sheet for the allowance for Doubtful Accounts will be based on the aging schedule shown below:

Days Accounts Outstanding Amount Probability of Collection Less than 16 days Tk.300,000 0.98 Between 16 and 30 days 100,000 0.90 Between 31 and 45 days 80,000 0.85 Between 46 and 60 days 40,000 0.75 Between 61 and 75 days 20,000 0.40 Over 75 days 15,000 0.00

Required: (i) What is the appropriate balance for the Allowance for Doubtful Accounts on December

31, 2010? (ii) Show how accounts receivable would be presented on the Balance Sheet prepared on

December 31, 2010. (iii) What is the Taka effect of the year-end bad debt adjustment on the before-tax income for

2010? [Marks: (3+3+8+4+2) = 20]

= THE END =

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FOUNDATION LEVEL SUBJECT: 002. BUSINESS COMMUNICATION AND OFFICE MANAGEMENT.


Answer THREE questions from each part, where Q. No. 4 and Q. No. 8 are compulsory. Answer must be brief, relevant, neat and clean. Use a fresh sheet for answering each question. All questions must be answered in English.

PART-A: BUSINESS COMMUNICATION

Q. No. 1. (a) An effective communication is the key to success Discuss. (b) What are the barriers of effective communication? (c) Differentiate between internal and external communication with examples.

[Marks: (5+5+5) = 15]

Q. No. 2. (a) Discuss the main points regarding importance of Business Letter. (b) Discuss the different parts of a commercial letter. (c) Suppose your office building is damaged by fire which was insured. Lodge a insurance claim to

the insurance company. [Marks: (4+5+6) = 15]

Q. No. 3. (a) Do you think electronic communication technology is necessary in a business organization? If

so, why? (b) Discuss the procedure how letter of credit is opened with a bank. (c) Write a CV with a forwarding letter to the MD of a limited company for the post of Cost

Accountant. [Marks: (3+6+6) =15]

Q. No. 4. Write short notes on any FIVE of the followings: (i) Bonded warehouse. (ii) Capital Market. (iii) E-mail. (iv) Online Banking. (v) Organization chart. (vi) Business ethics. (vii) Dumping. (viii) IPO.

[Marks: (4 x 5) = 20]

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CMA AUGUST, 2011 EXAMINATION FOUNDATION LEVEL SUBJECT: 002. BUSINESS COMMUNICATION AND OFFICE MANAGEMENT.

PART-B: OFFICE MANAGEMENT

Q. No. 5. (a) What is Office Management? What are the steps in the process of office management? (b) Discuss the Principles of Scientific Office Management. (c) State the qualities of a good office manager.

[Marks: (7+5+3) =15]

Q. No. 6. (a) Why office manual is necessary? (b) Describe the organogram of a hypothetical company with a diagram. (c) Discuss the necessity of the departmentation of office work.

[Marks: (3+6+6) =15]

Q. No. 7. (a) Discuss the importance of filing in modern office management. (b) What are the various systems of office filing? (c) Discuss the various methods of cost control of an office.

[Marks: (5+5+5) =15]

Q. No. 8. Write short notes on any five from the following: (a) Job evaluation method. (b) Performance appraisal. (c) Office automation. (d) Mobile Banking. (e) Office security. (f) E-commerce. (g) Employer-Employee relationship. (h) Motivation.

[Marks: (4x5) =20]

= THE END =

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FOUNDATION LEVEL SUBJECT: 003. QUANTITATIVE TECHNIQUES.


Answer any TEN questions, FIVE from each part. All questions carry equal marks. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

PART-A: BUSINESS MATHEMATICS Q. No. 1. (a) A cereal company finds that the number of people who will buy of its products in the first

month that it is introduced in linearly related to the amount of money it spends on the advertising. If it spends Tk.40,000 on advertising, then 100,000 boxes of cereal will be sold and if it spends Tk.60,000, then 200,000 boxes will be sold. (i) Write a linear equation that relates the amount A spent on advertising to the number x

of boxes the company aims to sell. (ii) How much advertising is needed to sell 300,000 boxes of cereal?

(b) Find dxdy for xy + yx = ab

[Marks: (3+3+4) = 10] Q. No. 2. (a) The marginal cost C (in dollars) of manufacturing x cell phones (in thousands) is given by

C(x) = 5x2 200x + 4000. How many cell phones should be manufactured to minimize the marginal cost? What is the minimum marginal cost?

(b) Show that 2(sin6 + cos6) -3 (sin4 + cos4) + 1 = 0. [Marks: (6+4) = 10]

Q. No. 3.

(a) Carryout the following: (i)

+ 1ee

2x

x

dx (ii)

xsin

x

1 dx.

(b) Find the differential coefficient of sec x with respect to tan x. [Marks: (6+4) = 10]

Q. No. 4.

(a) If A =

10

01

and B =

i0

0i

then prove that AB= - BA and A2 = B2 =I.

(b) Find that equation of the straight line passing through the point of intersection of the two lines 2x+3y-1=0 and x-2y+3=0 and intersects equal portion from both axes.

[Marks: (5+5) = 10] Q. No. 5. (a) If , are the roots of the equation x2 px + q = 0 form the equation whose roots are

pq

and pq

(b) Find the number of different permutations of the letters of the word parallel taken all together in which two ls are consecutive.

[Marks: (5+5) = 10] Q. No. 6. (a) Find the compound interest on Tk. 6,950.00 for 3 years if interest is payable half yearly, the rate

for the first two years being 6% p.a. and for the third year 9%p.a. (b) If x =log2aa, y= log3a2a, z= log4a3a prove that xyz + 1 = 2yz.

[Marks: (5+5) = 10]

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CMA AUGUST, 2011 EXAMINATION FOUNDATION LEVEL SUBJECT: 003. QUANTITATIVE TECHNIQUES.

Q. No. 7. (a) If A = {1, 2, 3}; B = {2, 3, 4}; S = {1, 3, 4}, T= {2, 4, 5}, verify that (AXB)I (SXT) = (AI S) X (BI T) (b) A factory produces 200 bulbs for a total cost Tk. 800 and 400 bulbs for a total cost of Tk. 1200.

Given that the cost curve is a straight line, find the equation of the straight line and use it to find the cost of producing 300 bulbs.

[Marks: (5+5) = 10]

PART-B: BUSINESS STATISTICS Q. No. 1. (a) How would you Account for the predominant choice of arithmetic mean as a measure of central

tendency? Under what circumstances would it be appropriate to use mode or median? (b) Particulars regarding the income of two villages are given below:

Village x Village y Number of employees 600 500 Average income (in Tk.) 1750 1860 S.D. of income (in Tk.) 100 81

(i) In which village is the variation in income greater? (ii) What is the combined standard deviation of the village x and village y put together?

[Marks: (4+6) = 10]

Q. No. 2. (a) In what way measures of central tendency variation, skewness and kurtosis are complementary

to one another in understanding a frequency distribution? Elucidate. (b) You are given the following frequency distribution of the daily earning of employees in

company.

Earning (in Rs) Number of workers Earning (in Rs) Number of workers 50 70 4 130 150 6 70 90 8 150 170 7

90 110 12 170 190 3 110 130 20

Calculate the first four months about the point 120. Convert the result into moments about the mean.

[Marks: (4+6) = 10]

Q. No. 3. (a) Distinguish between correlation and regressions analysis and point out their role in business. (b) Find the regression equation showing the regression equation of capacity utilization on

production from the following data:

Average Standard deviation Production (in Lakh units) 35.6 10.5 Capacity utilization (in percentage) 84.6 8.5

r = 0.62 Estimate the production when capacity utilization is 70 per cent.

[Marks: (4+6) = 10]

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CMA AUGUST, 2011 EXAMINATION FOUNDATION LEVEL SUBJECT: 003. QUANTITATIVE TECHNIQUES.

Q. No. 4. (a) Discuss the distinctive features of the Binomial, Passion and Normal Distributions. When does

a binomial distribution trend to become a normal distribution? (b) A whole distributor of fertilizer products find that the annual demand for one type of fertilizer is

normally distributed with a mean of 120 tons and standard deviation of 16 tons. If he orders only ones a year, what quantity should be ordered to ensure that there is only a 5 percent change of running short?

[Marks: (4+6) = 10] Q. No. 5. (a) Define scatter diagram. Discuss the usefulness of using scatter diagram in studying the

correlation between variables. (b) The sales and experience of workers of seven shops are given in the below table:

Sales (in Tk.) 30 37 28 42 29 24 38 Experience (in years) 5 6 4 6 6 7 6

Fit a simple regression model of sales on experience. [Marks: (4+6) = 10]

Q. No. 6. (a) Define probability. Explain addition and Multiplication law of probability. (b) A box contain 5 red and 6 white balls. 5 balls are drawn at random without replacement. What

is the probability of getting 2 red and 3 white balls? [Marks: (4+6) = 10]

Q. No. 7. Write short notes on the followings: (a) Skewness. (b) Kurtosis. (c) Normal distribution. (d) Type-I error & Type-II error.

