AIMA Exam Solution 2021 FM11 FINANCIAL AND MANAGEMENT ACCOUNTING

 𝐀𝐢𝐦𝐚 𝐬𝐨𝐥𝐯𝐞𝐝 𝐞𝐱𝐚𝐦 𝐬𝐨𝐥𝐮𝐭𝐢𝐨𝐧𝐬 𝟐𝟎𝟐𝟏 

𝐅𝐨𝐫 𝐒𝐨𝐥𝐮𝐭𝐢𝐨𝐧 𝐂𝐚𝐥𝐥 𝐚𝐭 +𝟗𝟏-𝟗𝟗𝟏𝟏𝟖𝟗𝟗𝟒𝟎𝟎 (𝐖𝐡𝐚𝐭'𝐬 𝐀𝐩𝐩 𝐀𝐯𝐚𝐢𝐥𝐚𝐛𝐥𝐞)

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Please note: There are 25 questions out of which Q.No.21-25 are based on the Case Study.

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Subject Code: FM11

Subject Name: FINANCIAL AND MANAGEMENT ACCOUNTING

Component name: TERM END Assignment Start Date: 10/02/2021

Assignment End Date: 20/02/2021

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Question 1:- Which of the following statements is true?

a)   All costs are controllable                        

b)   Fixed cost per unit remains constant                        

c)   Depreciation is an out-of-pocket cost                        

d)   An item of cost that is direct for one business may be indirect for another                        

Question 2:- The costing method in which fixed factory overheads are added to inventory is —

a)   Direct costing                        

b)   Marginal costing                        

c)   Absorption costing                        

d)   Activity based costing                        

Question 3:- If the total cost for producing 1000 units is Rs. 12000, and for 1100 units, it is 13,000; the nature of cost is

a)   Variable cost                        

b)   Fixed cost                        

c)   Semi variable cost                        

d)   The information is not sufficient                        

Question 4:- V. Ltd. manufactures and markets a single product. The following information is available: Rs. per unit Materials 8.00 Conversion costs (variable) 6.00 Dealer’s margin 2.00 Selling price 20.00 Fixed cost Rs.2,50,000 Present sales, 90,000 units Capacity utilisation: 60 per cent. There is acute competition. Extra efforts are necessary to sell. Suggestions have been made for increasing sales: (i) By reducing sales price by 5% (ii) By increasing dealers margin by 25% over the existing rate. Calculated the units of sales under both options?

a)   Option 1 : 116129 units, Option 2 : 102857 units                        

b)   Option 1 : 102857units, Option 2 : 116129units                        

c)   Option 1 : 116139 units, Option 2 : 102867 units                        

d)   Option 1 : 106129 units, Option 2 : 112857 units                        

Question 5:- _________budgets provide expected revenues and costs for several levels of activity.

a)   Continuous                        

b)   Flexible                        

c)   Master                        

d)   Static                        

Question 6:- Which of the following statements is true?

a)   Management accounting is prepared in accordance with the Generally Accepted Accounting Principles                        

b)   Management accounting focuses on providing information for internal users.                        

c)   Management accounting is mandatory for business organizations because it should be maintained as per various legal statutes                        

d)   The application of Management accounting cannot be extended beyond the traditional accounting system.                        

Question 7:- R Company sells a product for £35. Budgeted sales for the first quarter of 2010 are as follows: January £600,000, February £240,000, March £900,000.The company collects 70% in the month of sale and 25% in the following month. Five percent of all sale are uncollectible and are written off. Budgeted cash receipts for March are _____.

a)   £600,000                        

b)   £690,000                        

c)   £900,000                        

d)   £360,000                        

Question 8:- Which of the following items would be treated as an indirect cost in manufacture of a chair?

a)   Wood used to make a chair                        

b)   Metal used for the legs of a chair                        

c)   Fabric to cover the seat of a chair                        

d)   Staples to fix the fabric to the seat of a chair                        

Question 9:- D Ltd. represents the following data: Rs. Sales 4,00,000 Variable costs 2,40,000 Fixed costs 1,00,000 Net profit 60,000. Find the BEP & Margin of Safety (MOS).

a)   BEP 250000, MOS 250000                        

b)   BEP 150000, MOS 250000                        

c)   BEP 350000, MOS 150000                        

d)   BEP 250000, MOS 150000                        

Question 10:- Material yield variance is favourable if the

a)   Standard quantity for the actual output exceeds actual quantity.                        

b)   Standard output is more than actual output.                        

c)   Actual output exceeds over standard output.                        

d)   Actual quantity exceeds standard quantity for actual output.                        

Question 11:- If the current assets and current liabilities are Rs.2,000 lakh and Rs.1,200 lakh respectively. How much amount can be borrowed on a short-term basis without reducing current ratio below 1.5?

