CMA Question August-2013 PDF

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST 2013, EXAMINATION

FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING.
Time: Three Hours
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.
CAMPS MUSIC STORE
Trial Balance
July 31, 2012
Cash ...
Accounts Receivable ..
Merchandise Inventory, 8/1/2011
Prepaid Fire Insurance .
Prepaid Rent ..
Office Equipment ...
Accumulated Depreciation Office Equipment
Accounts Payable
Clay Camp, Capital ...
Clay Camp, Drawing .
Sales
Sales Returns and Allowances .
Purchases
Purchase Returns and Allowances
Transportation In
Advertising Expense ...
Supplies Expense
Salaries Expense .
Utilities Expense ..
Full Marks:100
Debits
Tk. 34,780
4,600
31,400
720
4,800
12,000
Credits
Tk. 4,500
8,000
22,000
20,000
300,000
1,000
194,000
1,400
5,200
1,000
1,800
23,200
1,400
Tk. 335,900
Tk. 335,900
Clay Camp has prepared the above trial balance for Camps Music Store. The following
information will be used to prepare the work sheet.
1. A 12-month fire insurance policy was purchased for Tk.720 on April 1, 2012, the date on
which insurance coverage began.
2. On February 1, 2012, Camp paid Tk. 4,800 for the next 12 months rent. The payment was
recorded in the Prepaid Rent account.
3. Depreciation expense on the office equipment is Tk. 1,500.
4. Merchandise inventory at July 31, 2012, was Tk. 26,400.
Required:
a. Prepare a 10-column work sheet for Camps Music Store for the fiscal year ended July 31,
2012.
b. Prepare a classified income statement for the fiscal year ended July 31, 2012. Do not
separate operating expenses into selling and administrative categories.
c. Prepare a statement of owners equity for the fiscal year ended July 31, 2012.
d. Prepare a classified balance sheet for July 31, 2012.
e. Prepare closing entries.
[Marks: (8+7+2+4+4) = 25]
Page 1 of 3

FOUNDATION LEVEL
Q. No. 2.
(a) Write a note on impress system of accounting.
(b) The following information is available to reconcile XYZ Companys book balance of cash
with its bank balance as of July 31, 2011.
(i)
The July 31 cash balance according to accounting records is Tk. 80,756.60 and the bank
statement balance on that date is Tk. 93,644.80.
(ii) An examination of deposit slips revealed that daily cash receipts of Tk. 19,166.20 were
placed in the banks evening depository on July 31, which do not appear on the July 31
bank statement.
(iii) When the July Cheques are compared, it is found that Cheque No. 1437 had been
correctly drawn for Tk. 6,918 to pay for office supplier but was erroneously in the
accounting records as Tk. 6,981.
(iv) Cheque No. 1244 for Tk. 9,178.60 and Cheque No. 1284 for Tk. 800.00 both written and
entered in the cash book in July, are not among the cancelled Cheques. Two Cheques,
No. 1211 for Tk. 4,578 and No. 1223 for Tk. 820.80, were outstanding on the most recent
June 30 reconciliation. While Cheque No. 1211 is included in the July cancelled cheque
list, but Cheque No. 1223 is not listed.
(v) Two debit memoranda are enclosed with the statement and are unrecorded at the time of
reconciliation. One of it is for Tk. 1,525 and debit with an NSF cheque for Tk. 1,490 that
had been received from a customer, BM Company. The bank assessed a Tk. 35 fee for
processing it. The second debit memorandum is a Tk. 198 charge for cheque printing.
(vi) A credit memorandum indicates that the bank collected Tk. 38,000 on a note receivable
for the company, deducted a Tk. 40 collection fee, and credited the balance to the
company account.
(vii) A two-month, 7% Tk. 15,000 customers note dated May 28, discounted on July 15, had
been retested on July 28, and the bank had charged the company for Tk. 15,045 which
included a pretest fee of Tk. 45.
Required:
(i)
Prepare Bank Reconciliation Statement as of July 31, 2011 bringing both balances to the
correct position.
(ii) Prepare the necessary journal entries to adjust the cash.
[Marks: {5+ (15+5)} = 25]
Q. No. 3.
(a) The Best Company estimates its bad debts expense to be 1% of sales. Sales in 2012 were
Tk. 750,000.
Required: Prepare the journal entries for the following transactions:
1. The company prepared the adjusting entry for bad debts for the year 2012.
2. On January 15, 2013, the company decided that the account for James Ryan in the
amount of Tk. 500 was uncollectible.
3. On February 12, 2013, James Ryans check for Tk. 500 arrived.
(b) A Tk. 15,000, 90-day, 12% note dated June 15, 2012, was received by the Long Company
from the Short Company in payment of its account.
Required: Prepare the journal entries in the records of the Long Company for each of the
following:
1. The Long Company received the note on June 15, 2012.
2. The Long Company discounted the note on July 15, 2012, at 10% at the Citizens
National Bank.
Page 2 of 3

FOUNDATION LEVEL
Q. No. 3. (contd..)
3. The Short Company paid the note at maturity.
4. Assume that the Short Company did not pay the note at maturity. The Citizens National
Bank charged the note to the Long Company. The Long Company decided that the note
was uncollectible.
(c) The Meaders Company reported annual net income as follows:
2010 .
Tk. 68,000
2011 .
71,000
2012 .
60,000
Analysis of the inventories shows that certain clerical errors were made with the following
results:
Incorrect
Correct
Inventory
Inventory
Amount
Amount
December 31, 2010
Tk. 12,000
Tk. 14,200
December 31, 2011
14,000
11,700
Required: What is the corrected net income for 2010, 2011, and 2012?
(d) Allowance for doubtful debts is an application of conservatism Critically evaluate the
statement.
[Marks: (5+10+5+5) = 25]
Q. No. 4.
(a) On January 1, 2006, a company purchased a machinery at an acquisition cost of Tk.
84,000. The machinery has been depreciated by the straight line method using a 4 year
service life and a Tk. 12,000 salvage value. The companys fiscal year ends on December
31.
Required:
Prepare the journal entries to record the disposal of the machinery that it was:
(i)
Retired and scrapped with no salvage value on January 1, 2010.
(ii) Sold for Tk. 15,000 on July 1, 2009.
(iii) Traded in on a new machinery on January 1, 2009. The fair market value of the old
machinery was Tk. 34,000 and Tk. 6,000 was paid in cash.
(b) A Ltd. Company depreciates its machinery at 10% on diminishing balance method, had on
1st January 2010 Tk. 175,000 to the debit of machinery account. A part of machinery
purchased on 1st January, 2008 for Tk. 30,000 was sold for Tk. 15,000 on July 01, 2010. A
new machinery at of cost of Tk. 35,000 was purchased and installed on the same date
installation charge being Tk. 2,500. The company wanted to change its method of
depreciation from diminishing balance method to straight line method with effect from 1st
January, 2010. The rate of depreciation is remained the same.
Required:
(i)
Pass Journal entries to record the sale of the machinery.
(ii) Calculate the depreciation expense of the existing machinery to be recorded in the
books for 2010.
[Marks: (15+10) = 25]
= THE END =
Page 3 of 3

FOUNDATION LEVEL
SUBJECT: 002. BUSINESS COMMUNICATION AND OFFICE MANAGEMENT.
Time: Three Hours
Full Marks:100
Answer THREE questions from each part, where Q. No. 4 and 8 are compulsory.
Use a fresh sheet for answering each question.
GROUP - A : BUSINESS COMMUNICATION

Q . No. 1.
(a) What is Non verbal communication?
(b)
List and discuss four objectives of graphic and visual aids.
(c) What is meant by Electronic Communication?
(d) What are the functions of a CPU?
[Marks: (3+4+4+4) = 15]
Q. No. 2.
(a) Give a brief thought on how language can he used more effectively in Business
Communication.
(b) Write an application to the HRM (Human Resources Management) of Eastern Bank
Limited for internship program.
[Marks: (10+5) = 15]
Q. No. 3.
(a) What is a Short Report? Describe different kinds of Short Report.
(b) How does the annual report of a listed company help the major users of such report? Give
examples of two such major users.
(c) As a Company Secretary, draft a report to the Companys management suggesting ways
for settling of a labor unrest.
[Marks: (7+3+5) = 15]
Q. No.4.
Write short notes on any FIVE of the following:
(a) Credit Report
(b) Electronic Communication
(c) Trading Corporation Bangladesh (TCB)
(d) Letter of Credit
(e) Book Building Method (BBM)
(f) ADB
(g) BOI
(h) European Union.
[Marks: (4 x 5) = 20]
Page 1 of 2

FOUNDATION LEVEL
SUBJECT: 002. BUSINESS COMMUNICATION AND OFFICE MANAGEMENT.
GROUP - B : OFFICE MANAGEMENT
Q. No. 5.
(a) Briefly write about Goal Congruence & MBO (Management By Objective).
(b) Briefly discuss about the important role of HRM (Human Resources Management).
(c) Briefly write about KPI Knowing Performance Indicator.
[Marks: (5+6+4) = 15]
Q. No. 6.
(a) What is work measurement?
(b) Explain the different methods of job evaluation.
(c) What is management training & why is it important?
[Marks: (3+4+8) = 15]
Q. No. 7.
(a) What is office form? Discuss the different types of office forms.
(b) Discuss the principles of a good Filing System
(c) Why is an index prepared? Explain in brief the various methods of indexing of files.
[Marks: (5+4+6) = 15]
Q. No. 8.
Write short notes on any FIVE of the following:
(a) Source of File
(b) Record Management
(c) Office environment
(d) Card index
(e) Functional organization
(f) Office Layout
(g) Employer employee relationship
(h) Standing committee
[Marks: (4 x 5) =20]
= THE END =
Page 2 of 2

FOUNDATION LEVEL
SUBJECT: 004. BUSINESS ECONOMICS AND INTERNATIONAL BUSINESS.
Time: Three Hours
Full Marks:100
Answer
FIVE
questions,
Taking
at
least
TWO
from
each
Group
A
and
B
GROUP - A : BUSINESS ECONOMICS

Q. No. 1.
(a) Describe the importance of Time Element in Price Determination.
(b) State the similarities and dissimilarities between Monopoly competition and Perfect
competition.
(c)
State the areas where Demand and Supply analysis can be applied under perfect
competition.
[Marks: (6+6+8) = 20]
Q. No. 2.
(a) Differentiate between demand-pull and cost-push inflation. Is inflation always bad? Justify
your views.
(b) What are the causes of and remedies for inflation in the present situation of Bangladesh?
(c) Explain the impact of interest rate on investment.
(d) What are the relative advantages and disadvantages of foreign aid for development of
Bangladesh, particularly financing Padma-Bridge Construction?
[Marks: (5+4+4+7) = 20]
Q. No. 3.
(a) Differentiate between demand-pull and cost push inflation.
(b) How to manage inflation without affecting economic growth?
(c) Explain the term Super Profits.
[Marks: (7+7+6) = 20]
Q. No. 4.
(a) Explain how Monetary Measures and Fiscal Measures help to Control Inflation.
(b) Discuss with example:
(i)
Fixed cost and Variable cost.
(ii) Direct cost and Indirect cost.
(iii) Opportunity cost and Outlay cost.
(c) The table below is presented with the data of information regarding a nations income. You
are required to ascertain (i) Net National Product at Market Prices, (ii) Disposable
Personal Income
Data
Value in billion Taka
Net Domestic Product at Factor Price
12,860
Government Income from State Owned Enterprise (SOEs)
10
Interest on National Debt
110
Transfer Payments by Government
280
Net Foreign Donations
260
Net earned income from export
162
Indirect Taxes
1660
Direct Taxes
470
Subsidies
110
Taxes on Corporate profits
345
Page 1 of 2
[Marks: (7+6+7) = 20]

FOUNDATION LEVEL
SUBJECT: 004. BUSINESS ECONOMICS AND INTERNATIONAL BUSINESS.
Q. No. 5.
(a) Distinguish between:
(i)
Direct Cost and Indirect Cost.
(ii) Marginal Cost and Average Cost.
(iii) Average Revenue and Marginal Revenue.
(iv) Fixed Cost and Variable Cost.
(b) Calculate average cost, marginal cost, marginal revenue and profit from the following data:
Units of
Total Cost
Variable Cost
Fixed Cost
Total Revenue
output
(Tk.)
(Tk.)
(Tk.)
(Tk.)
1
350
150
200
300
2
400
200
200
600
3
450
250
200
900
4
550
350
200
1100
5
600
400
200
1300
6
650
450
200
1500
7
700
500
200
1750
8
800
600
200
2000
[Marks: (8+12) = 20]
GROUP - B : INTERNATIONAL BUSINESS
Q. No. 6.
(a) Discuss different types of global competitive strategies with example?
(b) Suggest your strategies to make Bangladesh Garments product competitive in the
international market.
(c) Describe export development strategies for both thrust and special sector products export
from Bangladesh.
[Marks: (7+6+7) = 20]
Q. No. 7.
(a) What do you mean by the back to back letter of credit?
(b) What is the mode of Export financing in Bangladesh?
(c) State the role of Multinational Corporation (MNC) in international business of a country.
(d) What is the importance of international business for a country?
[Marks: (5+5+5+5) = 20]
Q. No. 8.
Write Short notes on any five from the following:
(i)
Trade and Investment Cooperation Framework Agreement (TICFA);
(ii) Anti-Globalization;
(iii) International Product Life cycle;
(iv) Foreign Direct Investment (FDI);
(v) Rules of Origin;
(vi) M.D.G.;
(vii) Free Trade Area (FTA).
[Marks: (4x5) = 20]
= THE END =
Page 2 of 2