[Marks: (2.5 x 4) = 10]

= THE END =

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FOUNDATION LEVEL SUBJECT: 004. BUSINESS ECONOMICS AND INTERNATIONAL BUSINESS.


Answer FIVE questions, taking at least TWO from each Group A and B. Show computations, where necessary. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

GROUP-A: BUSINESS ECONOMICS Q. No. 1. (a) State the importance of Business Economics for Professional Management Accountant. (b) Distinguish between:

(i) Business Profit and Economic Profit. (ii) Economic Objectives and Social Objectives of firms.

(c) Miss Suporna, a CMA professional left her job of Taka 60,000 a month and started consultancy services under the name Suporna Cost and Management Consultancy Limited with a capital of Taka 5,00,000. She took bank loan of Taka 3,00,000 @interest rate of 15% p.a. She used a flat of her fathers business house for which she need not pay any rent, which could be rented out @Taka 10,000 per month. She earned Taka 20,00,000 in her consultancy business during 2010-11. During the year material costs and services charges were Taka 80,000 and salaries of employees were Taka 1,20,000 in her business. Depreciation of equipment was estimated at Taka 10,000. Calculate business profit and economic profit of Suporna Cost and Management Consultancy Limited during 2010-11.

[Marks: (4+6+10) = 20] Q. No. 2. (a) State the Law of Demand and point out its exceptions. (b) Distinguish between

(i) Demand and Needs. (ii) Complementary Goods and Substitutes.

(c) What are the determinants of Demand of Professional Management Accountant in Bangladesh? (d) What is the impact of increase of price of gas for transport in Bangladesh? (e) Give examples of two price inelastic goods in Bangladesh.

[Marks: (4+6+4+4+2) = 20] Q. No. 3. (a) Distinguish between Oligopoly and Monopoly market. (b) State how price is determined under Monopolistic Competition. (c) Give example of two products of Perfect Competition and two products of Monopolistic

Competition in Bangladesh. (d) Define Monopsony with one example.

[Marks: (6+7+4+3) = 20] Q. No. 4. (a) State the causes of and remedies for controlling inflation in the present situation of Bangladesh. (b) What is the impact of interest rate on investment? (c) What are the advantages and disadvantages of foreign aid in financing budget deficit? (d) State the causes of recent share market debacle (during 2010-11) in Bangladesh.

[Marks: (6+3+6+5) = 20] Q. No. 5. (a) Distinguish between:

(i) GDP and National Income; and (ii) National Income at Market Price and at Factor Price.

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CMA AUGUST, 2011 EXAMINATION FOUNDATION LEVEL SUBJECT: 004. BUSINESS ECONOMICS AND INTERNATIONAL BUSINESS.

Q. No. 5. (Contd..)

(b) What are the limitations of National Income as measure of economic performance of a nation? (c) Calculate GDP and National Income of Bangladesh during 2009-2010 from the following

information: Dollars in Crores Gross Private Investment 3500 Government Purchase of goods and Services 500 Personal Consumption of goods and Services 4500 Depreciation Charges 150 Exports 1850 Imports 2250 Gains from sale of Shares during the year 150 Value of Second hand computer purchased in the country 50 Purchase of land during the year 120 Gains from sale of old cars during the year 150

[Marks: (6+4+10) = 20]

GROUP-B: INTERNATIONAL BUSINESS

Q. No. 6. (a) State the theory of comparative advantage in International business. (b) Discuss the determinants of international business and investment decisions. (c) What are the advantages of foreign direct Investment in Bangladesh? (d) Discuss the existing investment incentives to attract foreign investment in Bangladesh and make

suggestions to improve them. [Marks: (5+5+4+6) = 20]

Q. No. 7. (a) What are the potential sectors for export promotion in Bangladesh in the present global market

situation? (b) Do you support Preshipment Inspection in International Business in Bangladesh? Give

arguments in favour of your statement. (c) How WTO has been affecting international business in the present day world?

[Marks: (8+6+6) = 20]

Q. No. 8. Write short notes on five of the following: (a) Non-Tariff Barriers. (b) Balance of Trade and Balance of Payment. (c) Average Cost & Marginal Cost. (d) Monetary and Fiscal Policies. (e) Impact of Currency Depreciation. (f) Multinational Corporation (MNC) (g) Product Life Cycle Theory. (h) Back to Back Letter of Credit.

[Marks: (4 x 5) = 20]

= THE END =

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PROFESSIONAL LEVEL-I SUBJECT: 101. INTERMEDIATE FINANCIAL ACCOUNTING.



Q. No. 1. (a) Can you explain Interim Financial Reporting, Capital Market and Money Market? (b) You have been appointed as Manager Finance of a company named ZYX Ltd. The Finance

Controller of that company asked you to prepare a classified Balance Sheet in good form for the year ended 31st December-2010 based on the following data:

ZYX Ltd.

Descriptions Ledger Balance (Tk.) Descriptions Ledger

Balance (Tk.) Land 24,00,000 Employees salary tax payable 887,955 Building 82,00,000 0% Interest Bond payable 15,00,000 Equipments 73,50,000 Discount on 0% Int. Bond payable 75,000 Goodwill 625,000 Bank A/C- Citi N.A. 10,00,000 Inventories 11,99,000 Bank A/C- Standard Chartered 750,000 Accumulated dep.- Building 851,000 Cash in hand 50,000 Accumulated dep.- Equipment 14,60,000 Accounts payable 29,50,000 Notes receivable 27,28,500 Refundable over-paid Income Tax 488,150 Notes payable to banks 13,25,000 Rent payable Short-term 225,000 Income Tax payable 491,810 Share capital @ Tk. 10 par value 10,00,000 Long-term notes payable-Unsecured 80,00,000 Preferred share @ Tk. 100 par value 750,000 Long-term rental obligations 24,00,000 Trading securities 605,000 Prepaid expenses 439,600

Additional Information: (i) Cost and fair value of marketable securities are the same. (ii) Assume that note receivable and notes payable are short-term, unless stated otherwise. (iii) Authorized share capital was 500,000 no. shares. (iv) Preferred share authorized was 50,000 no. shares.

[Marks: (3+17) = 20] Q. No. 2. (a) Explain various possible types of contingent liabilities and there disclosure in the financial

statements. (b) Listed below are selected items from the financial statements of A & B Pump Co. for the year

ended December 31, 2010:

Taka Notes payable to Prime Bank 99,000 Income taxes payable 63,000 Loss contingency relating to law suit 200,000 Accounts payable and accrued expenses 163,230 Mortgage note payable 240,864 Bonds payable 2,200,000 Premium on bonds payable 1,406 Accrued bond interest payable 110,000 Pension expenses 61,400 Unearned revenue 25,300

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CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-I SUBJECT: 101. INTERMEDIATE FINANCIAL ACCOUNTING.

Q. No. 2. (Contd..)

Other information: (1) The note payable owed to Prime Bank is due in 30 days. A & B has arranged with this bank to

renew the note for an additional two years. (2) A & B has been sued for Tk.200,000 by someone claming the companys pumps are

excessively noisy. It is reasonably possible, but not probable, that a loss has been sustained. (3) The mortgage note is payable at Tk.8,000 per month over the next three years. During the next

12 months, the principal amount of this will be reduced to Tk.169,994. (4) The bonds payable mature in seven months. A sinking fund has been accumulated to repay the

full maturity of this bond issue. Required: (i) Using this information, prepare the current liabilities and long term liabilities sections of a

classified balance sheet at December 31, 2010. (ii) Explain briefly how the information in each of the above four numbered paragraph affected

your presentation of the companys liabilities. [Marks: (5+10+5) = 20]

Q. No. 3. (a) Why would a manufacturing company invest funds in stocks, bonds, and other securities? (b) The following balances appeared in the ledger of the Hamja Company on December 31, 2007:

Investment in Belal Corp. Common Stock, par Tk.10, 500 shares ..Tk.10,000 Investment in Belal Corp. 8% Preferred Stock, par Tk.50, 20 shares ..Tk. 1,500

The Hamja Company uses the first-in, first-out method in accounting for stock transactions. In 2008, 2009 and 2010 the following transactions took place relative to the above investments:

2008 Feb. 15 - Holders of Belal Corp. 8% preferred were given the right to exchange their holdings at the

rate of 5 shares of Belal Corp. common for each share of preferred, and the Hmaja Co. made such exchange. Common shares on the date of exchange were quoted on the market at Tk.30 per share.

Nov. 21 - Received cash dividends of Tk.1 per share on Belal Corp. common.

2009 June 15 - Received additional shares of Belal common in a 2-for-1 stock split. (par value of common

was reduced to Tk.5). Nov. 21 - Exercised option to receive 1 share of Belal Corp. common for each 15 shares held in lieu of a

cash dividend of Tk.1 per share held. The market value of Belal Corp. common on the date of distribution was Tk.20 per share. Dividend revenue was recognized at the value of the shares received.

