Section-01

1. Contribution Margin is:

A. Gross Profit less Operating Expenses.

B. Sales less Selling and Admin Expenses.

C. Sales less Variable Expenses.

D. Sales less Fixed Expenses. (1 mark)

2. Write the formula of BEP (in units) (1 mark)

Information for Question No. 3 and 4:

The following information regarding ABC Company is available:

Selling price per unit $530

Costs:

Variable Costs per unit $22.20

Fixed Costs $18,000

3. What will be the Contribution Margin per unit (Show workings clearly) (2 marks)

4. What will be the Net Income if the company sells 1,000 unit of its products? (Show workings

clearly) (2 marks)

5. Under Absorption Costing System, product cost consists of Direct Material, Direct Labor and

variable portion of the Manufacturing Overhead. True or False? (1 mark)

6. Write the Contribution Margin Format of Income Statement. (4 marks)

7. Under Variable Costing System, product cost consists of Direct Material, Direct Labor and

variable portion of the Manufacturing Overhead. True or False? (1 mark)

8. Gyro Gear Company produces a single product, a special gear used in automatic transmissions.

Each gear sells for $28, and the company sells 500,000 gears each year.

Unit cost data are presented below:

Direct material ............................... $6.00

Direct labor ................................... $5.00

Variable Manufacturing overhead ............ $2.00

Fixed MOH ....................................$7.00

Variable Selling & administrative ............ $4.00

Fixed Selling & administrative ............. $4.00

The unit product cost of gears under variable costing is:

A) $13 B) $20 C) $17 D) $27 (1 mark)

9. Information regarding Activity Pools of TMZ Corporation are as follows:

Total Cost Total Activity

Assembly $313,000 28,000 machine hours

Customer Orders $500,000 15,000 orders

Order Size $174,800 28,000 machine hours

Calculate the Activity Rate (ABC Costing Rate) for the above mentioned Activity Pools.(Show

workings clearly) (5 marks)

10. The first budget a company prepares in a master budget is the production budget. True or

False? (1 mark)

11. On January 1, Colver Company has 6,500 units of Product A on hand. During the year, the

company plans to sell 15,000 units of Product A, and plans to have 5,000 units on hand at year end.

How many units of Product A must be produced during the year?

A) 13,500

B) 16,500

C) 15,000

D) 20,000 (1 mark)

12. Write the formula of Operating Leverage (1 mark)

Section- 02

1. Write the formula of Material Quantity and Material Price Variance. (1 mark)

2. Write the formula of Labou Rate and Efficiency Variance. (1 mark)

3. Write the formula of Variable Manufacturing Spending and Efficiency Variance. (1 mark)

4. The following labor standards have been established for a particular product:

Standard labor-hours per unit of output ............. 8.0 hours

Standard labor rate .............................................. $13.10 per hour

The following data pertain to operations concerning the product for the last month:

Actual hours worked ............ 4,000 hours

Actual total labor cost ........... $53,000

Actual output ........................ 400 units

Calculate the Labour Rate and Efficiency Variance. Explain your answer (Show workings clearly) (4

marks)

5. The following materials standards have been established for a particular raw material used in

the company's sole product:

Standard quantity per unit of output .......... 0.1 kg

Standard price ............................................ $18.20 per kg

The following data pertain to operations for the last month:

Actual materials purchased ....................... 5,700 kgs

Actual cost of materials purchased ............ $100,320

Actual materials used in production .......... 5,600 kgs

Actual output ............................................. 55,800 units

Calculate the Material Price and Quantity Variance. Explain your answer (Show workings clearly)

(4 marks)

6. The following standards for variable manufacturing overhead have been established for a

company that makes only one product:

Standard hours per unit of output .............. 5.6 hours

Standard variable overhead rate ................ $19.15 per hour

The following data pertain to operations for the last month:

Actual hours ................................................ 5,100 hours

Actual total variable overhead cost ............. $99,195

Actual output ............................................... 1,100 units

Calculate the Variable MOH Spending and Efficiency Variance. Explain your answer (Show

workings clearly) (4 marks)

7. Explain which Material Variance (Quantity or Price) is calculated first and why is there a specific

order in which these calculations are made. Discuss the responsibility of Production Manager and