PROFESSIONAL LEVEL-I
SUBJECT: 101. INTERMEDIATE FINANCIAL ACCOUNTING.
Time: Three Hours
Full Marks:100
Q. No. 1.
The comparative Statement of Financial Position for XYZ Company shows the following
information:
Statement of Financial Position
As on 31st December
Assets
2012
2011
Equity and Liabilities
2012
2011
Non Current Assets
Capital and Reserves
Property, plant and equipment
Less: Accumulated Depreciation
Patent
Current Assets
Inventories
Account receivables
Cash and cash equivalent
Prepaid expenses
Total Assets
418,500
90,000
328,500
65,000
345,300
78,000
267,300
73,000
30,000
45,000
40,500
6,500
21,000
37,000
47,300
8,700
.
515,500
.
454,300
Share Capital (Tk. 10 par)

Share premium
Revaluation reserve
Retained earnings
Non Current Liabilities
8% Debenture
Current Liabilities
Accounts Payable
Outstanding expenses
Income tax liability
Interest payable
Total Equity and Liability
280,000
18,000
13,000
123,500
225,000
10,000
5,000
111,800
45,000
65,000
20,500
2,800
12,000
700
515,500
17,200
4,000
16,000
300
454,300
Additional Information:
(a) Details of property, plant and equipment:
Cost
Accumulated Depreciation
2011
2012
2011
2012
Freehold building
175,000 200,000
0
0
Furniture and fixtures
45,300
73,000
22,500
28,700
Equipment
125,000 145,500
55,500
61,300
Total
345,300 418,500
78,000
90,000
(i)
No depreciation has been provided for freehold building , however, during the year
a professional revaluation of buildings taking account of additions during the year
has been incorporated into the books of accounts. There were no disposals during
the year.
(ii) Account payable includes Tk. 15,000 for purchase of furniture during the year.
(iii) Equipment with original cost of Tk. 45,000 was sold for Tk. 18,000 during the year.
(b) Profit before interest and tax was Tk. 47,800 for the year which includes loss on sale of
equipment Tk. 2,500.
(c) Company paid interest of Tk. 1,800 on the outstanding balance of debenture.
(d) Corporate tax rate applicable for the firm is 35%.
(e) On February 2012 the company made a right issue of 1 for 5 shares at Tk. 11.50 per
share.
(f) New shares were issued at June 2012. Part of the proceeds was used to redeem 8%
Debenture at a premium of 4% of their face value.
(g) On November 2012 cash dividend was declared and paid by the company.
Required: Prepare a statement of cash flow for XYZ Company following BAS 7.
[Marks: 20]
Page 1 of 5

Q. No. 2.
XYZ Company reported following ledger balances at December 31, 2012.
Debit
Tk.
Credit
Tk.
Cost of goods sold
252,500 Accounts payable
4,300
Land
400,000 Revenue
693,500
Building
225,000 Allowance for doubtful accounts
500
Office Equipment
125,000 8% Bonds payable
25,000
Long term Investments
56,000 Share capital (Tk. 10 par)
350,000
Distribution costs
36,000 Share premium
72,950
Administrative expenses
56,000 Retained earnings
60,300
Short term investments
45,000 Accumulated depreciation Equipment
24,000
Accounts receivable
20,800 General reserve
28,200
Inventories
12,350 Investment income
16,700
Patent
9,000 Sinking fund
21,000
Losses from asset abandonment
3,800
Losses from earthquake
25,000
Loss on disposal of a
discontinued division
30,000
(a) Net realizable value of companys inventory at the year end is Tk. 11,700.
(b) A full year interest on bonds payable is due and applicable income tax rate for the
company is 40%.
(c) Allowance for bad debt has to charge @ 6% on the ending balance of account receivable.
But in previous years the rate was estimated and applied as 5%. If the new rate had been
used in prior years, cumulated bad debt expense would have been Tk. 7,250 instead of
Tk. 6,425.
(d) Patent (to sell and distribute a special product) was acquire on 1 July 2011 with an useful
life of 5 years. The annual impairment review has indicated that the paten has a
recoverable value at the end of current year Tk. 6,000.
(e) Depreciation on equipment has to be charged @ 20% under reducing balance method.
But in previous years depreciation was charged following straight line method which
resulted Tk. 12,000 depreciation per year. Under the new method, depreciation expense
would be Tk. 22,800 for 2010 and Tk. 20,440 for 2011.
(f) The company identified at the year end some unrealized holding gain on available for sale
securities (included in short term investment) of Tk. 12,800.
(g) A transfer of Tk. 20,000 for the year should be made to general reserve.
(h) Bonds payable will be due in June 2013 for which XYZ has been accumulated the sinking
fund. A sum of Tk. 3,000 should be transferred to sinking fund at the end of the year from
general reserve.
Required:
(i)
A statement of financial position as at December 31, 2012.
(ii) A statement of comprehensive income for the year ended December 31, 2012 and
(iii) A statement of changes in equity.
[Marks: (8+7+5) = 20]
Q. No. 3.
(a) State the amount of revenue and/or expense for 1984 in each of the following transactions
of the Marine Co. The accounting period ends December 31, 1984. Treat each item
individually.
(i)
On December 15, 1984, Marine received Tk. 12,000 as rental revenue for a 6-month
period ending June 15, 1985.
Page 2 of 5

Q. No. 3. (contd.)
(ii) Marine, on July 1, 1984, sold one of its tractors and received Tk. 10,000 in cash and
a note for Tk. 50,000 at 12% interest, payable in one year. The fair market value of
the tractor is Tk. 60,000.
(iii) One of the Marines steady customers is presently in a weak cash flow position. To
maintain its goodwill with this customer, Marine sells them 2 tractors with a normal
combined selling price of Tk. 112,000, but allows them a special discount of Tk.
8,000.
(iv) During 1984, tractors sold for Tk. 400,000 are accompanied by a Marine guarantee
for one year. Past experience indicates that repairs equal to 1% of sales revenue will
be required in year of sale, and an additional 3% of sales revenue will be needed for
repairs in the subsequent year.
(v) On December 28, 1984, Marine sold 6 tractors for a total of Tk. 435,000. As of
December 31, 1984, 3 of the tractors were still in Marines Warehouse.
(b) Ignace Paderewski Corporation operates in an industry that has a high rate of bad debts.
Before any year-end adjustments, the balance in Paderewskis Accounts Receivable
account was Tk. 555,000 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 Account Outstanding
Amount
Probability of collection
Less than 16 days
Tk. 300,000
0.98
Between 16 and 30 days
100,000
0.90
80,000
0.85
40,000
0.75
20,000
0.40
Over 75 days
15,000
0.00
Required:
(i)
What is the appropriate balance for the Allowance for Doubtful Accounts at year-end?
(ii) Show how accounts receivable would be presented on the balance sheet.
(iii) What is the taka effect of the year-end bad debt adjustment on the before-tax income?
[Marks: (10+10) = 20]
Q. No. 4.
Listed below are selected items from the financial statements of G & H Pumb Co. for the year
ended December 31, 2007:
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
Other Information:
(i)
The note payable owed to Prime Bank is due in 30 days, G & H has arranged with this
bank renew the note for an additional two years.
(ii) G & H has been sued for BDT 200,000 by someone claiming the companys pumps are
excessively noisy. It is reasonably possible, but not probable, that a loss has been
sustained.
(iii) The mortgage note is payable at BDT 8,000 per month over the next three years. During
the next 12 months, the principal amount of this note will be reduced to BDT 169,994.
Page 3 of 5
(iv)
The bonds payable mature in seven months. A sinking fund has been accumulated to
repay the full maturity of this bond issue.
Q. No. 4. (contd.)
Required:
(a) Using this information, prepare the current liabilities and long-term liabilities sections of a
classified balance sheet at December 31, 2007.
(b) Explain briefly how the information in each of the four numbered paragraph affected your
presentation of the companys liabilities.
[Marks: (15+5) = 20]
Q. No. 5.
(a) Revolving Chair (RC) is one of the most popular items of Home Fusion, a furniture
manufacture. Most of the companys RCs are standard models and are sold on the basis
of catalog prices. At December 31, 2012 Tk. 78,000 of finished RC appears in the
companys inventory. Catalog prices of 2012 and 2013 are Tk. 98,000 and Tk. 92,000
respectively. Estimated current cost to manufacture the RCs is Tk. 75,000 and expected
sales commission and other costs of disposal is Tk. 2,000. The 2012 catalog was in effect
through November 2012, and the 2013 catalog is effective as of December 1, 2012. All
catalog prices are net of the usual discounts. Generally, the company attempts to obtain a
30% gross profit on selling price and has usually been successful in doing so. At what
amount should RC appear in the companys December 31, 2012, inventory assuming that
the company has adopted a lower of cost or market approach for valuation of inventories?
(b) Presented below is information related to Prince Bazar. Assuming that Prince Bazar uses
the conventional retail inventory method, compute the cost of its ending inventory at June
30, 2013.
Cost
Retail
Retail
Inventory, 1.7.12
Tk. 30,000 Tk. 48,000 Gross sales
Tk. 412,000
Purchases
339,500
520,800 Sales returns
28,300
Purchase returns
25,800
36,480 Markups
32,500
Purchase discounts
7,590
- Markup cancellations
8,320
Freight-in
8,920
- Employee discounts granted
3,400
Markdowns
12,000 Loss from breakage (normal)
2,400
(c) Alvi Corporation has two classes of capital stock outstanding: 12%, Tk.100 par preferred
and Tk. 30 par common. At December 31, 2012 the following accounts were included in
stockholders equity.
Preferred Stock, 80,000 shares
Tk. 8,000,000
Common Stock, 800,000 shares
24,000,000
Paid-in Capital in Excess of Par Preferred Stock
1,600,000
Paid-in Capital in Excess of Par Common Stock
20,000,000
Retained Earnings
12,500,000
The following transactions affected stockholders equity during 2013.
Jan. 1
25,000 shares of preferred stock issued at Tk. 125 per share.
Feb. 1
70,000 shares of common stock issued at Tk. 80 per share.
June 1
3-for-2 stock split (par value reduced to Tk. 20)
July 1
60,000 shares of common treasury stock purchased at Tk. 90 per
share. Alvi uses the cost method.
Sept. 15 15,000 shares of treasury stock reissued at Tk. 95 per share.
Dec. 31
The preferred dividend is declared, and a common dividend of Tk.
0.25 per share is declared.
Dec. 31
Net income is Tk. 8,250,000
Required: Prepare the stockholders equity section for Alvi Corporation at December 31, 2013.
Show all supporting computations.
[Marks: (5+5+10) = 20]
Page 4 of 5
= THE END =
Page 5 of 5

SUBJECT: 102. COST ACCOUNTING.
Time: Three Hours
Full Marks:100
Q. No. 1.
(a) Describe the three main components of product cost. Select a product with which you are
familiar and provide examples of costs that would be classified under each of those three
components.
(b) During November the following transactions took place in Sevenhill Manufacturing
Company:
(i) Materials purchased on account, Tk.35,600.
(ii) Materials issued during the month as follows: to fill requisitions on job orders,
Tk.25,250, supplies issued to the factory, Tk.1,300.
(iii) Materials issued to complete defective units, Tk.200.
(iv) Freight paid for materials received, Tk.850. (Freight is not added to unit costs on
materials inventory cards).
(v) Materials returned to the vendor during the month, Tk.225.
(vi) Scrap materials received in the storeroom were set up at a value of Tk.175, and
credit was given to Factory Overhead Control for that amount. A separate general
ledger account, Scrap Materials is used.
(vii) Materials returned to the storeroom during the month as follows: from job orders,
Tk.1,090; from supplies issued to the factory, Tk.175.
(viii) Total payroll for the month as follows;
Recorded and then paid liability for net pay to workers, Tk.41,503.
Withheld for income tax, Tk.7,780.
Withheld for hospitalization plan, Tk.950.
Other deductions, Tk.2,367.
(ix) Employers liability for the Provident Fund is 6.5% of total payroll.
(x) The payroll was distributed as follows: direct labor, Tk.40,200; indirect labor,
balance of payroll.
(xi) Depreciation for the month: building, Tk.3,000; machinery, Tk.4,800.
(xii) Property taxes accrued during the month, Tk.750; insurance expired with a credit to
the prepaid account, Tk.850.
(xiii) Factory overhead is charged to production at a rate of Tk.1.40 per direct labor
hour. Records show 19,200 direct labor hours used during the month.
(xiv) Close out the over or under applied factory overhead to Cost of Goods Sold.
(xv) Cost of Goods completed during the month Tk.81,750.
(xvii) Goods costing Tk.75,500 were sold on account during the month for Tk.90,000.
Page 1 of 4

Q. No. 1. (contd)
Required:
(a) Journal entries to record the above transactions. Indicate the subsidiary records to which
the entries would also be posted.
(b) Ledger accounts for Work in Process, Factory Overhead Control, Materials and Finished
Goods. The November 01 balances were: Work in Process, Tk.9,750; Materials, Tk.6,180;
Finished Goods, Tk.5,660.
[Marks: (4+12+8) = 24]
Q. No. 2:
(a) Under EOQ approaches, order costs can be minimized by placing large infrequent orders
of inventory. However, under JIT, inventory-related costs are reduced by ordering
frequently and in small quantities. Can you explain why both of these statements are
correct?
(b) Monyem Limited uses a small casting in one of its finished products. The castings are
purchased from a foundry.
Monyem Limited purchases 54,000 castings per year at a cost of Tk.800 per casting. The
castings are used evenly throughout the year in the production process on a 360-day-peryear basis. The company estimates that it costs Tk.9,000 to place a single purchase order
and about Tk.300 to carry one casting in inventory for a year. The high carrying costs
result from the need to keep the castings in carefully controlled temperature and humid
conditions and the high cost of insurance. Delivery from the foundry generally takes 6
days, but it can take as much as 10 days. The days of delivery time and percentage of
their occurrence are shown in the following table:
Delivery time (days)
:
6
7
8
9
10
Occurrence
:
75% 10% 5%
5%
5%
Required:
(i)
Compute the economic order quantity (EOQ).
(ii) Assume the company is willing to assume a 15% risk of being out of stock. What would be
the safety stock? The re-order point?
(iii)
Assume 5% stock-out risk. What would be the total cost of ordering and carrying inventory
for one year?
(iv)
Refer to the original data. Assume that using process re-engineering the company reduces
its cost of placing a purchase order to only Tk. 600. In addition, company estimates that
when the waste and inefficiency caused by inventories are considered, the true cost of
carrying a unit in stock is Tk.720 per year.
(a)
(b)
Compute the new EOQ.