2010 May 14 - Received a stock dividend of 20% on Belal common. Sept. 16 - Received warrants representing right to purchase 1 share of Belal Corp. common for every 6

shares held. On date of warrants issue, the market value of ex-rights was Tk.28.50, and the market value of rights was Tk.1.50. Cost of the stock was allocated on this basis. The exercise price was Tk.20 per share.

Sept.30 - Exercised 900 rights identified with the first lot of stock acquired and sold remaining rights at Tk.1.25 per right less brokerage charge of Tk.75.

Dec. 31 - Sold 1400 shares of Belal Corp. common at Tk.32 per share less brokerage charge of Tk.225. Required: (i) Prepare Journal entries to record the transactions in Belal Corp. holdings. (ii) Prepare a schedule showing the balance of Belal Corp. common stock held by Hamja Company

on December 31, 2010. [Marks: (5+10+5) = 20]

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Q. No. 4. (a) Most companies prepare their financial statements under the historical cost convention. In times

of rising prices it has been said that without modification such financial statements can be misleading. Explain the problems that can be encountered when users rely on financial statements prepared under the historical cost convention for their information needs. (Note: your answer should consider problems with the income statement and the balance sheet).

(b) The following information is pertinent to Liverich Ltd.

Shares Issued

Treasury shares

Shares outstanding

Preferred shares

1 Jan. 2009 Balance at beginning of year 2,000 200 1,800 500 1 June 2009 Repurchase of shares for cash - 200 1,600 - 1 July 2009 Share issued for cash 600 - 2,200 - 31 July 2009 Stock dividend at 1 share for

every 10 outstanding shares 260 40 2,420 -

1 Sept. 2009 Shares issued in consideration for a factory building acquired

80 - 2,500 -

31 Dec. 2009 Balance at year end 2,940 440 2,500 500 On 31 October 2009 Liverich Ltd. issued 3% convertible bonds for Tk. 1 Million at par. Each bond (with a par value of Tk. 1,000) is convertible into 20 ordinary shares at October 2011. On 15 December 2009 the company declared a preferred dividend of Tk. 2.10 per preferred share and no preferred dividends were declared in the past. Net profit for 2008 is Tk. 2,100 and net profit for 2009 is Tk. 3,650. All shares were outstanding for a full period on 31 December 2008. The average fair value of the ordinary shares during 2009 amounted to Tk. 20. Required: Calculate the basic earnings per share for 2008 and 2009 as would need to be stated

in the 2009 financial statement of Liverich Ltd. [Marks: (5+15) = 20]

Q. No. 5. (a) An important requirement of the IASBs Framework for the Preparation and Presentation of

Financial Statements is that in order to be reliable, an entitys financial statements should represent faithfully the transactions and events that it has undertaken. Explain what is meant by faithful representation and how it enhances reliability.

(b) Western Plastic Ltd. is a company, which uses a chemical process to manufacture plastic container, which it sells at a markup of 25% on cost. Its inventory consists of raw material, work in progress and finished goods, and at the end of its first year of trading it is having problems valuing inventories. You ascertain the following information: (i) Raw material:

(a) The process needs at least 100,000 kgs of material to continue working, but a physical inventory count reveals that the machinery contains 108,000 kgs.

(b) The original cost of the initial 100,000 kgs to set up the process was Tk.30 per kg and you find an invoice to show that the last consignment of 20,000 kgs cost Tk.31 per kg. All other consignments in the year (a total of 200,000 kgs) cost Tk.32 per kg.

(ii) Work in progress: (a) The work in progress is currently all 60% complete and you discover that there are

50,000 units currently going through the process. (b) The total number of complete units for the period was, as anticipated, 800,000. (c) The costs for the process for the period were as follows:

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Q. No. 5. (Contd..)

(Tk. 000) Raw materials 200 Direct labor 242 Factory overheads 191 Administrative expenses attributable to production 114 Distribution costs 90

(iii) Finished goods: (a) There are 70,000 units in inventories. (b) Of (a) above, it was intended to sell 20,000 units at 75p per unit, a discount of one

third on normal selling price, in a future promotional campaign (a further 10p per unit distribution cost is to be incurred).

Required: (i) For each of the above categories of inventory, suggest a method of valuation and show

the value as it would appear in the balance sheet. (ii) If the information regarding costs for the period were not available, suggest an alternative

method of valuing finished goods. [Marks: (4+12+4) = 20]

= THE END =

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PROFESSIONAL LEVEL-I SUBJECT: 102. COST ACCOUNTING.



Q. No. 1. (a) What are the three separate parts of a Production report? (b) I think we made a severe mistake in hiring that new assistant Cost Accountant said the

Executive Director of Sharmin Industries. Look at this production report that he prepared for last month for the Finishing Department. I cant make heads or tails out of it.

Finishing Department Costs: W/I/P inventory (opening), 450 units, 100% complete as to materials, 60% complete as to conversion costs

Tk. 8,208

Cost transferred in during the month from preceding department, 1950 units Tk. 17,940 Materials cost added during the month (materials are added when processing is 50% complete in Finishing

Tk. 6,210 Conversion cost incurred during the month Tk. 13,920 Total Departmental costs Tk. 46,278 Finishing Department costs assigned to: Units completed and transferred to finished goods, 1800 units at Tk. 25.71 per unit Tk. 46,278 W/I/P inventory (closing), 600 units, 0% complete as to materials, 35% complete as to processing

Nil Total Departmental cost Tk. 46,278

Opening W/I/P consists at : Cost transferred in Tk. 4,068, materials cost, Tk. 1,980 and conversion cost Tk. 2,160. May be he is struggling to learn our system replied the GM (costing). The problem is that he is been away from process costing for a long time, and it is coming back slowly. Its not the format of his report that I am concerned about. Look at that Tk. 25.71 unit cost that he is come up with for this month. Doesnt that seem high to you? said the Executive Director. Yes, if does seem high; but on the other hand, I know we had an increase in materials prices during this month, and that may be the explanation replied GM (costing). Anyway I will get some one else to redo this report and then we may be able to see whats going on. Sharmin Industries manufactures a household product that goes through two processing departments Moulding and Finishing. The company uses the weighted average method to account for units and costs. Required: (i) Prepare a revised production report for the Finishing Department. (ii) Explain to the Executive Director why the unit cost on the new assistant Cost Accountants

report is so high. [Marks: (3+9+8) = 20]

Q. No. 2. Moni Limited has a single production process for which the following costs have been estimated for the period ending 30 June 2011:

Material receipt and Inspection cost Tk. 15,600 Power cost Tk. 19,500 Material handling cost Tk. 13,650

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CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-I SUBJECT: 102. COST ACCOUNTING.

Q. No. 2. (Contd..)

Three Product X, Y and Z are produced by workers who perform a number of operations on material blanks using hand held electrically powered drill. The workers have a wage rate of Tk. 9 per hour. The following budgeted information has been obtained for the period ending 30 June, 2011:

X Y Z Production Quantity (units) 2000 1500 800 Batches of materials 10 5 16 Direct material (Sq.meter/unit) 4 6 3 Direct material (Tk.) 5 3 6 Direct labor (Minute)/unit 24 40 60 Number of power drill operation/unit 6 3 2

Material receipt and Inspection: Number of batches of materials. Process power: Number of power Drill operations. Material Handling: Quantity of material (Sq meters) handled. Required: (a) Prepare a summary which shows the budgeted product cost per unit for each of the product X,

Y and Z for the period ending June 30, 2011 detailing the unit costs for each cost element: (i) Using the existing method for the absorption of overhead costs. (ii) Using an approach which recognizes the cost drivers revealed in the activity based costing

investigation. (iii) Discuss the implication of Moni limited making the decision to switch to activity based

costing. (b) Explain the relevance of cost drivers in activity based costing. You are advised to make use of

figures from the summary statement prepared in part (a) to illustrate yours answer. [Marks: (13+7) = 20]

Q. No. 3. (a) How do you differentiate between producing and Service departments? Explain with a suitable

example. (b) Comilla Power Company has three service departments and one producing department. Service

departments are Water, Steam and electric power. The technical relationships between the service departments are that it requires 0.8 kw hours of electricity to pump one gallon of water, 0.5 gallon of water to generate one Cubic foot of Steam, and 0.15 Cubic feet of Steam to generate one kw hour of electricity. Each units of producing department output requires 0.6 gallons of water, 0.9 Cubic feet of Steam and 4.8 kw hours of electricity. The output of the producing department is 1,00,000 units. Cost data before service department cost allocations are:

Department VC per unit of service dept. output (Tk.)