a)   Rs. 400 lakh                        

b)   Rs. 600 lakh                        

c)   Rs. 500 lakh                        

d)   Rs. 450 lakh                        

Question 12:- The term relevant cost applies to all the following decisional situations, except:

a)   Determination of a product price                        

b)   Replacement of equipment                        

c)   Deletion of a product line                        

d)   Manufacture or purchase of component parts                        

Question 13:- V Ltd. has furnished the following cost data for 600 units (which is its 50% capacity) of its product: Variable overhead costs Rs.3,00,000 Fixed overhead costs Rs.5,00,000. The total cost for 950 units is

a)   Rs. 7,00,000                        

b)   Rs. 6,50,000                        

c)   Rs. 9,75,000                        

d)   Rs. 6,00,000                        

Question 14:- W Ltd. produces and sells a product ‘Ferrum’. The company has a P/V ratio of 20%. The company incurs Rs.1,20,000 as fixed cost per annum and its present sales are Rs.90,000 per month. The fixed cost is likely to increase to Rs.1,35,000 and the variable cost is expected to increase by 5% for the next period. The percentage increase in selling price required to maintain the existing level of profit is

a)   4.00%                        

b)   5.00%                        

c)   5.39%                        

d)   5.50%                        

Question 15:- A company makes and sells a single product. At the beginning of period 1, there is no opening stock of the product, for which the variable production cost is Rs.4 and the sale price is Rs.6 per unit. Fixed costs are Rs.2,000 per period of which Rs.1,500 are fixed production costs. The following details are available: The Sales & Production for Period 1 were 1,200 units & 1,500 units and that for period 2 were 1,800 units & 1,500 units respectively. What would be the profit in each period using - (a) Absorption costing. (Assume normal output is 1,500 units per period); and (b) Marginal costing?

a)   Absorption Costing Rs. 500 & Rs 1500. Marginal Costing Rs. 600 & Rs. 1400                        

b)   Absorption Costing Rs. 800 & Rs 1200. Marginal Costing Rs. 700 & Rs. 1300                        

c)   Absorption Costing Rs. 700 & Rs 1300. Marginal Costing Rs. 400 & Rs. 1600                        

d)   Absorption Costing Rs. 800 & Rs 1200. Marginal Costing Rs. 600 & Rs. 1400                        

Question 16:- The following information has been gathered for a company doing jobbing work only for 2013: a) Materials Consumed Rs. 4,00,000/- b) Direct Labour Rs. 3,00,000/- c) Factory Overheads Rs. 2,40,000 d) Office and Administrative Expenses Rs. 94,000 e) Sales Rs. 12,40,800. The company has to quote for a job to be undertaken in February, 2014. It is estimated that the job will require materials costing Rs. 30,000 and direct wages for it will be Rs.45,000. What should be the quotation?

a)   Rs. 146520/-                        

b)   Rs. 150000/-                        

c)   Rs, 120200/-                        

d)   Rs, 165400/-                        

Question 17:- The Material Mix variance calculated is Rs.3456 (A) and Material Usage variance is Rs.1234(F). What will you say about the Material Yield variance?

a)   It will be favourable                        

b)   It will be zero                        

c)   it will be 2,222 adverse                        

d)   None of the above                        

Question 18:- Profit centers can _____.

a)   never be used by organizations regardless of their degree of centralization in decision making                        

b)   be used in both centralized and decentralized organizations                        

c)   only be used if an organization is decentralized in structure                        

d)   only be used if an organization is centralized in structure                        

Question 19:- The Projected sales for Boris Company for the next month and beginning and ending stock data are as follows: Sales 40,000 units Beginning inventory 3,000 units Targeted ending inventory 7,000 units. The selling price is $20 per unit. Each unit requires 4 pounds of material, which costs $5 per pound. The beginning inventory of raw material is 15,000 pounds. The company wants to have 20,000 pounds of material in inventory at the end of the month. Pounds of material to be purchased would be _____.

a)   1,65,000 lbs                        

b)   1,81,000 lbs                        

c)   2,05,000 lbs                        

d)   2,45,000 lbs                        

Question 20:- Z Ltd. has furnished the following standard cost data per unit of output. Direct labour 5 hours at Rs 7.50 per hr. Direct wages paid Rs 2,03,500 for 27,500 hours Actual output 4,900 units. The labour rate variance is:

a)   Rs. 2750 (F)                        

b)   Rs. 2750 (A)                        

c)   Rs. 2850 (F)                        

d)   None of the above                        

Case Study

Wise Works Ltd. is in the business of handloom for the last 15 years and enjoys a good market share and reputation. Along with manufacturing and trading of bed sheets & curtains, it manufactures soft carpets which it sells in the domestic as well as international markets. The standard size of carpets measuring 3 metres wide and 30 metres long. Standard mixture fixed for a batch of 900 sq.m. of soft carpets is 2,000 kg of material X at Rs.1 per kg., 800 kg of material Y at Rs.1.50 per kg., 20 gallons of material Z at Rs. 30 per gallon. During a period, 1,505 standard sized soft carpets were produced from materials issued for 150 batches. The actual usage and cost of materials were 3,00,500 kg of material X at Rs.1.10 per kg, 1,19,600 kg of material Y at Rs.1.65 per kg and 3,100 gallons of material Z at Rs.29.50 per gallon.

Question 21:- The material price variance will be…….

a)   Rs 43,650 Adverse                        

b)   Rs 40,890 Favourable                        

c)   Rs 46,440 Adverse                        

d)   Rs 47,990                        

Question 22:- The material mix variance is…….

a)   Rs.2,630 Adverse                        

b)   Rs.2,698 Favourable                        

c)   Rs.2,630 Favourable                        

d)   Rs.2,698 Adverse                        

Question 23:- The standard cost of 150 batches of 900 sq.m. or 3 x 30 =90 sq.m. x 1,500 soft carpets is……

a)   Rs 4,67,800                        

b)   Rs 6,00,000                        

c)   Rs 5,80,000                        

d)   Rs 5,70,000                        

Question 24:- The actual cost of production will be…..

a)   Rs 6,19,440                        

b)   Rs 6,19,350                        

c)   RS 6,19,340                        

d)   Rs 5,70,000                        

Question 25:- The material yield variance is…….

a)   Rs 1630 favourable                        

b)   Rs 1630 Adverse                        

c)   Rs 2,630 favourable                        

d)   Rs 3,630 Favourable