How frequently would the company be placing an order, as compared to the old
purchasing policy?
[Marks: 5 + {3+3+3+(3+3)} = 20]
Page 2 of 4

Q. No. 3.
(a) Conventional costing systems apply manufacturing overhead costs to products using a
volume-based cost driver such as direct labour hours. What do we mean by the term
volume-based cost driver? What problems can arise with this approach to product costing
when use in a modern manufacturing environment?
(b) The accountant of Camberwell Electronics Company believes that the identification of the
variable and fixed components of the firms costs will enable the firm to make better
planning and control decisions. Among the costs the accountant is concerned about is the
behavior of indirect materials cost. She believes that machine hours are a cost driver for
indirect materials costs.
A member of the accountants staff has suggested that regression analysis be used to
determine the cost behavior of indirect materials. The following regression equation was
developed from 40 pairs of observations:
S = $200+$4H
where S = total monthly costs of indirect materials
H = machine hours per month
Required:
(i)
(ii)
Explain the meaning of 200 and 4 in the regression equation S = $200 + $4H.
Calculate the estimated cost of indirect materials if 900 machine hours are to be used
during a month.
(iii) To determine the validity of the cost estimate calculated in requirement (ii), what questions
would you ask the accountant about the data used for the regression?
(iv) Consider three other activities that could be used as cost drivers to predict the total
monthly costs of indirect materials.
[Marks: 6+(4+3+4+3) = 20]
Q. No. 4.
Kennelly and Sons manufactures components for the computer industry. The company uses an
activity-based costing system to assign labour, manufacturing overhead and non-manufacturing
costs to products. Below is a partially completed bill of activities for one of the companys major
products, Switch 3901.
Activity
Prepare purchase order
Process payables
Prepare payroll
Process sales orders
Pack and dispatch
Program solder robots
Solder circuits
Assemble circuit boards
Wire in switch
Insert fuse
Test switch
Design switch
Cost per unit of

activity driver
$43 per purchase order
$27 per invoice received
$10 per payslip
$33 per sales order
$17 per sales order
$153 per program
$2 per solder joint
$5 per board
$14 per switch
$10 per fuse
$4 per switch
$5,000 for model 3901
Page 3 of 4
Annual quantity of
activity driver
50 purchase orders
50 invoices
300 payslips
500 sales orders
500 sales orders
200 programs
72,000 solder joints
15,000 boards
5,000 switches
5,000 fuses
5,000 switches

Q. No. 4. (contd)
These annual costs relate to an annual production level of 5,000 switches. The direct material
cost per switch is $20.
Required:
(i)
(ii)
(iii)
Calculate the total cost per unit for Switch 3901.

Calculate the manufacturing cost per unit for Switch 3901.
Discuss the role that product costs that include both manufacturing and non-manufacturing
costs can play in management decision making.
[Marks: (5+5+4) = 14]]
Q. No. 5.
The following data relate to Sparkling Waters Ltd, a manufacturer of softdrinks:
Work in process, 1 February:
(100% complete as to material;

35% complete as to conversion cost)
Direct material
Conversion
Costs incurred during February:
Direct material
Conversion
10,000 units
$ 5,500
$ 17,000
$ 110,000
$ 171,600
The equivalent units for February were as follows:

Weighted average
Direct material
110,000
Conversion
92,000
FIFO
100,000
88,000
During February, 89,000 units were completed and transferred out.

Required:
(a) Calculate each of the following amounts using weighted average process costing:
(i)
Cost of goods completed during February.
(ii) Cost of the 28 February work in process inventory.
(b) Repeat requirement (a) using the FIFO method.
[Marks: (10+12) = 22]
= THE END =
Page 4 of 4

SUBJECT: 103. MANAGEMENT & MARKETING MANAGEMENT.
Time: Three Hours
Full Marks:100
Answer THREE questions from each part .

PART A : MANAGEMENT (TOTAL MARKS-50)
Q. No. 1.
(a)
(b)
(c)
What is Management?
Different types of management have different types of function - Explain.
Managerial process comprise four main task; planning, organizing, leading and
controlling. Your company want to launch a new product in the market, How can
you relate managerial functions with this decision. Explain briefly?
[Marks: (4+6+6) = 16]
Q. No. 2.
(a) What is the meaning of organizing? Identify the basic elements of organizations.
(b) Describe the benefits and limitations of job specialization.
(c) What are the alternative approaches you suggest in overcoming the limitations of
job specialization?
[Marks: (6+4+6) = 16]
Q. No. 3.
(a)
(b)
(c)
Define control?
Why control is necessary?
What are the steps involved in the control process?
[Marks: (3+8+5) = 16]

Q. No. 4.
(a) How would you define and differentiate corporate level and business level
strategy? Give examples.
(b) Which strategy should a firm develop first Business level or Corporate level
strategy? Explain why?
(c) Explain use of SWOT for formulating strategy.
[Marks: (4+6+6) = 16]
Q. No. 5.
(a)
(b)
(c)
(d)
Management is both science and Art;

Span of Control;
Supply Chain Management;
Corporate Governance.
[Marks: (4+4+4+4) = 16]
* Two Marks are reserved for neatness and relevance.
Page 1 of 2

SUBJECT: 103. MANAGEMENT & MARKETING MANAGEMENT.
PART B : MARKETING MANAGEMENT (TOTAL MARKS-50)
Q. No. 6.
(a) Marketing is about identifying and meeting human and social needs explain.
(b) Distinguish between social and managerial definition of marketing.
(c) Explain with example the process of value creation in strategic marketing.
[Marks: (4+5+7) = 16]
Q. No. 7.
(a) Define Brand, Brand equity and Brand positioning.
(b) Briefly describe marketing strategies at different stages of a product life cycle.
(c) Differentiate between product and brand.
[Marks: (4+8+4) = 16]
Q. No. 8.
(a) What are the factors that influence the consumer buying behavior? Give a brief.
(b) Describe the 5 stage model of consumer buying decision process.
[Marks: (8+8) = 16]
Q. No.9
(a) What do you mean by market segmentation?
(b) Discuss the advantages of market segmentation.
(c) Explain major market segmentation.
[Marks : ( 4+6+6) = 16]
Q.No.10
(a) What is marketing information system?
(b) What are the components of marketing information system?
(c) Design a marketing information system for Bangladesh Ice-Cream Co. Ltd.
[Marks : ( 4+6+6)=16]
* Two Marks are reserved for neatness and relevance.
= THE END =
Page 2 of 2

SUBJECT: 104. INFORMATION TECHNOLOGY.
Time: 2 hours 30 minutes
Full Marks: 80
Answer any FOUR of the following questions.

Q. No. 1.
(a) What is computer based Information System? Why is the study of information systems
important to you?
(b) What is the role of information system in todays competitive business environment?
(c) Briefly discuss several data-storage issues that face the modern organization.
(d) What ethical, social, and political issues are raised by Information Systems?
[Marks: (5+5+5+5) = 20]
Q. No. 2.
(a) What advantages and disadvantages are associated with the use of client/server
computing?
(b) What role do the bridge, router, gateway and switch play in a network?
(c) What is telecommunicating? Why are many companies using it?
(d) What is voice over IP (VoIP) and how could it be used in a business setting?
[Marks: (5+5+5+5) = 20]
Q. No. 3.
(a) What is a Traditional Filing System state problems with traditional filing system?
(b) What are the elements in a database environment?
(c) Differences between WI-FI and WI Max?
(d) What is PAN, LAN, MAN, WAN?
[Marks: (8+4+4+4) = 20]
Q. No. 4.
(a) Prepare a checklist for selecting an accounting software for your organization.
(b) Discuss the classification of accounting software.
(c) Describe the common modules of accounting software/List and explain eight core modules
that accounting software may have.
[Marks: (8+6+6) = 20]
Q. No. 5.
(a) Define networking. Discuss some major advantages of networking.
(b) What is meant by e-commerce? Describe the characteristics of e-commerce?
(c) What are the benefits and limitations of e-commerce?
(d) Briefly explain network management. Discuss its functions.
[Marks: (4 x 5) = 20]
Q. No. 6.
Write short notes on (any five):
(a) Half-duplex channel;
(b) Wi-Fi and Bluetooth;
(c) Outsourcing;
(d) Upload and Download;
(e) Speech-Recognition Technology;
(g) Point-of-Sale Device.
[Marks: (5 x 4) = 20]
= THE END =
Page 1 of 1

PROFESSIONAL LEVEL-II
SUBJECT: 201. ADVANCED FINANCIAL ACCOUNTING-I.
Time: Three Hours
Full Marks:100

Q. No. 1.
(a) What are the advantages and disadvantages of leasing assets instead of owning them?
(b) Purabi Leasing Co. Ltd. signs an agreement on January 01, 2008, to lease equipment to
Rana Enterprise. The following information relates to this agreement:
(1) The term of the non-cancelable lease is 8 years with no renewal option. The
equipment has an estimated economic life of 10 years.
(2) The equipment will revert to the lessor at the end of the lease term, at which time the
equipment is expected to have a residual value of Tk 500,000 which is guaranteed
by Ran Enterprise.
(3) Rana Enterprise will bear the executory cost which include insurance cost of Tk.
15,000 and servicing cost of Tk. 9,000 per year. The executory cost is to be paid with
annual rental payment.
(4) The agreement requires equal rental payment of Tk. 250,000 to Purabi leasing
beginning on January 01, 2008.
(5) Rana Enterprise can borrow at 12% to purchase this type of equipment while Purabi
Leasing expects 10% returns on its investment. Purabis expected rate of return is
known to Rana Enterprise.
(6) Rana Enterprise uses the straight line depreciation method for all equipment.
(Present Value of Tk. 1 payable annually at beginning for 8 years at 10% interest rate is
5.86842 and at 12% is 5.56376.
Present value of Tk. 1 payable at the end of 8th year at 10% interest rate is 0.46651 and at
12% is 0.40388)
Required:
(i)
Do you think that the lease is capital one? Explain.
(ii) Prepare an amortization schedule for Rana Enterprise.
(iii) Prepare all journal entries for Rana Enterprise for the years 2008 and 2009.
(iv) Prepare Balance Sheet as on December 31, 2008 for Rana Enterprise reflecting lease
related items only. Assume Rana Enterprise follows calendar year to prepare Financial
Statements.
(v) Assume that instead of paying installment due on 01.01.2010 Rana Enterprise offered to
purchase the equipment for Tk. 13,40,000. What journal entry would Rana pass on
01.01.2010 ?
[Marks: {5 + (3 x 5)} = 20]
Q. No. 2
The Balance Sheet of Universal Traders Ltd as on January 01, 2012 is given below:
Assets
Liabilities and Capital
Cash
Tk. 80,000
Accrued Expenses
Tk.
1,500
Accounts Receivable
160,000
Accounts Payable
40,000
Merchandise Inventory
Capital Stock
250,000
96,000
Retained Earnings
Store Furniture & Fixture 48,000
76,900
Less- Allow. for depre
15,600
32,400
Total Assets
Tk. 368,400
Total Liabilities & Capital
Tk. 368,400
Page 1 of 4

Q. No.2.(Contd.)
On January 01, 2012 the company established a branch sales office at Jessore. The branch is
sent the following assets by Head Office upon its organization:
a)
Cash Tk. 30,000
b)
Merchandise, Cost Tk. 30,000, billed at 120% of cost.
c)
Store furniture and fixture previously used by head office Cost Tk. 10,000; age, 5 years;
depreciation rate used in the past, 10% a year. The cost of shipment and installation, Tk.
1,500, is paid by the branch. The cost is to be written off over the remaining life of the
asset. The fixed assets accounts are to be carried on the books of branch office.
Head office and branch transactions with outsiders during the year 2012 were:
Head Office
Branch
Sales on account
Tk. 250,000
Tk. 175,000
Collection on accounts
280,000
140,000
Purchase on account
220,000
120,000
Payment on account
240,000
115,000
Payment of expenses (including accruals as of January 01)
30,000
5,000
Interoffice transactions during 2012 were:
Merchandise shipment to branch at billed price
Tk. 60,000
Cash remittance to Head office
25,000
The following information is to be recorded on December 31, 2012:
a)
Merchandise billed Tk. 12,000 was shipped by head office to the branch on December 30,
2012; this merchandise is in transit and will not reach the branch until January 2013. (This
shipment is not included in the transfer previously mentioned).
b)
Expenses paid by the head office during the year that are chargeable to the branch total
Tk. 6,000. (These are included in the Tk. 30,000 amount)
c)
Depreciation on furniture and fixtures is recorded at the rate of 10% a year.
d)
Merchandise inventories, excluding merchandise in transit, are, head office Tk. 60,000;
branch Tk. 40,000, composed of merchandise received from head office at billed price, Tk.
9,600.
e)
Accrued expenses are: head office, Tk. 1,800; branch, Tk. 900.
Required:
(i)
Prepare journal entries including adjusting entries to record the foregoing transactions for
(a) the head office and (b) the branch office.
(ii) Prepare individual Income Statement for the year ended December 31, 2012 and Balance
Sheet as on December 31, 2012 for the head office and branch.
[Marks: (10 + 10) = 20]
Q. No. 3.
(a) When the outcome of a contract can be estimated reliably as per IAS 11?
(b) How the stage of completion of a construction contract may be determined as per IAS 11?
(c) What do you mean by (i) Jointly Controlled Operations, (ii) Jointly Controlled Assets, and
(iii) Jointly Controlled Entities ?
(d) National Engineers Ltd. Commenced work on 1st January 2011, on a contract of which the
agreed price was Tk. 50,00,000. The following expenditure was incurred during the year to
31st December 2011:
Wages
Tk. 14,00,000
Plant
3,50,000
Materials
10,50,000
Sundry Expenses
65,000
Head Office Charges
1,25,000
Page 2 of 4