Fixed costs at various Service Department output levels

(Tk.) 0-50000 50000-100000 100000-300000 300000-800000 Water 0.0266 4,000 6,000 8,000 N/A Steam 0.2000 5,000 10,000 12,000 N/A Electric Power 0.0200 6,000 8,000 8,500 9,000 The company can purchase power externally for Tk. 0.06 per KWH. Required: Develop computations to support your recommendation as to whether the company should continue generating electric supply internally or acquire it externally.

[Marks: (5+15) = 20]

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CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-I SUBJECT: 102. COST ACCOUNTING.

Q. No. 4. The RFL plastic Company has its general office in Dhaka but has a major plant in Rangpur. A separate set of records is kept at the home office and at the factory. On December 1 the factory trial balance showed the follows.

Accounts Dr Cr Material 35,000.00 Work in Process 78,000.00 Finished Goods 6,4000.00 General Ledger _________ 1,77,000.00 1,77,000.00 1,77,000.00

For the most of December the following transaction occurred: (i) Materials purchased on credit Tk.2,30,000.00 (ii) Direct Materials of Tk.1,20,000.00 were requisitioned, alongwith Indirect materials of

Tk65,000.00 and Tk.25,000.00 of supplies. (iii) Total Payroll of December was Tk.3,00,000.00. In Rangpur Factory Payroll consisted of

Tk.30,000.00, office Salaries; Tk.80,000.00, sales salaries; Tk.60,000.00 Indirect Labour and Tk.1,30,000.00 direct labour.

(iv) Factory Overhead is applied at a rate of 210% of Direct Labour. (v) Material costing Tk.2,750.00 were defective and were returned to the suppliers. (vi) Payments made to vendor on credit Tk.2,15,000.00 (vii) Tk. 1,20,000.00 of vendor factory overhead expenses is recorded , including Tk,20,000.00

depreciation of Factory Machinery. (viii) Goods completed total Tk.4,83,000.00 (ix) Goods costing Tk.4,50,000.00 were sold on Tk.6,00,000.00. Required: Journal entries on the basis of the general office and the factory to record the above

transactions. [Marks: 20]

Q. No. 5. (a) Define Safety Stock & Lead Time. (b) Supermax Company sells a number of products through its many sells centre. One of the

products is plastic razor with five blades in a package. The sale price of blade with razor is Tk.55.00. The package of 5 blades sells Tk.35.00 per package. The demand for the replacement blades is at a constant rate 20,000 packages per month. The cost of manufacturer per package is Tk20.00. The minimum lead time 7 days from date of order. The ordering cost is Tk.1200.00 & holding cost is 10% per annum. The Supermax company uses the EOQ formula.

Required: (i) The economic order quantity. (ii) The number of orders needed per year. (iii) The total cost of buying and carrying blades for the year. (iv) Assuming there is no safety stock and the present inventory level is 4,667, when should be the

next order be placed (One year=360 days). (v) Describe the shortcomings of EOQ formula.

[Marks: (4+3+3+5+5) = 20]

= THE END =

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PROFESSIONAL LEVEL-I SUBJECT: 103. MANAGEMENT AND MARKETING MANAGEMENT.


Answer any THREE questions from each part. Answers must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

PART-A: MANAGEMENT (TOTAL MARKS-50)

Q. No. 1. (a) What is strategic planning? (b) What are the corporate level strategies and business level strategies? (c) Explain SWOT & Comment on them.

[Marks: (6+6+4) = 16]

Q. No. 2. (a) What are the basic roles of a manager to run an organization properly? (b) How an organization is benefited by Managerial skills? (c) Identify the nature of Managerial works.

[Marks: (6+6+4) = 16]

Q. No. 3. (a) What is meant by leadership? (b) How generic approaches to leadership is different from situational approaches to leadership? (c) Summarize the political behavior in organizations with respect to leadership.

[Marks: (6+6+4) = 16]

Q. No. 4. (a) What is management process? (b) What are the differences between classical and behavioral management perspective? (c) Skill is the only measuring rod of a manager discuss.

[Marks: (6+6+4) = 16]

Q. No. 5. (a) Describe how to implement operations system through supply chain management. (b) What are the benefits of TQM? (c) Analyze the various types of information system.

[Marks: (6+6+4) = 16]

Two marks are reserved for neatness and relevance.

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CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-I SUBJECT: 103. MANAGEMENT AND MARKETING MANAGEMENT.

PART-B: MARKETING MANAGEMENT (TOTAL MARKS-50)

Q. No. 6. (a) What is meant by effective Marketing Management? (b) Define Marketing Goals. (c) How would you integrate and manage Marketing Communications?

[Marks: (6+6+4) = 16]

Q. No. 7. (a) Define advertising. What are its characteristics? (b) What is the difference between publicity and public relations? (c) Outline the consumer oriented and trade oriented sales promotional activities.

[Marks: (6+6+4) = 16]

Q. No. 8. (a) Explain needs, wants and demands with example. (b) How customer-value is different from satisfaction? (c) Describe the key-customer markets.

[Marks: (6+6+4) = 16]

Q. No. 9. (a) Define domestic business, international business and multinational business with example. (b) What are the basic challenges of international business? Describe. (c) What do you mean by Global Economy?

[Marks: (6+6+4) = 16]

Q. No. 10. Write short note on: (a) PLC (Product Life Cycle). (b) Marketing Report. (c) Direct and Indirect Marketing. (d) Branding.

[Marks: (4 x 4) = 16]

Two marks are reserved for neatness and relevance.

= THE END =

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PROFESSIONAL LEVEL-I SUBJECT: 104. INFORMATION TECHNOLOGY.

Time: 2 hours 30 minutes Full Marks: 80

Start answering each question from a fresh sheet. All questions are to be attempted. Show computations, where necessary. Answer must be brief, relevant, neat and clean.

Q. No. 1. (a) What are the Telecommunication Software and Hardware? (b) Describe the Electronic Payment System. (c) How e-mail system can help Electronic Payment System. (d) Discuss advantages & disadvantages of Electronic Payment System.

[Marks: (5 x 4) = 20]

Q. No. 2. (a) Differentiate between system analysis and system design. (b) What are the major categories of information system plan? (c) Draft a information design planning of a new Manufacturing Company.

[Marks: (6+6+8) = 20]

Q. No. 3. Write short notes on: (a) Search Engine; (b) Executive information system; (c) Foreign Key; (d) Artificial Intelligence; (e) Controlling information system.

[Marks: (5 x 4) = 20]

Q. No. 4. Differentiate between: (a) Bluetooth and Wireless. (b) Netbook and Notebook. (c) ESS & MIS. (d) System software and Application Software. (e) Compiler and Interpreter.

[Marks: (5 x 4) = 20]

= THE END =

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PROFESSIONAL LEVEL-II SUBJECT: 201. ADVANCED FINANCIAL ACCOUNTING-I.



Q. No. 1. (a) Identify special issues related to deferred Income taxes. (b) During 2009, ST. Co.s first year of operations, the Company reports pre-tax financial Income

at Tk. 2,50,000. Tax rate is 45% for 2009 and 4% for the rest years. ST. Co. expects to have taxable income in each of the next 5 years. The effects on future tax returns of temporary differences existing at December 31, 2009 are summarized below:

Future years Future taxable (Deductible) Amounts: 2010 2011 2012 2013 2014 Total Installment Sales 32,000 32,000 32,000 - - 96,000 Depreciation 6,000 6,000 6,000 6,000 6,000 30,000 Unearned Rent (50,000) (50,000) - - - (1,00,000)

Instructions: (i) Complete the schedule below to compute the deferred taxes at Dec. 31, 2009. (ii) Compute taxable Income for 2009. (iii) Prepare the journal entry to record Income tax payable, deferred taxes and Income tax expenses

for 2009.

Temporary difference Future Taxable (Deductible) Amounts

Tax rate December 31, 2009 Deferred tax

Asset Liability Installment sales 96,000 Depreciation 30,000 Unearned rent (1,00,000) ------- -------- Total ------- --------

[Marks: (5+2+3+10) = 20] Q. No. 2. (a) For accounting purposes, we classify accounting changes into three categories. What are they?

Provide a short description of each. (b) In 2008, the Hi-tech construction Ltd. entered into a contract to construct a bridge over the

Padma bridge for Tk.1,00,00,000. The bridge was completed in 2010. In formation related to the contract is as follow:

2008 (Tk.) 2009 (Tk.) 2010 (Tk.) Cost incurred during the year 24,00,000 36,00,000 22,00,000 Estimated costs to complete off year end 36,00,000 20,00,000 -

Required: A schedule for computation of the revenues, expenses and profit (Loss) for years as per IAS-II.

[Marks: (6+14) = 20]

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CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 201. ADVANCED FINANCIAL ACCOUNTING-I.