Purchasing Manager in relation to the calculation of Material Variances. (8 marks)

8. Explain the difference between relevant cost and sunk cost, with proper example. (8 marks)

9. What is Opportunity Cost? Give one example. ( 4 marks)

Section- 03

1. Data regarding Bengal Corporation are as follows:

(a). Budgeted Sales for the year 2020 are:

January : 20,000 units

February: 35,000 units

March: 35,000 units

April: 45,000 units

May: 60,000 units

June: 75,000 units

July: 75,000 units

August: 80,000 units

September: 65,000 units

October: 50,000 units

November: 25,000 units

December: 15,000 units

(b). Selling Price per unit is usually 175 Taka. However due to increase in demand, the

price was increased to 190 Taka in the second and third quarter of the year.

(c). 30% of the sales each month are in cash and the rest are on account.

(d). On account collection patterns are as follows: 45% is collected in the following month

of sales and the remaining 55% is collected the second month following the month of sales.

Previous Accounts receivables of 8,877,750 Taka will be collected in the month of July.

(e). The company wants ending inventory to be equal to 25% of the following month's

estimated sales in units.

(f). The company purchases 60% of its inventory in the month prior to the month of sale,

keeping it in the ending inventory, and 40% in the month of sale. Payment for inventory in made in

the month following the purchase.

(g). The company required 3 kilograms of raw materials to manufacture one unit of final

product, at a cost of 3 Taka per kilogram.

(h). In order to make one unit of product, the company requires 0.15 hours of direct labors,

at a cost of 12 Taka per hour.

(i). The company has an incentive policy for the labors that any extra hour the labors work

beyond 8000 hours each month, they will get paid at a rate of 15 Taka for every additional hour

worked.

(j). Manufacturing Overhead is applied to units of products on the basis of direct labor

hours. The company uses variable manufacturing overhead rate of 1.50 Taka for each unit produced.

Fixed manufacturing overhead is of 110,000 Taka which includes 35,000 Taka of factory related

Depreciation Expense.

(k). Variable selling and administrative expenses are 4.20 Taka per unit. Fixed selling and

administrative expenses are of 1000000 Taka which includes 33,000 Taka of Depreciation Expense.

(l). The company paid a cash dividend of 2500000 Taka in July, 2800000 Taka in the month

of August and 5000000 Taka in the month of September.

(m). The company spent the following amounts on purchasing non-current assets in the year

2020:

February 100000 Taka

June 800000 Taka

July 4000000 Taka

September 2100000 Taka

December 500000 Taka

(n). Cash Balance on July 1 2020 is 230,000 Taka . Due to the corona virus crisis, the

company requires a minimum of 4000000 Taka at the beginning of each month, from August onward.

(m). Due to the corona virus crisis, in the month of September, the company spent as

additional 10000000 Taka in cash, in order to support its labor financially.

Requirement:

(i). Make a complete Master Budget for Bengal Corporation, for the third quarter of the year

2020, concluding with the Cash Budget (Do not have to prepare the Budgeted Income Statement

and Budgeted Balance Sheet). You must show the working of Expected Cash Collection form sales ,

as well as Expected Cash Payments for purchasing Direct Materials. (30 marks)

(ii). Calculate the production cost/ unit of Bengal Corporations finished goods. What is be the cost

of budgeted finished goods inventory? (5 marks)

(ii). Describe how creating a master budget can be helpful for a company. Explain, in detail, how

each component of the master budget flow works and how they are interconnected with each other.

(10 marks)

(iii). Identity at least two possible ways Bengal Corporation can overcome the issue of cash

deficiency the company might face (in the month of September) while operating the business. You

must explain in detail how your stated solution can help the company overcome its cash deficiency

problem. (12 marks)

4. (i). Explain, in detail, the impact current covid-19 pandemic can have over manufacturing

companies. State the difficulties that the manufacturing companies are facing due to the current

lockdown occurring all over Bangladesh.(5 marks)

(ii). Assume that you are a factory manager of a manufacturing company. The company was closed

down due to the lockdown but from next month, the factory will reopen for production and normal

business operation. As a manager of the factory provide at least two precautionary measures the

factory should take in order to protect its labour force from being infected by the virus. Discuss the

possible increase/ decrease in cost that might occur due to your suggested solution .(8 marks)