Q. No.3.(Contd.)
Certain of the materials costing Tk. 1,00,000 proved unsuitable and were sold for Tk. 1,15,000,
and part of the plant was scrapped and sold for Tk. 17,000.
Of the contract price Tk. 24,00,000 representing 80% of the work certified, had been received
by 31st December 2011, and on that date the value of the plant, on the job was Tk. 80,000 and
the value of the materials Tk. 30,000. The cost of the work done but not certified was Tk.
2,50,000.
It was decided to estimate what further expenditure would be incurred in completing the
contract, to compute from this estimate and the expenditure already incurred the total profit that
would be made on the contract and to take to the credit of the Profit and Loss Account for the
year ended December 31st 2011, and that proportion of the total profit which corresponded with
the work certified. The estimates were as follows:
a)
That the total contract would be finished by 30th June, 2012;
b)
That wages to complete would amount to Tk. 8,49,500;
c)
The materials in addition to those in stock on 31st December, 2011, would cost Tk.
5,00,000, and sundry expenses on the contract Tk. 35,000 further;
d)
That a further Tk. 1,50,000 would have to be spent on plant and that the residual value of
the plant on 30th June, 2012, would be Tk. 60,000;
e)
That head office charges to the contract would be at the same annual rate as in 2011;
f)
That the claims, temporary maintenance and contingences would require Tk. 90,000.
Prepare Contract Account for the year ended 31st December, 2011 and show your calculation of
the sum to be credited to Profit and Loss Account for the year.
[Marks: (4+3+13) = 20]
Q. No. 4.
The following Trial Balance was extracted from the books of the Popular Life Assurance
Company as on December 31, 2012;
Accounts Titles
Issued and Subscribed Capital: 10,000 shares of Tk.15
each, Tk.10 called
Life Assurance Fund on 01.01.2012
Dividend Paid
Bonus to policy-holders
Premium received
Claims paid
Commission paid
Management expenses
Mortgage in Bangladesh
Interest and Dividend received
Agents Balances
Freehold premises
Investments
Loan on companys policies
Cash Deposits
Cash in hand
Surrenders
Total
Page 3 of 4
Dr. (Tk.)
Cr. (Tk.)
1,00,000
29,00,300
16,000
30,500
2,33,500
1,97,000
9,300
32,300
4,92,200
1,12,700
9,300
40,000
23,00,000
1,78,600
27,000
7,300
7,000
33,46,500
...
33,46,500

Q. No.4.(Contd.)
Adjustments:
(i)
Claims admitted but not paid Tk.10,000;
(ii) Management expenses due Tk. 1,200;
(iii) Interest accrued Tk.21,300;
(iv) Premiums outstanding Tk.10,000;
(v) Bonus utilized in reduction of premium Tk.6,000; and
(vi) Claims covered under re-insurance Tk.2,300.
Required: (a) Revenue Account and (b) Balance Sheet.
[Marks: (10+10) = 20]
Q. No. 5.
The following details were available regarding the affairs of Emacol Ltd as at 31 December 2012
when the company was contemplating filing a petition for liquidation or reorganization:
Taka
Accounts payable
97,500
Mortgage Notes payable
100,000
Bank Notes payable
16,000
Cash in Hand
2,000
Cash at Banks
2,100
Notes Receivable
12,000
Accounts Receivable (estimated collectible value: Tk.14,000)
23,500
Wages and Salaries due to 3 employees
6,750
Interest Payable- Bank Notes
550
Interest Payable- Mortgage Notes
4,250
Inventories Finished Goods
28,000
Inventories Work in Progress
12,000
Inventories Raw Materials
19,500
Prepaid Insurance (estimated recovery value: Tk.300)
600
Investment in Stock
13,250
Capital Stock
125,000
Retained Earnings (deficit)
(70,600)
Land (appraised value: Tk.20,000)
21,000
Building Net (appraised at Tk.50,000)
99,000
Plant and Machinery Net (estimated disposal value: Tk.19,000)
46,500
(a) The Notes Receivable are expected to be fully realized, and they have been pledged as
collateral on a Bank Note in the principal amount of Tk.10,000 plus interest payable of
Tk.300.
(b) Finished goods inventory can be sold at a mark-up of 20% over cost, with estimated
selling expenses of 10% of selling price.
(c) Inventories-WIP required Taka 6,000 to complete, of which Taka 2,500 represents the cost
of raw materials. Estimated selling price of the completed WIP inventories is Taka 12,500.
(d) Estimated selling price of the raw materials is Taka 11,900.
(e) Investment in stock is pledged as collateral on a Bank Note Payable in the principal
amount of Taka 6,000 plus interest payable of Taka 250.
(f) Land and Buildings serve as collateral on the Mortgage Note Payable.
Required: Prepare a Statement of Affairs for Emacol Ltd. along with a Deficiency Account.
[Marks: 20]
= THE END =
Page 4 of 4

SUBJECT: 202. MANAGEMENT ACCOUNTING.
Time: Three Hours
Full Marks:100
Q. No. 1.
(a) Explain how costs and benefits are relevant to the design of management accounting
systems.
(b) Give an example of management accounting information that could be use by a manager
to make each of the following decisions. Remember to consider non-financial information
where relevant.
(i)
The manager of a discount department store is deciding how many security
personnel to employ to reduce shoplifting.
(ii) A city council is deciding whether to build an extension to the public library.
(iii) The manager of a rental car agency is deciding whether to add luxury cars to the
rental car fleet.
(iv) The production manager in a car manufacturing plant is deciding whether to have
routine maintenance performed on a machine weekly or every two weeks.
(c) What are the advantages and limitations of the four types of benchmarking?
[Marks: (4+6+8) = 18]
Q. No. 2.
(a) Discuss the following comment by the manager of a small manufacturing company:
Budgeting is a waste of time. Ive been running this business for forty years. I dont need
to plan.
(b) The annual flexible budget of Tesco Lotus Ltd is as follows:
Capacity
40%
60%
80%
100%
Costs
Tk.
Tk.
Tk.
Tk.
Direct labor
16,000
24,000
32,000
40,000
Direct Materials
12,000
18,000
24,000
30,000
Production Overheads
11,400
12,600
13,800
15,000
Administration costs
5,800
6,200
6,600
7,000
Selling and Distribution cost
6,200
6,800
7,400
8,000
51,400
67,600
83,800
1,00,000
Owning to trading difficulties, the Company is operating at 50% capacity. Selling prices have
had to be lowered to what the directors maintain in an uneconomical level and they are
considering whether or not their single factory should be closed down until trade recession has
passed.
A market research consultant has advised that in about 12 months time there is every indication
that sales will increase to about 75% of normal capacity and that the revenue to be produced in
the second year will amount to Taka 90,000. The present revenue from sales at 50% capacity
would amount to only Tk. 49,500 for a complete year.
If the directors decided to close down the factory for a year, it is estimated that:
(i)
The present fixed cost would be reduced to Tk. 11,000 p.a.
(ii) Closing down cost would amount to Tk. 7,500.
(iii) Necessary maintenance at plant would cost Tk. 1,000 p.a.
Page 1 of 4

Q. No. 2.(contd.)
(iv)
On reopening the factory, the cost of overhauling plant, training and engagement of new
personnel would amount to Tk. 4,000.
Required:
Prepare a statement for the directors presenting the information in such a way as to indicate
whether or not it is desirable to close the factory.
[Marks: (5+15) = 20]
Q. No. 3.
Berwin Ltd is a manufacturer of small industrial tools with annual sales of approximately $7
million. Sales growth has been steady during the year and there is no evidence of cyclical
demand. Production has increased gradually during the year and has been evenly distributed
throughout each month.
Carla Viller, the accountant, has designed and implemented a new budget system in response
to concerns voiced by CEO George Berwin. Carla prepared an annual budget that has been
divided into 12 equal segments; this budget can be used to assist in the timely evaluation of
monthly performance. George was visibly upset upon receiving the May performance report for
the machining department. He exclaimed: How can they be efficient enough to produce nine
extra units every working day and still miss the budget by $300 per day! Gene Jordan, the
supervisor of the machining department, could not understand all the red ink when he knew
that the department had operated more efficiently in May than it had done in months. Gene
stated: I was expecting a pat on the back. Instead, the boss tore me apart. Whats more, I dont
even know why!
Berwin Ltd
Machining Department
Performance Report
For the month ended 31 May 2008
Budgeted
Actual
Variance
Volume in units
Variable manufacturing costs:
Direct materials
Direct labour
Variable overheads
Total variable Costs
Fixed manufacturing Costs:
Indirect labour
Depreciation
Taxes
Insurance
Other
Total fixed costs
Corporate costs:
Research and development
Selling and administrative
Total corporate costs
Total costs
3,000
3,185
185 F
$24,000
27,750
33,300
$85,050
$24,843
29,302
35,035
$89,180
$ 843 U
1,552 U
1,735 U
$4,130 U
$ 3,300
1,500
300
240
930
$ 6,270
$ 3,334
1,500
300
240
1,027
$ 6,401
$ 34 U
0
0
0
97 U
$ 131 U
$ 2,400
3,600
$6,000
$97,320
$ 3,728
4,075
$ 7,803
$103,384
$1,328 U
475 U
$1,803 U
$6,064 U
Page 2 of 4

Q. No. 3(contd.)
Required
(a)
Discuss the strengths and weaknesses of the new budgetary system.
(b)
Identify the weaknesses of the performance report and explain how it should be revised to
eliminate each weakness.
(c)
Prepare a revised report for the machining department using the May data.
(d)
What other changes would you make to improve Berwins budgetary system?
[Marks: (4+4+8+4) = 20]
Q. No. 4.
(a)
Hawaiian Candy Company is a wholesale distributor of candy. Small but steady growth in
sales has been achieved by the company over the past few years while candy prices have
been increasing. The company is manufacturing its plans for the coming fiscal year.
Presented below are the data used to project income of $184,000.
Average selling price
$4.00 per box
Average variable costs

Cost of Candy
Selling expenses
Total
$2.00 per box

$0.40 per box
$2.40 per box
Annual fixed costs

Selling
Administrative
Total
$160,000
280,000
$440,000
Expected annual sales volume (390,000 boxes) $1,560,000

The manufacturing of the candy have announced that they will increase prices of their products
by 15 percent in the coming year. The company expects that all other costs will remain the
same rates or levels as the current year.
Required:
(i)
(ii)
(iii)
What is Hawaiian Candy Companys breakeven point in boxes of candy and in dollar
amount for the current year?
Calculate margin of safety and degree of operating leverage of the current year. What will
be change in expected profit if expected sales are increased by 15%?
What selling price per box must the company charge to cover the 15 percent increase in
the cost of candy and still maintain the current contribution margin ratio?
Page 3 of 4

Q. No. 4. (contd.)
(b)
The management of Baker Company is considering the elimination of an unprofitable

product. Data for its three major products are as follows:
Sales
Manufacturing Costs
Fixed Operating expenses
Income
Variable cost ratio
Allocated fixed ratio
Snap
$4,000
2,800
800
$400
40%
200
Crackle
$2,000
1,200
600
$200
Pop
$1,000
600
800
$(400)
30%
200
50%
$200
Allocated fixed costs would not be affected by a decision to drop a product. However, 50% of
fixed costs (both manufacturing and operating) identified with a product would be dropped if the
product were eliminated.
Prepare an analysis to see whether pops should be eliminated.
[Marks: (4+6+4) + 8 = 22]
Q. No. 5.
(a)
Would you recommend variable costing or absorption costing as a source of information

for managers? Explain your answer.
(b)
Slim and Trim produces frozen yoghurt, a low-fat dairy dessert. The product is sold in fivelitre containers and had the following price and variable costs per unit in the current year:
Sales price
$27.00
Direct material
9.00
Direct labour
3.60
Variable overhead
5.40
Budgeted fixed overhead for the current year was $600,000, which was equal to actual
fixed overhead. Actual production was 150,000 five-litre containers, which was equal to
the budgeted level of production, but only 125,000 containers were sold. Slim and Trim
incurred the following selling and administrative expenses:
Fixed
$100,000
Variable
$2 per container sold.
Required:
(i)
Calculate the cost per unit under variable and absorption costing.
(ii)
Prepare income statements for the current year using:
(iii)
(a) Absorption costing;

(b) Variable costing.
Reconcile the profits reported under the two methods.
[Marks: 6 + {3 + (4+4) + 3} = 20]
= THE END =
Page 4 of 4