Q. No. 3. (a) How available cash is prorated between unsecured bank loan, creditors and other unsecured

creditors under Insolvency act 1997? (b) Mr. P. Kotler of Khulna became insolvent. As on December 31, 2010, his financial information

were as follows: Taka Creditors for purchase 4,00,000 Salary and wages to clerk and workers (five months) 9,600 House Rent due (four months) 10,800 Municipal Tax due 1,500 Income tax payable 15,000 Bank loan secured by lien on merchandise (book value Tk. 6,000) 30,000 Furniture (estimated to realise Tk. 6,000) 12,000 Merchandise Inventory (expected to realise 80%) 90,000 Cash in hand 6,000 Book debts: Good 15,000

Doubtful (expected to realise 50%) 30,000 Bad 9,000

Household furniture 30,000 Bills Receivable (Tk. 6,000 bad) 21,000 Bills payable 30,000 Bills Receivable discounted (Tk. 3000 bad) 9,000 Shares in SP Ltd. (estimated to realize Tk. 2,25,000) 2,74,500 Creditors holding first charge on above shares 60,000 Creditors holding second charge on above shares 180,000 Loss through betting 15,000 Building (estimated to realise Tk. 1,50,000) 1,20,000 Creditors secured by building 90,000

Mr. P. Kotler started his business five years back with a Capital of Tk. 2,70,000. His drawings were Tk. 15,000 a year. Out of his drawings he bought one mobile phone set for his son for Tk. 3,000. Interest on capital Tk. 2,000 per year. Out of the creditors for purchase Tk. 12,000 is now unclaimable. Mrs. P. Kotler gave a jewellery valued at Tk. 15,000. Realisation and administrative expenses paid by the receiver Tk. 15,000. Instructions: Draw up (i) statement of affairs and (ii) Deficiency account as per Insolvency act, 1997.

[Marks: (4+16) = 20] Q. No. 4. (a) Under what general conditions is the installment sales method of accounting preferred to the

full accrual method? (b) What special recognition problems arise in accounting for franchise fees? (c) On January 1, 2010 Bapa Company Ltd. sold property for Tk.4,00,000. The note will be

collected as follows:

Year 2010 Tk.2,00,000 Year 2011 Tk.1,20,000 Year 2012 Tk.80,000

The property had cost Bapa Co. Ltd. Tk.3,00,000 when it was purchased in 2009.

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CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 201. ADVANCED FINANCIAL ACCOUNTING-I.

Q. No. 4. (Contd..)

Instructions: (i) Compute the amount of gross profit realized in each year, assuming Bapa Co. Ltd. uses

the Cost Recovery method. (ii) Compute the amount of gross profit realized each year assuming Bapa Co. Ltd. uses the

Installment Sales method. (iii) Show the journal entries for the year 2010 under both the methods inscribed above.

[Marks: {2+3+(5x3)} = 20]

Q. No. 5. (a) Mention four different transactions originating with the branch that affect the reciprocal

accounts. (b) The Sun-Moon Company has its Home Office in Dhaka and a Branch at Coxs Bazar. The

Branch received all its supplies from the Home Office, which are marked up at 25% on cost. Both the Home Office and Branch uses perpetual inventory system. The following information were available from the books of Home Office and the Branch as on 31-12-2010: (i) The Home Office sent a cheque of Tk.50,000 to the Branch. The Branch deposited the

cheque in its Bank Account. (ii) The Home Office shipped merchandise costing Tk.2,00,000 to the Branch. (iii) The Branch purchased merchandise on account costing Tk.20,000 from outside. (iv) The Branch returned defective merchandise with a billed price of Tk.5,000 to the Home

Office. (v) The Home Office billed the Branch Tk.25,000 for services performed and for

depreciation Tk.5,000. (vi) Expenses of Tk.20,000 incurred and paid by the Branch. (vii) The Branch purchased an equipment amounting to Tk.50,000. (viii) The Branch sold all the merchandise received from the Home Office: In cash Tk. 1,00,000 And on accounts Tk.2,00,000 (ix) The Branch collected Tk.1,50,000 from accounts receivable. (x) 2% of accounts receivable was uncollectible. (xi) At the end of the year the Branch had Tk.5,000 of accrued expenses. (xii) The Branch had an inventory at year end of Tk.20,000, all of which was purchased by the

Branch from outside. Required: (i) Give journal entries in the books of both Home Office and Branch. (ii) Give necessary adjusting and closing entries in the books of Branch. (iii) Give the adjusting entries in the books of Home Office.

[Marks: (5+15) = 20]

= THE END =

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PROFESSIONAL LEVEL-II SUBJECT: 202. MANAGEMENT ACCOUNTING.



Q. No. 1. (a) Far East Telecom Ltd. has organized a new division to manufacture and sell mobile telephones.

Monthly costs associated with the mobile phones and with the plant in which the mobile phones are manufactured are as shown below:

Manufacturing costs: Variable costs per unit:

Direct Materials Tk.48.00 Variable manufacturing overheads Tk.2.00 Fixed manufacturing overheads Tk.3,60,000

Selling and administrative costs: Variable 12% of sale Fixed (Total) Tk.4,70,000

Far East Telecom regards all of its workers as full time employees and the company has a long-standing no layoff policy. Furthermore, production is highly automated. Accordingly, the company has included in its fixed manufacturing overheads all of its labor costs. The mobile phones sell for Tk.150 each. During, September, the first month of operations, the following activity was recorded:

Units produced 12,000 Units sold 10,000

Required: (i) Prepare an income statement for the month using absorption costing. (ii) Prepare an income statement for the month using variable costing. (iii) Reconcile the absorption costing & variable costing net income, varies if any.

(b) ABC Company Limited having an installed capacity of 1,00,000 units of product is currently operating at 70% utilization. At current levels of input prices, the FOB unit cost (after taking credit for applicable export incentives) work out as follows:

Capacity utilization (per unit) FOB unit costs (in Tk.) 70.00 97.00 80.00 92.00 90.00 87.00 100.00 82.00

The company has received three foreign offers from different sources as under: Source A 5,000 units at Tk.55.00 per unit FOB Source B 10,000 units at Tk.52.00 per unit FOB Source C 10,000 units at Tk.51.00 per unit FOB Required: Advise the company as to whether any or all the export order should be accepted or not.

[Marks: (15+10) = 25]

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CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 202. MANAGEMENT ACCOUNTING.

Q. No. 2. (a) Dynamic Foods Ltd. which recently launched a new product, Tastewell, after initial estimation

of demand and costs, would like to have a review through fresh projections based on the available information on actual production, costs, and revenue. The product is sold in one kg home packs. Performance, pertaining to the previous two quarters, detailed below, can be projected to the future. There were no inventories at the end of each quarter. Tax incidence can be reckoned at 50%.

First quarter (Tk.) Second quarter (Tk.) Sales 60,000 packs 96,00,000 - Sales 80,000 packs - 1,28,00,000 Cost of goods sold 58,00,000 70,00,000 Gross profit 38,00,000 58,00,000 Selling and administration expenses 48,00,000 52,00,000 Profit before tax (10,00,000) 6,00,000 Tax (50%) - 3,00,000 Profit after tax (10,00,000) 3,00,000

Required: (i) What is the break even volume in terms of quarterly sales of home packs? (ii) On an investment of Tk.10,00,000 for Tastewell, an after-Tax return of 15% is expected.

What should be the volume of sales and the sales revenue for getting this return? (iii) The marketing manager of Dynamic Foods Ltd. expects a 20% increase in sales over the

second quarter, if a reduction of Tk.10 per pack in price is coupled with an advertisement outlay of Tk.6,00,000. Should this proposal be accepted?

[Marks: (5+5+10) = 20]

(b) Compute the missing data indicated by the question marks from the following: Product R Product S Sales quantity (standard) ? 400 Actual (Units) 500 ? Price/Unit Standard (Tk.) 12 15 Actual (Tk.) 15 20 Sales price variance ? ? Sales volume variance 1200 F ? Sales value variance ? ?

Sales mix variance for both the products together is Tk. 450F. [Marks: 10]

Q. No. 3. Jhonson Building Supplies are prepare to purchase and sales budget for the year 2009. All sales of Jhonson Building Supplies (JBS) are made on credit. Sales are billed twice monthly, on the 10th of the month for the last half of the prior months sales and on the 20th of the month for the first half of the current months sales. The terms of the sales are 2/10, net 30. Based on past experience, the collection of accounts receivable is as follows:

Within the discount period 80% On the 30th day 18% Uncollectible 2%

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CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 202. MANAGEMENT ACCOUNTING.

Q. No. 3. (Contd..)

The sales value of shipments for May 2009 was Tk. 7,50,000. The forecasted sales for the next 4 months are:

June Tk. 8,00,000 July Tk. 9,00,000 August Tk. 9,00,000 September Tk. 7,50,000

JBSs average markup on its products is 20% of the sales price. JBS purchases merchandise for resale to meet the current months sales demand and to maintain a desired monthly ending inventory of 25% of the next months sales. All purchase are on credit with terms of net 30. JBS pays for one-half of a months purchases in the month of purchase and the other half in the month following the purchase. All sales and purchase occur uniformly throughout the month. Required: (i) How mach cash can JBS plan to collect from accounts receivable collections during July 2009? (ii) How mach can JBS plan to collect in September from sales made in August 31, 2009. (iii) Compute the budgeted value of JBS inventory on August 31, 2009? (iv) How mach merchandise should JBS plan to purchase during June 2009? (v) How mach should JBS budget in August 2009 for the payment for merchandise purchased?