SUBJECT: 203. COMMERCIAL & INDUSTRIAL LAWS.
Time: Three Hours
Full Marks:100
Answer SIX questions taking any THREE from each part, including compulsory question
No. 5 and 10.
PART-A: COMMERCIAL LAWS

Q. No. 1.
(a) Every agreement by which any one is restrained from exercising a lawful profession,
trade or business of any kind is to that extent void Explain with at least two examples.
(b) By whom is a contract to be performed? Who can demand performance?
[Marks: (8 + 7) = 15]
Q. No. 2.
Discuss the circumstances where the object or consideration of an agreement is unlawful?
[Marks: 15]
Q. No. 3.
(a) Define Negotiable Instrument. Name the Negotiable Instruments that are recognized by
statute and recognized by usage or custom.
(b) What conditions are implied in arbitration agreement?
(c) Differentiate between Common carriers and Private carriers.
[Marks: (5+5+5) = 15]
Q. No. 4.
(a) What are the distinctions between Bill of Exchange and Cheque.
(b) What are the rules of Endorsement?
[Marks: (8 + 7) = 15]
Q. No. 5.
Write short notes on any 4(four) of the following:
(a) Misrepresentation.
(b) Undue influence.
(c) Bill of Lading.
(d) Trade Mark.
(e) Promissory Note.
(f) Doctrine of Caveat emptor.
[Marks: (5 x 4) = 20]
Page 1 of 2

SUBJECT: 203. COMMERCIAL & INDUSTRIAL LAWS.
PART-B: INDUSTRIAL LAWS
Q. No. 6.
(a) What is lay off? Discuss the rate of compensation to workers for lay off. Under what
conditions laid off workers are not entitled to get any payment?
(b) What are the procedures of retrenchment? Is an employer under any obligation bound to
reemploy a retrenched worker?
[Marks: (8+7) = 15]
Q. No. 7.
(a) Describe the provisions of (i) Interval for rest or meal and (ii) Weekly hours as per the BLA
2006.
(b) Narrate shortly the provisions of Annual leave with wages as per the BLA 2006.
[Marks: (8 + 7) = 15]
Q. No. 8.
Discuss the liability of a Garments Owner in respect of safety of the workers as per the BLA
2006.
[Marks: 15]
Q. No. 9.
(a) What are the functions of Labour Appellate Tribunal?
(b) What is unfair labour practice? What are the unfair labour practices on the part of the
employer?
[Marks: (8 + 7) = 15]
Q. No. 10.
Write short notes on any 4(four) of the following:
(a) Trade Union and CBA.
(b) Strike & lockout.
(c) Annual Leave.
(d) Maternity benefit.
(e) Temporary workers and Probationary workers.
[Marks: (4 x 5) = 20]
= THE END =
Page 2 of 2

CMA AUGUST 2013 EXAMINATION
SUBJECT: 204. TAXATION
Time : Three hours
Full Marks: 100

Q. No. 1.
(a) Write short notes on the following:(i)
Minimum tax for partnership firm;
(ii) Amortization of Licence fees; and
(iii) Changes in forms of Income Tax Return for assessment year 2013-14.
(b) Briefly explain the tax implications in following cases:(i)
Rental Power Company; and
(ii) Investment in residential building and apartment u/s 19BBBBB.
[Marks: {(2+2+3) + (2x3)} = 13]
Q. No. 2
(a) What incentives are given to SMEs through the Finance Act 2013?
(b) What are the consequences if advance payment of tax is more or less than the required
amount?
(c) Briefly explain the role of facilitator at ADR. How will his fees be determined?
(d) Specify the requisite tax to be paid at every stage of first appeal, second appeal, reference
to the High Court Division and appeal to the Appellate Division of the Supreme Court.
[Marks: (4 x 4) = 16]
Q. No. 3
From the following particulars compute the total income and tax liability of Mr. X for the income
year ending 30 June, 2013:(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.), rental
value being Tk. 72,000 p.a.
Medical allowance: Tk. 500 p.m. (actual expense Tk. 8,000)
Conveyance allowance: Tk. 3,000 p.m.
Subscription to RPF: 10% of basic salary (Employer also contributed the same).
(b) Interest on Securities :
Interest on SEC approved debenture Tk. 10,000/Interest on Government securities. 70,000/- (TDS @ 10% Tk. 7000/- 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 ( actually paid Tk. 50,000/-)
1,47,000
Page 1 of 3

Q. No. 3. (contd.)
(d)
Income from Partnership Business :

50% share income from a partnership firm is Tk. 1,46,000 (after tax).
Firms total income was Tk. 3,00,000/- (tax came at Tk. 8,000/-), but the firm did not pay
any tax rather it preferred 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 of tax) from a listed company Tk. 45,000/Stock dividend of 100 shares (Face value TK. 10 but market price on that day Tk. 1500/per share).
Interest (net of tax) on savings bank account Tk. 5,400/-.
(g) During the year Mr. X made the following investments:(1) Life insurance premium at the name of his dependent old father Tk. 60,000 (Policy
Value TK. 500,000);
(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.
From the following Profit and Loss Account of PQ Ltd. for the year ended on 30 June 2013,
determine total income and tax liability:
Profit and Loss Account
Taka
Taka
Directors Remuneration
46,000 Gross profit
4,75,000
Salaries & Wages
1,00,052 Dividend Income
30,000
Contribution to Provident Fund
8,800 Share Premium
30,000
Rent & Taxes
24,500 Sundry Income
13,000
Repairs and Operating Expenses
27,300 Capital gain on sale of machine
40,000
Electricity
17,500
Insurance
8,000
Legal Expenses
14,500
Audit Fee
5,800
Printing, Stationery and Postage
14,600
Compensation for Termination of a Staff
10,000
Typewriter
5,948
Advertisement
12,200
Entertainment
9,500
Provision for Bad Debt
4,400
Depreciation
46,600
Net Profit
2,32,300
5,88,000
5,88,000
Other Information:
a)
Rent and Taxes included Value Added Tax (VAT) of Tk. 4,200/- which was paid for
importing a machine and it was not used during the relevant year.
b)
Legal expenses included a sum of Tk. 10,000/- spent for income tax appeal.
c)
Provident Fund is recognized by the Income Tax Authority.
d)
Bad debt written off previously was recovered during the year Tk. 2,000/-.
Page 2 of 3

Q. No. 4. (contd.)
e)
f)
Allowable tax depreciation Tk. 58,400/Repairs and operating expenses included Tk. 6,000/- spent fo installation of a second
hand air conditioner in the residence of Managing Director.
g)
Entertainment expenses included Tk. 2,000/- for which no clear explanation was available
and miscellaneous expenses of Tk. 5,276/- which proved to be personal expenses of a
Manager.
h)
Company declared dividend @ 22% on paid up capital for the shareholders.
i)
The Company is a trading company and not listed in any stock Exchange.
[Marks: 20]
Q. No. 5.
M/S. Asa Electronics has imported electronic parts which will be assembled and packed in
Bangladesh. Due to increase in the last consignment price, the company needs to increase its
product price, for which it has to submit VAT FORM-1 to the VAT authority.
The imported consignment consisted of 10,000 units at a C&F (cost & freight) value of USD 60
per unit. The exchange rate was Tk. 78 for 1 US dollar. Applicable duties and tax were: Custom
duty @ 12%, Supplementary duty @ 10%, Advance income tax @ 5%, VAT @ 15% and ATV
@ 4%. Customs authority added 1% of C&F value as insurance cost and 1% of CIF value as
landing charge to determine the assessable value.
After importation, the companys carrying and other cost was Tk. 40 per unit, labour cost Tk.
200 per unit and overhead 50% of labour cost. For assembling and packing, the company used
2 articles locally, article A at a cost of Tk. 80 per unit without any VAT for exemption and article
B at a cost of Tk. 200 per unit plus 15% VAT therefor.
As per management policy, the companys mark up profit is 20% of cost.
Required: Determine
(a) Assessable Value for Customs clearance.
(b) Total duties and taxes, including VAT, AIT and ATV.
(c) Per unit sales price for submission of VAT Form-1.
(d) Output VAT per unit, Input VAT per unit and VAT liability per unit after input VAT credit.
[Marks: (4 x 4) = 20]
Q. No. 6
(a) Briefly describe the PSI system for imposition of import duty under section 25B of the
Customs Act, 1969. Comment on the conversion of mandatory PSI into optional one with
effect from 01 July, 2013.
(b) Who is required to pay VAT as per section 3 of the VAT Act, 1991? How is excise duty
being collected now?
(c) Distinguish between tax avoidance and effective tax planning. Why should one consider
the income tax authority as a party in a new project even if the project is exempt from tax?
[Marks: (4+4+3) = 11]
= THE END =
Page 3 of 3

PROFESSIONAL LEVEL-III
SUBJECT: 301. ADVANCED FINANCIAL ACCOUNTING-II
Time : Three hours
Full Marks: 100

Q. No. 1.
(a) MUTTAKEEN LTD. reported number of Shares outstanding 50,00,000 and Basic Earnings
per Share (EPS) is Tk. 2.00. The company has 10,00,000 of 12% convertible Debenture
of Tk. 10 each (each debenture is convertible into 1 ordinary share). Tax Rate is 37.50%.
Calculate the Basic EPS again and the Diluted Earnings Per Share of the company as per
IAS-33.
(b) You are the CFO of MONYEM PHARMA AID LTD. and you are asked for prepare a
management information system (MIS) report with the following data for the management
for decision making based on IFRS-8.
Amount
Amount
Particulars
(Tk. in
(Tk. in
millions)
millions)
Sales:
Food Products
5,650
Plastic & Packaging .
625
Health & Scientific
345
Others ..
162
Expenses:
6,782
Food products
3,335
Plastic & Packaging ..
425
Health & Scientific .
222
Others..
4,182
200
Other Items:
General Expenses
562
132
Income from Investments
Interest expenses .
65
Identifiable Assets:
Food Products ..
7,320
Plastic & Packaging .
1,320
Health & Scientific
1,050
Others
665
10,355
General Assets .
722
Other Information:
(i) Inter Segment Sales:
Food Products . Tk. 55 millions
Plastic & Packaging .Tk. 72 millions
Health & Scientific Tk. 21 millions
Others Tk. 7 millions
(ii) Opening profit includes Tk. 33 millions on inter-segment sales;
(iii) Information about inter-segment expenses are not available.
Required: Prepare a statement showing financial information about MONYEM PHARMA AID
LTD.s operation in different industry segments as per IFRS-8.
[Marks: (6 +14) = 20]
Page 1 of 5

Q. No. 2.
On 1 July 2012, MMH Ltd acquired 80% of the share capital of Muaz Ltd for Tk.150,000 and
Muaz Ltd acquired 60% of the share capital of Mahran Ltd for Tk.99,400. At that date, the
shareholders' equity of Muaz Ltd and Mahran Ltd were as follows:
Muaz Ltd
Mahran Ltd
Share capital ..
Tk. 100,000
Tk.100,000
General reserve .
60,000
40,000
Asset revaluation reserve
4,750
3,000
Retained profits..
25,000
10,000
At acquisition date, the assets and liabilities of Muaz Ltd and Mahran Ltd were recorded at
carrying amounts equal to their fair values, the non-current assets being revalued immediately
prior to the acquisitions of shares by MMH Ltd. and Muaz Ltd. The nonmonetary assets of Muaz
Ltd at 1 July 2012 consisted of:
Plant .. Tk.120,000
Motor vehicles..
40,000
Inventory
20,000
The motor vehicles and plant of Muaz Ltd were expected to have remaining useful lives of 5 and
10 years respectively. The inventory on hand at 1 July 2012 was all sold by 30 June 2013. Any
goodwill acquired is amortized evenly over a 10-year period. At 1 July 2012, Mahran Ltd had
recorded goodwill ofTk.9,000. the tax rate is 30%.
Additional information
(a) The profit and loss statements of MMH Ltd and its two subsidiaries, Muaz Ltd and Mahran
Ltd, for the year ended 30 June 2013 were as follows:
MMH Ltd
Muaz Ltd
Mahran Ltd
Sales revenue.
Tk.400,000
Tk.350,00
Tk.320,000
Other revenue
80,000
70,000
50,000
Total revenue
480,000
420,000
370,000
Cost of sales
210,000
252,000
185,000
Other
180,000
141,800
165,000
390,000
393,800
350,000
Profit before income tax
90,000
26,200
20,000
Income tax expense
22,000
8,700
9,000
Net profit
68,000
17,500
11,000
Retained profits as at 1/7/2012
16,000
25,000
10,000
84,000
42,500
21,000
Interim dividend paid
7,500
2,500
1,000
Final dividend provided
12,500
5,000
2,000
20,000
7,500
3,000
Retained profits as at 30/6/2013
Tk.64,000
Tk.35,000
Tk.18,000
(b) During the year ended 30 June 2013, all dividends paid and provided were out of profits
earned since 30 June 2012, except for the Tk.1,000 interim dividend paid by Mahran
Ltd, which was provided for out of profits for the year ended 30 June 2012.
(c) Inter-entity sales for the year:
Muaz Ltd to Mahran Ltd. ..Tk.20,000
Mahran Ltd to MMH Ltd.
10,000
(d) Profits in ending inventory through inter-entity sales were:
Inventory of Mahran Ltd. . Tk.3,000
Inventory of MMH Ltd ..
500
Page 2 of 5

Q. No. 2.(contd.)
(e)
On 1 January 2013, Mahran Ltd sold machinery to MMH Ltd for Tk. 42,000. Carrying
amount of the machinery on date of sale was Tk.43,500. MMH Ltd charged depreciation
on machinery at the rate of 10% per annum on a straight-line basis.
(f) Net profit attributable to outside equity interests = Tk. 8,625
Required: Prepare the consolidated statement of financial performance at 30 June 2013 with
notes.
[Marks: = 20]
Q. No. 3.
H Ltd. acquired a 70% interest in the equity shares of F. Ltd. for Tk. 750,000 on January 1,
2011. The abridged statement of financial position of both companies at the date of acquisition
were as follows.
H. Ltd. Tk.(000)
F. Ltd. (Tk.000)
Identifiable assets
8200
2000
Investment in F. Ltd.
750
8950
2000
Equity
6000
1200
Identifiable liabilities
2950
800
8950
2000
The fair value of the identifiable assets of F. Ltd. amounts to Tk. 2800,000 and the fair value of
the liabilities is Tk. 800,000. The non controlling interest will be measured as a percentage of
net assets of the acquire. Demonstrate the results of the acquisition.
(b) (i) A reportable segment is an operating segment or results from the aggregation of two or
more operating segments that meets any of the quantitative threshold. Discuss.
(ii) Hollier Inc is a diversified entity that operates in nine operating segments organized around
differences in products and geographical areas. The following financial information relates to the
year ending June 30, 2015.
$ 000
Nature of business
Total Sales
External Sales
Total profits Total Assets
Beer
2,249
809
631
4,977
Beverages
1,244
543
-131
3,475
Hotels
4,894
4,029
714
5,253
Retail
3,815
3,021
-401
1,072
Packaging
7,552
5,211
1,510
8,258
Totals:
19,754
13,613
2,323
23,035
Geographical areas
Total Sales
External Sales
Total profits Total Assets
Finland
7,111
6,841
1,536
9,231
France
1,371
1,000
-478
5,001
United Kingdom
3,451
2,164
494
3,667
Australia
7,821
3,608
771
5,136
Totals
19,754
13,613
2,323
23,035
As per IFRs- 8 identify the reportable operating segments on the basis of the reports mentioned
above.
[Marks: (6+4+10) = 20]
Page 3 of 5

Q. No. 4.
(a) Define National Income of Country and how it is computed?
(b) The following data relates to the national Income Account of a Country for the year-2012.
Taka in million
Total domestic expenditure at market price
37,250
Capital consumption
2,720
Property income received in abroad
1,730
Indirect taxes
6,550
Import of goods and services
6,970
Property Income paid abroad
1,230
Subsidies
2,500
Export of goods and services
6,350
Capital grant by government to government
1,500
Compute:
(i)
Gross domestic product at factor cost.
(ii) Gross National product at factor cost.
(iii) National Income.
[Marks: (5 + (3 x 5) = 20]
Q. No. 5.
On January 1, 2009, R & Co. purchased 80 percent of S & Co.'s ordinary shares for Tk. 56,000.
At acquisition, S & Co. reported net assets of Tk. 60,000. Trial balance for the two companies
on December 31, 2012 were as follows:
Items
Cash
Accounts Receivable
Inventory
Buildings & Equipment
Investment in S & Co.'s ordinary shares
Cost of Goods Sold
Depreciation & amortization
Other Expenses
Dividends Declared
Accumulated Depreciation
Accounts Payable
Bonds Payable
Bond Premium
Ordinary Shares
Share Premium
Retained Earnings, January 1, 2012
Sales
Other income
Income from Subsidiary
R & Co.
Dr.
Cr.
26,060
16,000
34,000
120,000
60,800
83,200
6,000
4,800
10,000
62,000
20,000
60,000
40,000
S & Co.
Dr.
2,000
14,000
22,000
80,000
Cr.
40,400
4,000
3,600
5,000
24,000
3,040
20,000
960
20,000
4,000
43,000
50,000
6,000
69,180
100,000
4,080
5,600
360,860 360,860 171,000 171,000
Page 4 of 5

Q. No. 5.(contd.)
Additional information:
1)
The purchase differential is assigned to buildings and equipment that had a remaining 10year economic life at the date of combination with a salvage value of zero.
2)
R & Co. regularly purchases inventory from S & Co. During 2011, S & Co. sold inventory
Costing Tk. 8,000 to R & Co. for Tk. 12,000 and R & Co. resold 60% of the inventory in
2011 and 40% in 2012 to non affiliates.
3)
During 2012, S & Co. sold inventory costing Tk. 6,000 to R & Co. for Tk. 9,000, and R &
Co. resold before end of year 2012, one-third of the inventory purchased from S & Co. to
non-affiliates.
4)
R & Co. sold equipment purchased at Tk. 15,000 to S & Co. for Tk. 10,000 on December
31, 2010. Accumulated depreciation over the 12 years of use before the intercorporate
sale was Tk. 9,000. The estimated remaining life at the time of transfer was eight years.
Straight line depreciation is used by both companies.
5)
R & Co. owes to S & Co. Tk. 2,000 on account on December 31, 2012.
Required (apply either Parent Company approach or Entity approach):
(a) Give all journal entries recorded by R & Co. with regard to its investment in S & Co. during
2012 under equity method.
(b) Give all eliminating entries needed to prepare consolidated financial statements for the
year 2012.
(c) Prepare equity method consolidated workpaper as of December 31, 2012.
Marks: (3+6+11) = 20]
= THE END =
Page 5 of 5

SUBJECT: 302. ADVANCED COST ACCOUNTING
Time: Three Hours
Full Marks:100
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 Department provides services to both producing services. 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. 30,000.00
Tk. 15,000.00
Timekeeping and Personnel
Tk. 16,500.00
Tk. 11,000.00
Others
Tk. 19,500.00
Tk. 19,500.00
Materials inventory and work in process are costed on a FIFO basis.
The Fabricating Departments records for December show:
Particulars
In process, December 1
Started in process
Total units to be accounted for
Transferred to Finishing Department
In process, December 31
Normal Losses throughout the process
Total units accounted for
Units
3,000
25,000
28,000
19,000
6,000
3,000
28,000
Particulars
Work in process, December 1
Material
Labor
Factory Overhead
Current period costs:
Direct Labor Cost
Departmental Factory Overhead (excluding service department
allocation)
Page 1 of 5
Amount in Taka
13,000
17,500
21,500
52,000
154,000
132,000

Q. No. 1.(contd)
Polyplast work-in -process at the beginning and end of the month was partially completed as
follows:
Particulars
Materials
Labor and Factory
Overhead
December 01
66%
50%
December 31
100%
75%
Material inventory records for December indicate:
Miracle Mix
Bypro
Particulars
Quantity (unit) Amount (Taka) Quantity (unit) Amount (Taka)
Balance, December 01
62,000
62,000.00
265,000
18,550.00
Purchase:
December 12
39,500
49,375.00
December 20
28,500
34,200.00
Fabricating Department
83,200
50,000
usage
Requirement:
(1) Compute the equivalent number of units of Polyplast for materials and conversion costs.
(2)
(i) Determine the total Fabricating Department cost to be accounted for.
(ii) Compute the unit costs of materials, labor and factory overhead for the Fabricating
department.
(iii) Compute the cost 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+7+8)} = 25]
Q. No. 2.
(a) Companies should always make and sell all products whose selling prices exceeded
variable cost. Do you agree with the statement? Explain.
(b) The Ottobi India manufactures filling small cabinets in two operations: Machining and
finishing. It provides the following information:
Machining
Finishing
Annual Capacity
100,000 units
80,000 units
Annual Production
80,000
80,000
Fixed Operating Costs
Tk. 64,00,000
Tk. 40,00,000
Fixed Operating Cost per unit produced Tk. 80 per unit
Tk. 50 per unit
Each Cabinet Sell for Tk. 720 and has direct material cost of Tk. 320 incurred at the start
of the machining operation Ottobi has no other variable costs. Ottobi can sell whatever
output it produces.
Required:
(i)
Ottobi is considering using some modern Jigs and Tools in the finishing operation
that would increases annual output by 1,000 units. The annual cost of these Jigs and
tools is Tk. 3,00,000. Should Ottobi acquire these tools? Show with Calculation.
Page 2 of 5

Q. No. 2.(contd)
(ii) The Production Manager of the machining department has submitted a proposal to
do faster setups that would increase the annual capacity of the machining
department by 10,000 units and would cost Tk. 50,000 per year. Should Ottobi
implement the change?
(iii) An outside contractor offers to do the finishing operation for 12,000 units at Tk. 100
per unit that is the double of Tk. 50 per unit that it costs Ottobi to do the finishing in
house. Should the Ottobi accept the subcontractors offer?
(iv) The Mumbai Corporation offers to machine 4,000 units at Tk. 40 per unit that is the
half of Tk. 80 per unit that it costs Ottobi to do the machining in house. Should Ottobi
accept Mumbai Corporations offer?
(c) Vision Enterprises manufactures converter boxes for high definition TVs. All processing is
initiated when an order is received. For March there were no beginning inventories.
Conversion Costs and Direct Materials are the only manufacturing cost accounts. Direct
Materials are purchased under a just-in-time system. Back-flush costing is used with a
finished goods trigger point. Additional information is as follows:
Actual conversion costs
Tk. 435,000
Standard materials costs per unit
Tk. 115
Standard conversion cost per unit
Tk. 85
Units produced
7,900
Units sold
7,600
Required: Record all Journal entries for the monthly activities related to the above transactions if
back-flush costing is used.
[Marks: (5+12+8) = 25]
Q. No. 3.
(a) Define Scraps, Wastage, Spoilage and Defectives and state how they are treated in Cost
Accounting?
(b) Eastern Refinery produces Gasoline Heating Oil and Jet Fuel from Crude Oil which is
processed in Department-A. At the end of the process in Department-A, three partially
completed products emerge: Gasoline, Heating Oil and Jet Fuel. These three products
later are being processed in Department-B, C and D respectively for refinement. The
following data relates to the production of these goods during a particular period:
Department
Input and output
Cost Incurred Disposable cost Price per gallon
(In Gallon)
Tk.
Tk.
Tk.
A (Crude Oil)
8,20,000
3,28,000
B (Gasoline)
2,80,000
1,00,000
8,000
2.30
C (Heating Oil)
3,40,000
60,000
2,000
2.00
D (Jet Fuel)
2,00,000
70,000
10,000
2.80
8,20,000
5,58,000
20,000
Required:
(i)
A statement showing the allocation of Joint Cost applying NRV method.
Page 3 of 5
(ii)
Statement showing total cost of production of each product and profit earned on each
product assuming all units are sold out.
Q. No. 3.(contd)
(c)
The Chittagong Timber Company prepares lumber for companies who manufacture
furniture. The main product is finished lumber with a byproduct of wood shavings. The
byproduct is sold to plywood manufacturers. For July, the manufacturing process incurred
Tk. 332,000 in total costs. Eighty thousand board feet of lumber were produced and sold
along with 6,800 pounds of shavings. The finished lumber sold for Tk. 6.00 per board foot
and the shavings sold for Tk. 0.60 a pound. There were no beginning and ending
inventory of lumber. However, 1,800 pounds of shavings remain unsold at the end of the
month.
Required:
Prepare an income statement showing the byproduct (a) as a cost reduction during production,
and (b) as a revenue item when sold. Put comments on any differences between the margin
under two methods.
[Marks: (5+12+8) = 25]
Q. No. 4.
(a) Lexington Company manufactures stone tiles for kitchen counters and floors. Its strategy
is to manufacture high quality products at reasonable prices and to rapidly deliver products
following sales.
Lexington sells to both hardware store and contractors. To avoid holding large inventories
of finished goods, Lexington manufactures products based on orders from customers. The
factory set up enables workers to perform multiple functions, including receiving orders,
running different machines, inspecting for quality, packaging, and shipping the final
product.
Given Lexingtons strategy, describe the financial and nonfinancial measures that you
would include in its balanced scorecard-based management control system.
(b)
The marketing department at Barnic Manufacturing has an idea for a new product that is
expected to have a life cycle of 5 years. After conducting market research, the company
has determined that the product could sell for Tk. 250 per unit in the first 3 years of life and
Tk. 175 per unit for the last 2 years. Units expected to sale are as follows:
Year 1
3,000 units
Year 2
4,500 units
Year 3
4,800 units
Year 4
5,000 units
Year 5
1,500 units
Per unit variable selling cost are estimated at Tk. 30 through the products life, annual
fixed selling and administrative costs are expected to be Tk. 3,50,000. Bernic
Manufacturing desires a profit margin of 20% of selling price per unit.
Requirement:
(i)
Complete the life cycle target cost to manufacture the product.
(ii) If the company expects the product to cost Tk. 65 to manufacture in the first year what is
the maximum manufacturing cost can be in the following 4 years.
(iii) Assume Bernic Manufacturing engineers conclude that the expected manufacturing cost
per unit is Tk. 70. What action might the company take to reduce this cost?
[Marks: (10 + 15) = 25]
Page 4 of 5
= THE END =
Page 5 of 5

SUBJECT: 303. CORPORATE LAWS, GOVERNANCE & SECRETARIAL PRACTICES.
Time: Three Hours
Full Marks:100
Answer SIX questions taking any THREE from each part, including compulsory question
No. 5 and 10.