[Marks: (4 x 5) = 20] Q. No. 4. (a) Write short notes on:

(i) Relevant Costing; (ii) Just in Time in Inventory; (iii) Divisional Profit.

(b) National Company is considering the introduction of a new product. To determine a target selling price, the company has gathered the following information:

Number of units to be produced and sold each year 14,000 Cost of unit produced Tk. 25 Projected annual selling, general & administrative expenses 50,000 Estimated investment required by the company 7,50,000 Desired return on investment (ROI) 12%

Required: (i) Compute the markup the company will have to use to achieve the desired ROI. (ii) Compute the target-selling price per unit.

[Marks: {(3 x 5) + 10} = 25]

= THE END =

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PROFESSIONAL LEVEL-II SUBJECT: 203-COMMERCIAL & INDUSTRIAL LAWS

Time: Three hours Full Marks: 100 Answer FIVE questions taking at least TWO from each group A and B Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

GROUP A: COMMERCIAL LAW

Q. No. 1. Briefly discuss the following: (a) An agreement is the sum total of offer and acceptance discuss. (b) Describe whether a price list to sell goods in a shop can be treated as an offer? (c) When consent is said to be free?

[Marks: (5+5+10) = 20]

Q. No. 2. Discuss the rules regarding minors agreement in details.

[Marks: (20)]

Q. No. 3. (a) No seller can give the buyer a better title of goods than he himself has. Explain. Discuss the

exception of this rule. (b) Discuss the essential elements of contract for sale of goods. (c) What are the differences between condition and warranty?

[Marks: (8+6+6) = 20]

Q. No. 4. (a) Discuss the different types or methods of Arbitration. (b) Describe the provision related to registration under Trade Mark Act-1940. (c) Describe the law related to application for and grant of Patent as per Patent and Design Act-

1911. (d) Mention in what type of work has copy right as per Copy Right Act2000.

[Marks: (5+5+5+5) = 20]

Q. No. 5. Write short notes on the followings (Any five): (a) Caveat Emptor. (b) Common Carrier. (c) Sub-agent & Co-Agent. (d) Quasi Contract. (e) Copy right Board. (f) Bailment & Pledge. (g) Charter Party. (h) Bill of Lading.

[Marks: (5 x 4) = 20]

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CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 203-COMMERCIAL & INDUSTRIAL LAWS

GROUP B: INDUSTRIAL LAW

Q. No. 6. Differentiate between the following: (a) Casual worker and Badly worker. (b) Temporary and permanent worker. (c) Lay off and Retrenchment. (d) Probation and Temporary in terms of employment. (e) Participation Fund and Welfare Fund.

[Marks: (4 x 5) =20]

Q. No. 7. (a) What is dismissal? What are the grounds of dismissal? (b) Under what circumstances and employer can stop any section or sections of the establishment

and for that what procedures he has to follow as per the Bangladesh Labour Act-2006? [Marks: (10+10) = 20]

Q. No. 8. Define the following as per the Bangladesh Labour Act 2006: (a) Manufacturing Process. (b) Commercial Establishment. (c) Industrial establishment. (d) Wages.

[Marks: (4 x 5) = 20]

Q. No. 9. (a) What are the objectives of Industrial Law? Discuss the necessity of Industrial Police in the

context of Bangladesh. (b) Define Collective Bargaining Agent. State the rules regarding appointment and election of

Collective Bargaining Agent. (c) Discuss the employers responsibility for Payment of Compensation as per the Bangladesh

Labour Act, 2006.

[Marks: (7+7+6) = 20] Q. No. 10. State the procedures for settlement of an industrial dispute.

[Marks: 20]

= THE END =

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PROFESSIONAL LEVEL-II SUBJECT: 204. TAXATION.



Q. No. 1. Write short note on the following under the Income Tax Ordinance 1984: (a) Return of withholding tax; (b) Corporate Social Responsibility (CSR) expenditure; (c) Annual Information Return; (d) Surcharge if net wealth exceeds Tk. 2 crore.

[Marks: (4 x4) = 16] Q. No. 2. (a) What are the conditions to be fulfilled to keep outside the scope of tax audit under the Income

Tax Ordinance (ITO) if an assessee shows at least 20% higher income? (b) In what situation, an assessee will have to pay tax over and above final settlement of tax

liability under section 82C of the ITO? (c) Specify the requisite tax to be paid at every stage of First Appeal, Appeal to the Tribunal,

Reference to the High Court Division and Reference to the Appellate Division under the ITO. (d) Briefly discuss the role of Facilitator, Applicant-assessee/Authorized Representative and

Commissioners/Commissioners Representative in resolving dispute through the Alternate Dispute Resolution under the ITO.

[Marks: (4 x5) = 20] Q. No. 3. From the following particulars compute the total income and tax liability of Mr. X for the income year ending 30 June, 2011:- (a) Salary Income:

Basic salary Tk. 20,000 p.m. Entertainment allowance-20% of basic salary. Bonus equivalent to 2 months basic salary. Free accommodation (out of which 1 room was sub-let by Mr. X for Tk.3,000 p.m.). Medical allowance- Tk. 500 p.m. Conveyance allowance-Tk. 1,200 p.m. Subscription to RPF-10% (Employer also contributed the same).

(b) Interest on Securities: Interest on SEC approved debenture Tk. 10,000. Interest on Government securities Tk.70,000 (TDS @ 10% Tk.7,000 under upfront system 3 years ago).

(c) Income from House Property: Mr. X has one residential house-one half of which is let out at a monthly rent of Tk. 50,000 and the other half is self-occupied. Following actual expenditures were incurred by Mr. X for the full house:

Taka Municipal tax 20,000 Repairs and maintenance 60,000 Insurance premium 12,000 Salary of caretaker 30,000 Interest on house building loan (total loan amount Tk. 32,00,000) 1,47,000

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CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 204. TAXATION.

Q. No. 3. . Contd

(d) Income from Partnership Business: One-third share income from a partnership firm is Tk. 73,000 (after tax). Firms total income Tk. 2,25,000. Firm did not pay any tax rather it prefers appeal and now it is pending at appeal stage.

(e) Capital Gain: Gain from sale of shares of listed companies Tk. 5,27,335.

(f) Income from Other Sources: Cash dividend (net) from a listed company Tk. 45,000. Stock dividend of 100 share (Face value Tk.10 but market price on that day Tk. 1,500 per share). Interest (net) on savings bank account Tk. 5,400.

(g) During the year Mr. X made the following investments:- (1) Life insurance premium in the name of his dependent old father Tk. 60,000 (Policy Value

Tk. 5,00,000); (2) Investment in secondary shares of listed companies Tk. 1,00,000; (3) Donation to Prime Ministers relief fund Tk. 10,000.

[Marks: 20] Q. No. 4. You are given the following Profit and Loss Account of ABC Company for the year ended 31st December, 2010:

Dr. Cr. Particulars Taka Particulars Taka To Cost of Goods Sold Salaries and Allowances Rent and Electricity Telephone and Postage Interest on Loan Traveling Allowance Legal Expenses Advertisement Charity Audit Fees Income Tax paid in Advance Fines Contribution to Provident Fund Entertainment Depreciation Net Profit

35,00,000 42,50,000 1,90,000

30,000 35,000 25,000 14,000 31,000 10,000 25,000

2,00,000 20,000 20,000 54,000

1,80,000 5,73,000

By Sales Dividend Interest on Bank Deposit Profit on Sale on Machineries Interest on Government Securities Sundry Incomes Refund of Income Tax Bad Debt Recovered

89,80,000 16,000 14,400

30,000

10,000 5,000

30,000 71,600

91,57,000 91,57,000

(1) Depreciation allowed by income tax authority was Tk. 1,15,000. (2) Salaries and Allowances included Tk. 10,50,000 from which taxes were not deducted at source.

Moreover excess perquisites were given Tk. 3,70,000. All salaries were paid in cash. Salaries included incentive bonus Tk.6,00,000. An employees minimum monthly salary was Tk.15,000.

(3) Interest on loan was given to a sister concern. The loan amount was Tk. 3,50,000 though it was not received through bank transfer or crossed cheque but it was properly reflected in both the audited accounts.

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CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-II SUBJECT: 204. TAXATION.