Start answering each question from a fresh sheet
PART-A: CORPORATE LAWS

Q. No. 1.
(a) Who are the signatories of Memorandum and Articles of Association of a Public Limited
Company (PLC)? How these two documents can be amended, if required?
(b)
A Public Limited Company decided to raise its capital. Discuss the procedures to be taken in this
respect.
[Marks: (7+8) = 15]
Q. No. 2.
(a) What are the restrictions imposed on the borrowing powers of the Board of Directors?
(b) Briefly mention the provisions of the Companies Act 1994 relating to the appointment and reappointment of Statutory Auditors.
[Marks: (7+8) = 15]
Q. No. 3.
(a) Who are considered to be related party? What disclosures are required in the Annual Report of
a listed company regarding related party transactions?
(b) Recently Bangladesh Securities Exchange Commission (BSEC) has made mandatory holding
of at least two percent shares of paid up capital by each of the sponsor director of a listed
company. Explain its merits and demerits. Do you think it will have a positive impact in the
stock exchanges of Bangladesh?
[Marks: (8+7) = 15]
Q. No. 4.
(a)
A company is an artificial person created by law with a perpetual succession and a common seal.
Explain this statement and point out the basic features of a company registered with RJSC.
(b)
A companys object clause is of fundamental importance not only to members but also to nonmembers. Explain this statement.
[Marks: (8+7) = 15]
Q. No. 5.
Write short notes on the following:

(a) Price sensitive information;
(b) Prospectus;
(c) Annual General Meeting;
(d) Casual Vacancy of a Director;
(e) Appointment of an Independent Director.
[Marks: (5 X 4) = 20]
Page 1 of 2

SUBJECT: 303. CORPORATE LAWS, GOVERNANCE & SECRETARIAL PRACTICES.
PART-B: GOVERNANCE & SECRETARIAL PRACTICES

Q. No. 6.
(a) A Company Secretary is an eye witness to the Board. Do you agree with the statement? Explain in
details.
(b) Discuss the role of a Company Secretary in Corporate Governance.
[Marks: (7+8) =15]
Q. No. 7.
(a) What are the procedures to offer right shares of a public limited company?
(b) How the interest of small investors can be protected in the share market?
[Marks: (8+7) =15]
Q. No. 8.
(a) What do you mean by share market index?
(b) Explain the procedures for calculating Index.
(c)
What are the factors responsible for declining share prices?
[Marks: (5+5+5) =15]
Q. No. 9.
(a) Draft a notice for the forthcoming Annual General Meeting of a Public Limited Company with
common agendas.
(b) What are the provisions that have to be complied in carrying out Cost Audit in a large Textile
Industry?
[Marks: (7+8) =15]
Q. No. 10
Write Short notes on the following:
(a) Quorum for a meeting;
(b) Record date;
(c) Proxy;
(d)
(e)
Insider Trading;
CDBL.
[Marks: (5 x 4) = 20]
= THE END =
Page 2 of 2

SUBJECT: 304. AUDITING.
Time: Three Hours
Full Marks:100

Q. No. 1.
(a) Explain the concept of assurance and briefly describe the reasonable assurance and
limited assurance engagement.
(b) Who may act as an auditor of a company? Who may appoint and fixed up remuneration of
auditor? Write briefly mentioning related section of Companies act 1994.
(c) What are the statutory duties and responsibilities of the auditor?
(d) Define internal control system? Who is responsible for implementation of IC system? If IC
are effective then it can reduce the risk of auditor Explain.
[Marks: (4+4+3+4) = 15]
Q. No. 2.
At the time of audit during 2013, you encountered the following situations:
(a) The audited financial statements of Asian Trading Ltd. were approved by the Shareholders
at the AGM held on 3rd June 2012. On 7th June 2012, the Managing Director discovered a
petty cash fraud by the cashier. It transpired that the fraud has been carried out over a
period of year. Cashier made out and signed Cash Expenses vouchers which were
charged to motor vehicle expenses. No receipts were attached to the Petty Cash
Vouchers. The Managing Director signs all cheques for reimbursing Petty Cash float.
The companys turnover was Tk. 20 crore and profit before tax was Tk. 1.50 crore. The
Partner-in-charge of the audit decided, at planning stage, that no audit worked need be
carried out on petty cash, as he concluded that petty cash expenditure (on imprest float)
was small, so the risk of material error or fraud was also small.
(i)
You are required briefly to state auditors responsibilities for detecting fraud and error
in financial statements.
(ii) Consider whether your firm would be negligent if the fraud was Tk. 15 lac.
(b) An auditor is expected to have an absolute basis for the expression of an opinion. Do
you agree? Why or why not?
[Marks: (10+5) = 15]
Q. No. 3.
(a) Auditors integrity, objectivity and independence are subject to various threats and that
safeguards must be in place to counter these. Please explain in brief the threats and
safeguards of its?
(b) Conflicts of interest and confidentiality are related matters. Where a conflict of interest
arises, one of key issues is whether it will be possible to keep information confidential.
Explain.
(c) Explain the situations where an auditor may disclose confidential information about a
client.
[Marks: (5+5+5) = 15]
Q. No. 4.
(a)
What do you mean by Subsequent event? In which ways they are treated differently in
Financial Statement.
(b) Define related Parties. What factors should be considered in judging the related parties
transaction during the time of audit?
(c) Explain the meaning of Analytical Procedure and discuss its significance for an auditor.
Do you think, Analytical procedure may increase or decrease the risk of an auditor
Explain in your own word?
[Marks: (5+5+5) = 15]
Page 1 of 2

SUBJECT: 304. AUDITING.
Q. No. 5.
(a) Auditor should obtain sufficient appropriate audit evidence to be able to draw reasonable
conclusions on which to base the audit opinion. What do you mean by Sufficient and
appropriate?
(b) What is meant by a significant risk? What are the three components of audit risk and how
they defined with example?
(c) What do you mean about Management representation? Do you think that Management
representation will reduce the risk of an Auditor? Write briefly in favour your answer.
(d) Distinguish between Auditing Standards and Auditing procedures?
[Marks: (3+4+5+3) = 15]
Q. No. 6.
You are the audit manager in Alam & Co, a firm of Chartered Accountants. Recently, you have
been assigned specific responsibility for undertaking annual review of existing clients. The
following situations have arisen in connection with three client companies:
(a) Alam & Co was appointed auditor & tax advisor to ABM Co. a limited liability company, last
year and has recently issued an unmodified opinion on the financial statements for the
year ended 30 June 2012. To your surprise, the tax authority has just launched an
investigation into the affairs of ABM Co. on suspicion of under declaring income.
(b) The chief executive of ABM Co., an exporter of specialist equipment, has asked for advice
on the accounting treatment and disclosure of payments made for security consultancy
services. The payments, which aim to ensure that consignments are not impounded in the
destination country of a major customer, may be material to the financial statements for
the year ended 30 June 2012. ABM Co. does not treat these payments as tax deductible.
(c) Your firm has provided financial advice to the Abdul Hai family for many years and this has
sometimes involved your firm in carrying out transactions on their behalf. The eldest son,
Yusuf, is to take up a position as a senior government official to a foreign country next
month.
Required:
Identify and comment on the ethical and other professional issues raised by each of these
matters and state what action, if any, Alam & Co should now take.
[Marks: (7+4+4) = 15]
Q. No. 7.
(a) What is sampling risk? Explain the importance of Audit Sampling.
(b) You are the audit manager for ABC & Co. One of your new clients this year is Data Soft
Ltd., a company having net assets of Tk. 150 million. The audit work has been completed,
but there is one outstanding matter that you are investigating; the directors have decided
not to provide depreciation on building in the financial statement, although Bangladesh
Accounting Standard suggests that depreciation should be provided.
Required:
State the additional audit procedures and actions you should now take in respect of above
matter.
[Marks: (5 x 2) = 10]
= THE END =
Page 2 of 2

PROFESSIONAL LEVEL-IV
SUBJECT: 401. FINANCIAL MANAGEMENT
Time : Three hours
Full Marks: 100

Q. No. 1.
MN Ltd. is comprised of only four major investment projects, details of which are as follows:Project
% of Company
Annual % return during
Risk % standard
Correlation with
Market
last five years
deviation
the market
1
28
10
15
0.55
2
17
18
20
0.75
3
31
15
14
0.84
4
24
13
18
0.62
The risk-free rate is expected to be 5% per year, the market return 14% per year and the
standard deviation of market return 13%.
Required:
(a) Assume the MN Ltd.s shares are currently priced based on the assumption that the last
five years experience of returns will continue for the foreseeable future. Evaluate whether
or not the share price of MN Ltd. is undervalued or overvalued.
(b) Discuss why your results in (a) above might not correctly identify whether or not the share
price of MN Ltd. is undervalued or overvalued.
[Marks: (12+8) = 20]
Q. No. 2.
The following information are provided relating to the acquiring Company Efficient Ltd. and the
target Company Healthy Ltd.
Efficient Ltd.
Healthy Ltd.
Nos. of Shares (F.O. Tk. 10 each
10 lacs
7.5 lacs
Market Capitalization
500 lacs
750 lacs
P/E Ratio (times)
10
5
Reserves and surplus
300 lacs
165 lacs
Promoters holdings (No. of Shares)
4.75 lacs
5 lacs
Board of Directors of both the companies have decided to give a fair deal to the shareholders
and accordingly for swap ratio the weight are decided as 40%; 25% and 35% respectively for
earnings. Book value and Market price of shares of each company.
Required:
(i)
Calculate the swap ratio and also calculate promoters holding percentage after
acquisition.
(ii) What is the EPS of Efficient Ltd. after acquisition of Health Ltd.?
(iii) What is the expected market price per share and market capitalization of Efficient Ltd.
after acquisition assuming P/E ratio of firm Efficient Ltd. remains unchanged.
(iv) Calculate free float market capitalization of the merged firm.
[Marks: (6+5+6+3) = 20]
Q. No. 3.
SRP is a market leader in the design, manufacture and installation of large scale equipment to
customer-specified performance criteria. Although it sells its products worldwide, all its
manufacturing capacity is in the Bangladesh and its shares are listed on Dhaka stock exchange.
Page 1 of 4

Q. No. 3. (contd)
SRP was formed by the amalgamation of three smaller companies in 1979 and many of its
current shareholders previously owned shares in those companies. Small, individual investors
own around 30% of the total shares in issue. Approximately 65% of the shares are owned by
large institutional investors such as pension funds and the remaining 5% are owned by the
directors and employees of SRP.
Financial objectives SRPs principal financial objective is to maximize shareholder wealth. It
also has the following additional specific financial objectives:
Annual increase in earnings per share (EpS) and dividend per share (DpS) of at least
3% on average over a rolling 3 year period.
Maintain gearing, based on book values, below 30%.
Gearing is defined as net debt to net debt plus equity where net debt is long term borrowings
less surplus cash.
SRPs forecast statement of financial position as at 31 March 2013 before taking into account
the dividend of Tk. 89.6 million that is due to be paid on 10 March is shown below:
Tk million
Assets
Non-current assets
1,650
Current assets
Cash and cash equivalents
215
Other
210
Total assets
2,075
EQUITY and LIABILITIES
Equity
Share capital (Tk. 1 ordinary shares)
350
Reserves
950
Non-current liabilities
Secured 7% loan
550
Current liabilities
225
Total equity and liabilities
2,075
Additional information:
Forecast revenue and earnings for SRP for the year ending 31 March 2013 are Tk. 2,500
million and Tk. 280 million respectively.
SRPs shares are currently trading at Tk 4.78 per share cum div and the underlying ex div
price is not expected to change before 31 March.
The secured loan is from a consortium of banks and is not traded. It is repayable at par on
31 March 2017.
Surplus cash
The company has been highly profitable in recent years having successfully tendered for a
number of very large contracts around the world. As a consequence, SRP has substantial
amounts of cash either on deposit or invested in short term securities (shown in the financial
statements as cash equivalents). Even after the planned dividend, the directors consider that a
significant portion of the forecast cash and cash equivalents balance as at 31 March 2013 is
surplus to requirements and are considering how to deal with this surplus cash.
Page 2 of 4

Q. No. 3. (contd)
Three proposed strategies for dealing with surplus cash are as follows:
1.
Continue to hold the surplus cash in a bank account and/or as short-term securities.
2.
Arrange a programme to repurchase a proportion of the companys shares.
3.
Pay bonuses on a one-off basis to directors and employees.
For this purpose, surplus cash is defined as all forecast cash and cash equivalents as at 31
March 2013 after paying the planned dividend and setting aside Tk. 15 million for the support of
on-going operations. Returns on short-term cash can be assumed to be negligible.
Required:
(a) Calculate forecasts of the following for SRP, after paying the dividend but before disposing
of surplus cash remaining:
EpS and DpS for the year ending 31 March 2013.
Gearing based on book values as at 31 March 2013.
Gearing based on market values as at 31 March 2013.
(b) Calculate the likely impact on EpS, DpS, and gearing of each of the three proposed
strategies for dealing with surplus cash.
(c) Evaluate each of the three proposed strategies for dealing with surplus cash. In your
answer, take into account likely impact of each strategy on:
Attainment of financial objectives.
Shareholder wealth in both the short and long term.
[Marks: (6+6+8) = 20]
Q. No. 4.
Lancaster Engineering Inc.(LEI) has the following capital structure, which it considers to be
optimal:
Debt
25%
Preferred Stock
15%
Common Equity
60%
100%
LEIs expected net income this year is Tk. 34,285.72; its established dividend payout ratio is 30
percent; its marginal tax rate is 40 percent; and investors expect earnings and dividend to grow
at constant rate nine percent in the future. LEI paid a dividend of Tk. 3.60 per share last year,
and its stock currently sells at a price Tk. 60 per share.
LEI can obtain new capital in the following ways:
Common : New Common stock has a floatation cost of 10 percent for up to Tk. 12,000 of new
stock and 20 percent for all common stock over Tk. 12,000.
Preferred : New Preferred stock with a dividend of Tk. 11 can be sold to the public at a price
of Tk. 100 per share. However, floatation cost costs of Tk. 5 per share will be incurred for up to
Tk. 7,500 of preferred stock, floatation cost will rise to Tk. 10 per share, or 10%, on all preferred
stock over Tk. 7,500.
Debt: Up to Tk. 5000 of debt can be sold at an interest rate of 12 percent; debt in the range of
Tk. 5,001 to Tk. 10,000 must carry an interest rate of 16 percent.
LEI has the following independent investment opportunities:
Project
Cost AT t= 0
Annual Net Cash Flow
Project Life
IRR
A
Tk. 10,000
Tk. 2,191.20
7 years
12.0%
B
Tk. 10,000
Tk. 3,154.42
5 years
17.4%
C
Tk. 10,000
Tk. 2,170.18
8 years
14.2%
D
Tk. 20,000
Tk. 3,789.48
10 years
13.7%
Page 3 of 4
E
Tk. 20,000
Tk. 5,427.84
6 years
Q. No. 4. (contd)
a.
b.
c.
Find the break points in the MCC schedule