Q. No. 4. .. Contd

(4) Legal expenses included Tk. 10,000 paid for Income Tax Appeal. (5) Travelling allowance included Tk. 20,000 paid to the General Manager for overseas traveling in

connection with business. (6) The machine sold was purchased six years ago and its book value was Tk. 42,000 but its written

down value as per Income Tax law was Tk.12,000. The cost price and the sales price of the machine were Tk. 62,000 and Tk. 72,000 respectively. Required: Determine the Tax Liability of the Company (applying tax rate first and then

minimum tax on gross receipt) assuming it to be a listed company. [Marks: 20]

Q. No. 5. (a) What do you mean by prohibited goods under the Customs Act 1969? Mention the new items

included in the list of prohibited items under section 15 of the Customs Act 1969 effective from July 1, 2011.

(b) Discuss the penal provision in the Customs Act 1969 regarding false statement in the documents by the importer.

(c) What are the provisions under the Baggage Rules if a person booked his luggage by air? (d) Discuss the mode of levy on travel by air and travel by land and sea. Who is responsible to

collect tax on travel by air? Is there any scope to exempt or reduce such tax? What is the procedure to get refund to foreign Travel Tax?

[Marks: (3+2+2+5) = 12]

Q. No. 6. (a) Under section 3(3)(e) of the VAT Act 1991, a service recipient has been made a legal taxpayer

from 2011-12 through amendment by the Finance Act 2011. Required:

(i) Give your critical comment on this new provision effective from 2011-12. (ii) Mention the legal implications of earlier imposition of VAT on commercial rent as

leaseholder in 2009-10 and on tenant of place and establishment in 2010-11. (b) What are the new provisions of VAT deducted at source and VAT collected in advance? How is

input tax allowed for VAT deducted at source and VAT collected in advance? [Marks: {(3+4) + 5} = 12]

= THE END =

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PROFESSIONAL LEVEL-III SUBJECT: 301. ADVANCED FINANCIAL ACCOUNTING-II.



Q. No. 1. The Balance Sheet of MSU Ltd. as on 31st December 2009 is as follows:

Liabilities Amount (Tk.) Total (Tk.) 7% cumulative Redeemable preference share @ Tk.100 each 5,00,000 Ordinary shares @Tk.100 each 7,50,000 Bank overdraft 1,00,000 Liabilities for goods supplied 1,50,000 Liabilities for other finance 45,000 Liabilities for expense 5,000 15,50,000 Assets: Goodwill 2,00,000 Land & Building 4,00,000 Plant & Machinery 3,00,000 Furniture & Fixtures 50,000 Motor Car 15,000 Stock in trade 1,80,000 Accounts Receivable 1,25,000 Cash in hand 5,000 Cash at Bank 25,000 Retained Earnings 2,50,000 15,50,000

The business has passed through a depression but the worse, seems to have been over. Preference dividends are in arrear to the extent of Tk.1,94,240. No depreciation has been provided on the fixed assets. The net assets appearing in the Balance Sheet as on 31st December 2009 are considered to be worth Tk.7,15,000. The company is assured of good future. Do you think any re-organization of capital is desirable? Draft your recommendation in a Report Form.

[Marks: 20] Q. No. 2. A Ltd., B Ltd., C Ltd. and D Ltd., companies form the ABCD Group. Their Balance Sheets at 31st December 2009 was as follows: (Amounts in Taka)

Liabilities A Ltd. B Ltd. C Ltd. D Ltd. Ordinary share of Tk.1.00 each 2,00,000 80,000 60,000 20,000 Preference share of Tk.1.00 each 1,00,000 50,000 - - Retained Earnings 2,50,000 95,000 65,000 25,000 Debentures 50,000 - 30,000 - Sundry Creditors 1,70,000 90,000 40,000 30,000 Taxation 60,000 40,000 25,000 10,000 Proposed Dividend 40,000 30,000 20,000 5,000 Total 8,70,000 3,85,000 2,40,000 90,000

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CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-III SUBJECT: 301. ADVANCED FINANCIAL ACCOUNTING-II. Q. No. 2. (Contd.)

Assets: A Ltd. B Ltd. C Ltd. D Ltd. Fixed Assets 4,90,000 2,15,000 86,000 70,000 Investment 1,32,000 87,000 13,000 - Stock 78,000 28,000 70,000 10,000 Sundry Debtors 82,000 36,000 22,000 5,000 Cash 88,000 19,000 49,000 5,000 Total 8,70,000 3,85,000 2,40,000 90,000

You are given the following additional information: (a) A Ltd. acquired 75% of the ordinary shares and 50% of the preference shares of B Ltd., in 2004

when the reserves of B Ltd. were Tk.40,000. (b) B Ltd. acquired 80% of the ordinary shares and 2/3rd of the debentures of C Ltd. in 2006 when the

reserves of C Ltd. were Tk.20,000. (c) C Ltd. acquired 40% of the ordinary shares of D Ltd. on 31st December 2009. (d) A Ltd. acquired 50% of the ordinary shares of D Ltd. on 31st December 2009. (e) The relevant companies have all taken account of intra-group dividends receivable by them

including such dividends in debtors and their reserves. Preference dividends and debenture interest have already been paid.

(f) The stock of B Ltd. includes goods purchased from C Ltd. at an invoice price to B Ltd. of cost plus 30%. The cost of these goods to C Ltd. was Tk.10,000. They are included in the stock of B Ltd. at a value of Tk.12,000.

You are required to prepare the consolidated Balance Sheet of A Ltd. and its subsidiaries at 31st December 2009.

[Marks: 20] Q. No. 3. (a) How Govt. Accounting differs from Non-Govt. Accounting? (b) Discuss importance of Human Resource Accounting in the perspective of a business entity. (c) The following information are related to M/S Jamjam Ltd.

Balance Sheet at January 01, 2009 Million (Taka) Property, plant, and equipment 7,000 Goodwill 3,000 Intangible assets 2,000 Financial assets 6,000 Total non-current assets (a) 18,000 Trade and other receivables 7,000 Other receivables 1,600 Cash and cash equivalents 700 Total current assets (b) 9,300 Total assets (a+b) 27,300 Issued capital 6,000 Revaluation reserve 1,500 Retained earnings 6,130 Total equity (d) 13,630 Interest-bearing loans 8,000 Trade and other payables 4,000 Employee benefits 1,000 Current tax liability 70 Deferred tax liability 600 Total liabilities (e) 13,670 Total equity and liabilities (d+e) 27,300

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CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-III SUBJECT: 301. ADVANCED FINANCIAL ACCOUNTING-II. Q. No. 3. (Contd.) (i) Tax bases of the above assets and liabilities are the same as their carrying amounts except for

Tax base Million Taka Property, plant, and equipment 1,400 Trade receivables 7,500 Interest-bearing loans 8,500 Financial assets 7,000

* The intangible assets are development costs that are allowed for tax purposes when the cost is incurred. The costs were incurred in 2007.

* Included in trade and other payables is an accrual for compensation to be paid to employees. It is allowed for taxation when the payment is made and totals Tk. 200 million.

(ii) During 2008, a building was revalued. At January 01, 2009, there was Tk. 1,500 million remaining in the revaluation reserve in respect of this building.

(iii) The following adjustments to the financial statements will have to be made to comply with IFRS 1, First-Time Adoption of IFRS, on January 1, 2009. * Intangible assets of Tk. 400 million do not qualify for recognition under IFRS 1. * The financial assets are all classified as at fair value through profit or loss and their fair value is

Tk. 6,500 million, which is to be included in the IFRS accounts. * A pension liability of Tk. 50 million is to be recognized under IFRS 1 that was not recognized under

local generally accepted accounting principles (GAAP). The tax base of the liability is zero. (iv) The entity is likely to be very profitable in the future. Required:

Calculate the deferred tax provision at January 1, 2009, showing the amount of the adjustment required to the deferred tax provision and any amounts to be charged to revaluation reserve. (Assume a tax rate is 30%)

[Marks: (3+3+14) = 20] Q. No. 4. Financial information for Tremendous Enterprises Inc. for the year ended December 31, 2010.

Tremendous Enterprises Inc. BALANCE SHEET

As of December 31, 2010 and 2009 2010 2009 Assets Cash and cash equivalents Tk. 4,500 Tk. 1,500 Trade receivables 7,500 3,750 Inventory 3,000 2,250 Intangible asset, net 1,500 2,250 Due from associates 28,500 28,500 Property, plant, and equipment (cost) 18,000 33,750 Accumulated depreciation (7,500) (9,000) Property, plant, and equipment (net) 10,500 24,750 Total assets Tk. 55,500 Tk. 63,000 Liabilities Accounts payable Tk. 7,500 Tk. 18,750 Income taxes payable 3,000 1,500 Deferred taxes payable 4,500 3,000 Total liabilities 15,000 23,250 Shareholders equity: Share capital 9,750 9,750 Retained earnings 30,750 30,000 Total shareholders equity 40,500 39,750 Total liabilities and shareholders equity Tk. 55,500 Tk. 63,000

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CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-III SUBJECT: 301. ADVANCED FINANCIAL ACCOUNTING-II. Q. No. 4. (Contd.)

Tremendous Enterprises Inc. STATEMENT OF INCOME

For the year Ended December 31, 2010

Sales Tk. 45,000 Cost of sales (15,000) Gross operating income 30,000 Administrative and selling expenses (3,000) Interest expenses (3,000) Depreciation of properly, plant, and equipment (3,000) Amortization of intangible asset (750) Investment income 4,500 Net income before taxation 24,750 Taxes on income (6,000) Net income after taxation Tk. 18,750

Additional Information: This additional information is relevant to the preparation of the statement of cash flows: (i) All sales made by Tremendous Enterprises Inc. (company) are credit sales. All purchases are

on account. (ii) Interest expense for the year 2010 was Tk. 3,000, which was fully paid during the year. (iii) The company pays salaries and other employee dues before the end of each month. All

administration and selling expenses incurred were paid before December 31, 2010. (iv) Investment income comprised dividends income form investments in shares of blue chip

companies. This was received before December 31, 2010. (v) Equipment with a net book value of Tk. 11,250 and original cost of Tk. 15,750 was sold for Tk.

11,250. (vi) The company declared and paid dividends of Tk. 18,000 to its shareholders during 2010. (vii) Income tax expense for the year 2010 was Tk. 6,000, against which the company paid Tk. 3,000

during 2010 as an estimate. Required: Using the above financial information for Tremendous Enterprises Inc., prepare the cash flow statement according to the requirements of IAS 7 under direct method.

[Marks: 20]

Q. No. 5. (a) Define ethical behavior. Mention at least six codes of ethics should be followed by the

practicing Cost and Management Accountants of Bangladesh. (b) What are the steps/procedures should be followed for recording transaction of foreign branch in

home country? (c) State the conceptual framework for human resource accounting. (d) Discuss the general principles of governmental accounting and state the basic structure of the

form of the governmental accounts. [Marks: (4 x 5) = 20]

= THE END =

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PROFESSIONAL LEVEL-III SUBJECT: 302. ADVANCED COST ACCOUNTING.



Q. No. 1. (a) Express an opinion as to the usefulness of data, derived from process costing, for the control of

costs. (b) Western Corporation has two producing departments, Fabricating and Finishing. In the

Fabricating Department, Polyplast is prepared from Miracle Mix and Bypro. In the Finishing Department, each unit of Polyplast is converted into six Tetraplexes and three Uniplexes. Service departments provide services to both producing departments.

The Fabricating and Finishing Departments use process cost procedures. Actual production costs, including factory overhead, are allocated monthly.

Service department expenses are allocated to producing departments as follows:

Expenses Fabricating Finishing Building Maintenance Tk.30000 Tk.15000 Timekeeping and personnel Tk.16500 Tk.11000 Others Tk.19500 Tk.19500

Materials inventory and work in process are costed on a fifo basis. The Fabricating Department records for December show:

Quantities (units of Polyplast): In process, December 1 3000 Started in process 25000 Total units to be accounted for 28000 Transferred to Finishing Department 19000 In process, December 31 6000 Normal losses throughout the process 3000 Total units accounted for 28000 Cost of work in process, December 1: Materials Tk.13000 Labor Tk.17500 Factory overhead Tk.21500 Tk.52000 Direct labor cost Tk.154000 Departmental factory overhead (excluding service department allocation) Tk.132000

Polyplast work in process at the beginning and end of the month was partially completed as follows:

Materials Labor and Factory overhead December 1 66% 50% December 31 100% 75%

Materials inventory records for December indicate:

Miracle Mix Bypro Quantity Amount Quantity Amount Balance, December 1 62000 Tk.62000 265000 Tk.18550 Purchase: December 12 39500 Tk.49375 December 20 28500 Tk.34200 Fabricating Department usage 83200 50000

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CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-III SUBJECT: 302. ADVANCED COST ACCOUNTING. Q. No. 1. (Contd..)

Required (1) Compute the equivalent number of units of Polyplast for materials and conversion costs. (2) (a) Determine the total Fabricating Department cost to be accounted for.

(b) Compute the unit costs of materials, labor, and factory overhead for the Fabricating department

(c) Compute the cost of units transferred to the Finishing Department, and the cost of ending work in process inventory in the Fabricating Department.

(3) Complete requirements (1) and (2) above, assuming that work in process inventory is costed using the average method. (Round unit costs to the nearest Taka)

[Marks: (5+5+5+5) = 20] Q.No. 2. (a) How may the revenue form the sale of by products be shown on the income statement? (b) When it is necessary to allocate joint costs to joint products?

(c) PHL Corporation Produces three products Padma, Meghna and Jamuna. Padma and Jamuna are joint products, while Meghna is by product of Padma. No joint cost is to be allocated to the by-product. The production processes for a given year are as follows: (i) In Department 1, 110000 pounds of material, X, are processed at a total cost of

Tk.120000. After processing, 60% of the units are transferred to Department 2 and 40% of the units (now Jamuna) are transferred to Department 3.

(ii) In department 2, the material is further processed at a total additional cost of Tk.38000. Seventy percent of the units (now Padma) are transferred to Department 4 and 30% emerge as Meghna, the by-product, to be sold at Tk.1.20 per pound. The marketing expenses related to Meghna is Tk.8100.

(iii) In Department 4, Padma is processed at a total additional cost of Tk.23660. After processing, Padma is ready for sale at Tk.5 per pound.

(iv) In Department 3, Jamuna is processed at a total additional cost of Tk.165000. In this department, a normal loss of units of Jamuna occurs, which equals 10% of the good output of Jamuna. The remaining good output is sold for Tk.12 per pound.

Required: (1) Prepare a schedule showing the allocation of the Tk.120000 joint cost between Padma and Jamuna,

using the market value at a split-off point and treating the net realizable value of Meghna as an addition to the sales value of Padma.

(2) Prepare a statement of gross profit for Padma, independent of the answer to requirement (1), assuming that: (a) Tk.102000 of total joint cost was appropriately allocated to Padma. (b) 48000 pounds of Padma and 20000 pounds of Meghna were available for sale. (c) During the year, sales of Padma were 80% of the pounds available for sale. There was no

beginning inventory. (d) The net realizable value of Meghna available for sale is to be deducted form the cost of

producing Padma. The ending inventory of Padma is to be based on the net cost of production. (e) All other costs, sales prices and marketing expenses are those presented in the facts of the

original problem. [Marks: (3+3+7+7) = 20]

Q. No. 3. (a) What are the important factors involved in selecting the rate to be used for applying the factory

overhead of a producing department? (b) Dynamic Company manufactures a complete line of radios. Because a large number of models

have plastic cases, the company has its own molding department for producing them. The month of April was devoted to the production of the plastic case for one of the portable radios Model SX76.

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CMA AUGUST, 2011 EXAMINATION PROFESSIONAL LEVEL-III SUBJECT: 302. ADVANCED COST ACCOUNTING. Q. No. 3. (Contd..)

The Molding Department has two operations molding and trimming; there usually is no interaction of labor in these two operations. The standard labor cost for producing 10 plastic cases for Model SX76 is as follows:

Molding: hour @ Tk.6 Tk.3.00 Trimming: hour @ Tk.4 Tk.1.00 Tk.4.00

During April, 70000 plastic cases were produced in the Molding Department; however, 10% of these cases had to be discarded because they were found to be defective at final inspection. The Purchasing Department had changed to a new plastic supplier to take advantage of a lower price for comparable plastic. The new plastic turned out to be of a lower quality, resulting in the rejection of the 7000 cases. Direct labor hours worked and direct labor costs charged to the Molding Department are as follows:

Molding: 3800 hours @Tk.6.25 Tk.23750 Trimming: 1600 hours @ Tk.4.15 Tk.6640 Total labor charges Tk.30390

As a result of poor scheduling by the Production Scheduling Department, the supervisor of the Molding Department had to shift molders to the trimming operations for 200 hours during April. The company paid the molding workers their regular hourly rate, even though they were performing a lower-rated task. There was no significant loss of efficiency caused by the shift. In addition, as a result of unexpected machinery repairs required during the month, 75 hours and 35 hours of idle time occurred in the molding and trimming operations, respectively.

The monthly report which compares actual costs with standard cost of output for April shows the following labor variance for the Molding Department:

Actual labor cost for April Tk.30390 Standard labor cost of output {63000 x (Tk.4/10)} Tk.25200 Unfavorable labor variance Tk.5190

This variance is significantly higher than normal.

Required: (1) Prepare a detailed analysis of the unfavorable labor variance for the Molding Department,

showing the variance resulting from (a) labor rates; (b) labor substitution; (c) material substitution; (d) operating efficiency; (e) idle time.

(2) Evaluate the Molding Department supervisors argument that the variances due to labor substitution and change in raw materials should not be charged to the department

[Marks: (4+8+8) = 20] Q. No. 4. (a) How should marketing expenses be classified in order to find the cost of selling jobs or

products? (b) Pacific Food Inc., a grocery chain consisting of these stores, operates in a state that permits each

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ICMA Questions Aug 2011