Determine the cost of each capital structure component.
Calculate the weighted average cost of capital in the internal between each break in the
MCC schedule.
d.
Calculate the IRR for Project E.
e.
Which project should LEI accept?
[Marks: (5+5+5+3+2) = 20]
Q. No. 5.
The following statement and operating results of AB Ltd. revealed the following position as on
31 December, 2012:
1
Equity Share Capital (Tk. 100 per share fully paid)
Tk. 200,000
2
Working Capital
1,56,000
3
Bank Overdraft
24,000
4
Current Ratio
2.5
5
Quick Ratio
1.5
6
Proprietary Ratio (Fixed Assets to Equity)
0.6
7
Gross Profit Ratio
20%
8
Stock Velocity
5 times
9
Debtors Velocity
1 month
10
Net Profit to Sales
10%
Expenses included depreciation Tk. 26,000. Closing stock was 25% higher that the opening
stock. There were also free reserves brought forward from earlier years. Current assets
included Stock, Debtors and Cash at Bank only. Current liabilities consisted of Bank Overdraft
and Creditors. There were no Fictitious Assets. The following information would be gathered
from the books and records for the year ended 31 December, 2013:
(1) From 1st January 2010 the sales price was enhanced by 5%. Further, sales for the year
were 10% & higher in volume as compared to the previous year.
(2) Stock level was raised to Tk. 1,80,000 from January and maintained at that level thought
the year.
(3) Percentage of gross profit on turnover has gone up from 20% to 25%.
(4) Depreciation on fixed assets to be provided at 10% on written down value method. Full
years depreciation is to be provided on additions.
(5) Expenses outstanding on 31.12.2010 Tk. 5000.
(6)
(7)
(8)
(9)
Ratio of net profit to sales 12 %

Debtors velocity was same and creditors were Tk. 1,00,000.
Bank Overdraft was fully discharged.
Fixed assets acquired Tk. 40,000.
From the above information prepare

(1) Income Statement for the year ended 31.12.2013 and Balance Sheet on that date.
[Marks: (10+10) = 20]
= THE END =
Page 4 of 4

SUBJECT: 402. STRATEGIC MANAGEMENT ACCOUNTING.
Time : Three hours
Full Marks: 100

Q. No. 1.
(a) Sunk costs are easy to spot. Theyre simply the fixed costs associated with a decision.
Do you agree? Explain.
(b) Variable costs and differential costs mean the same thing. Do you agree? Why?
(c) In an unbalanced minimization transportation problem, with positive unit transport costs
from 3 factories to 4 destinations, it is necessary to introduce a dummy destination to
make it a balanced transportation problem. How will you find out if a given solution is
optimal?
[Marks: (3+2+5) = 10]
Q. No. 2.
The Information Technology division (IT) of RJ Business Consulting Group provides consulting
services to its clients as well as to other divisions within the group. Consultants always work in
teams of two on every consulting day. Each consulting day is charged to external clients at
Tk.750 which represent cost plus 150% profit mark up. The total cost per consulting day has
been estimated as being 80% variable and 20% fixed.
The director of the Human Resources (HR) division of RJ Business Consulting Group has
requested the services of two teams of consultants from the IT division on five days per week
for a period of 48 weeks, and has suggested that she meets with the director of the division in
order to negotiate a transfer price. The director of the IT division has responded by stating that
he is aware of the limitations of using negotiated transfer prices and intends to charge the HR
division Tk.750 per consulting day.
The IT division always uses state of the art video-conferencing equipment on all internal
consultations which would reduce the variable costs by Tk.50 per consulting day. Note: this
equipment can only be used when providing internal consultations.
Required:
(a) Calculate and discuss the transfer prices per consulting day at which the IT division should
provide consulting services to the HR division in order to ensure that the profit of the RJ
Business Consulting Group is maximized in each of the following situations:
(i)
Every pair of consultants in the IT division is 100% utilized during the required
48-week period in providing consulting services to external clients, i.e. there is no
spare capacity.
(ii) There is one team of consultants who, being free from other commitments, would be
available to undertake the provision of services to the HR division during the required
48-week period. All other teams of consultants would be 100% utilized in providing
consulting services to the external clients.
(iii) A major client has offered to pay the IT division Tk. 2,64,000 for the services of two
teams of consultants during the required 48-week period.
(b) Briefly explain three limitations of negotiated transfer prices.
[Marks: {(8+6+5) + 6} = 25]
Page 1 of 4

Q. No. 3.
(a) When activity-based costing is used, why are manufacturing overhead costs often shifted
from high-volume products to low-volume products?
(b) ABC Ltd. manufactures and sells three types of products P, Q and R. The company has
been following conventional method of costing and wishes to shift to Activity-Based
Costing system. Following data are given for a month:
Products
Sales (in units)
Selling price (per unit)
Prime cost (per unit)
Gross production units/production run
No. of defective units/production run
Set up cost/production run
Inspection hours/production run
Machine hours/production run
P
50,000
Tk. 18.00
Tk. 12.00
5,040
40
Tk. 400
6
40
Q
1,12,000
Tk. 14.00
Tk. 9.00
5,620
20
Tk. 600
8
24
R
54,000
Tk. 12.00
Tk. 8.00
6,020
20
Tk. 500
8
60
Overhead costs :
Amount (Tk.)
Set-up
20,500
Inspection
146,000
Machines
284,000
Selling
324,000
The following additional information is given:
(i)
No accumulation of inventory is considered. All good units produced are sold.
(ii) Included in the total selling overhead is advertisement cost of Tk.166,000. This cost
is incurred only for products Q and R. However product P needs no advertisement.
(iii) Product Q needs special packing and Tk.108,000 is the amount on packing which is
included in the total selling overhead cost given above.
You are required to present:
(i)
Product-wise profitability statement under the conventional system assuming all
manufacturing and selling overheads are allocated on the basis of unit sold.
(ii) Product-wise profitability statement as per Activity-Based Costing system.
[Marks: 20]
Q. No. 4.
X Ltd. is specialized in the production and sale of biscuits. The biscuit division of this group is
Chocolaty. The divisional profitability statement for the month of December 2012 is given below:
ACTUAL
BUDGET
BDT
BDT
BDT
Sales (50% on credit terms)
1,140,000
1,200,000
Divisional Expenses:
Materials
800,000
Manufacturing cost
70,000
Marketing
93,000
Divisional administration
58,000
1,021,000
1,000,000
Divisional Contribution
119,000
200,000
Allocated Head Office expenses
100,000
100,000
Net Profit
19,000
100,000
Page 2 of 4

Q. No. 4. (contd..)
The Balance Sheet for the division after analysis shows the divisional net investment as follows:
Particulars
Amount (BDT)
Amount (BDT)
Traceable Assets:
Building
600,000
Motor Car
30,000
Plant
510,000
1,140,000
Stock:
Material
900,000
Finished goods
160,000
Debtors
900,000
Current liabilities
(320,000)
1,640,000
Net traceable assets
2,780,000
Proportion of centrally administered assets:
Cash
10,000
Other
60,000
70,000
Divisional net investment
2,850,000
The biscuit industry does not experience seasonal fluctuation. The month of December is typical
of all the other months in the year so far as performance is concerned. The cost capital for the
Group is 15%.
Required
(a) Evaluate the performance of the management of Chocolaty division using:
(i) Contribution; (ii) Net Income; (iii) Return of Investment; (iv) Residual Income Methods.
Also indicate the limitations of the above methods you have employed.
(b) How would your method of evaluation of the performance of this division differ if the
evaluation were made to check economic rather than managerial performance?
[Marks: (15+5) = 20]
Q. No.5.
(a) Can an investment with a profitability index of less than 1.00 be an acceptable
investment? Explain.
(b) Ice-Time Ltd. (ITL) manufactures a range of sports equipment used in a variety of wintersports in Snowland. Development engineers within ITL have recently developed a
prototype of a small engine-propelled bobsleigh named the Snowballer which has been
designed for use by young children. The directors of ITL recently spent Tk.2,00,000 on
market research, the findings of which led them to believe that there is a good market for
the Snowballer.
The marketing director has suggested that ITL should use the Olympic brand in order to
market the Snowballer.
The finance director of ITL has gathered relevant information and prepared the following
evaluation relating to the proposed manufacture and sale of the Snowballer.
1.
Sales are expected to be 3,200 units per annum at a selling price of Tk.2,500 per
unit.
2.
Variable material, labor, and overhead costs are estimated at Tk.1,490 per unit.
3.
In addition, a royalty of Tk.150 per unit would be payable to Olympic plc, for the use
of their brand name.
Page 3 of 4

Q. No. 5. (contd..)
4.
5.
Fixed overheads are estimated at Tk.9,00,000 per annum. These overheads cannot
be avoided until the end of the year in which the Snowballer is withdrawn from the
market.
An initial investment of Tk.5 million would be required. A government grant to 50% of
the initial investment would be received on the date investment is made. However,
because the Snowballer would be classified as a luxury good, no tax allowances
would be available on this initial investment. The estimated life cycle of the
Snowballer is six years.
6.
Corporate tax at the rate of 30% per annum is payable in the year in which profit
occurs.
7.
All cash flows are stated in current prices and, with the exception of the initial
investment and the government grants, will occur at the end of each year.
8.
The nominal cost of capital is 15.44%. Annual inflation during the period is expected
to amount to 4%.
Required:
(i)
Calculate the net preset value (NPV) of the Snowballer proposal and recommend whether
it should be undertaken by the directors of ITL.
(ii)
Using sensitivity analysis, estimate by what percentage of the annual contribution would
need to change before the recommendation in (i) above is varied.
(iii)
Using sensitivity analysis, estimate by what percentage the life cycle of the Snowballer
would need to change before the recommendation in (i) above is varied.
(iv)
Comment on the factors other than NPV that the directors of ITL should consider when
deciding whether to manufacture the Snowballer.
[Marks: (5+20) = 25]
= THE END =
Page 4 of 4

SUBJECT: 403. STRATEGIC MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR.
Time: Three Hours
Full Marks:100
Answer any THREE questions from Group A and TWO questions from Group B.
All questions carry equal marks.
GROUP A : STRATEGIC MANAGEMENT (TOTAL MARKS-60)

Q. No. 1.
(a) What is Strategy?
(b) As a manager if you want to attain a sustainable competitive advantage, what strategic
approaches would you select and why?
(c) Strategy is partly proactive and partly reactive. Explain.
[Marks: (4+8+8) = 20]
Q. No. 2.
(a) How does a strategic vision differ from a mission statement?
(b) Explain how would link the vision statement with company values.
(c) Identify the need for a balanced scorecard.
[Marks: (6+6+8) = 20]
Q. No. 3.
(a) What is Strategic Alliance?
(b) Why and how Strategic Alliances are advantages?
(c) What are the risks of Strategic Alliances with foreign partners?
[Marks: (6+7+7) = 20]
Q. No. 4.
(a) What lead to successful entrepreneurship in Bangladesh? Discuss.
(b) What may be the entrepreneurial start-up strategies?
(c) Discuss the future challenges of new generation entrepreneurs in Bangladesh.
[Marks: (8+5+7) = 20]
Q. No. 5.
Write short notes on any four of the following:
(a) First mover strategy.
(b) Benchmarking.
(c) Emergent Strategies.
(d) Divesting strategy.
(f)
Core Competency.
[Marks: (5 x 4) = 20]
Page 1 of 2

SUBJECT: 403. STRATEGIC MANAGEMENT AND ORGANIZATIONAL BEHAVIOUR.
GROUP B : ORGANIZATIONAL BEHAVIOUR (TOTAL MARKS-40)
Q. No. 6.
(a) How can you asses OB as a significant field of study in management?
(b) What are the major issues of OB to-day?
(c) As a CMA how can you contribute to mitigate these issues?
[Marks: (7+7+6) = 20]
Q. No. 7.
(a) What is spiritual organizational culture?
(b) How does culture influence negotiation?
(c) Discuss how to create customer responsive culture.
[Marks: (6+7+7) = 20]
Q. No. 8.
(a) What is perception?
(b) Identify and explain the factors that may influence the formation of perception.
(c) Identify the characteristics of Type A and Type B personality.
[Marks: (4+7+9) = 20]
Q. No. 9.
(a) What constitutes Conflict Management?
(b) Differentiate between functional conflicts and dysfunctional conflicts.
(c) Explain the effective process of Conflict Management.
[Marks: (7+6+7) = 20]
= THE END =
Page 2 of 2

SUBJECT: 404. COST AND MANAGEMENT AUDITING.
Time: Three Hours
All questions carry equal marks.
Full Marks:100
PART A : COST AUDITING (MARKS 50)

Q. No. 1.
(a) State the provisions of the Companies Act 1994, regarding cost audit in the case of limited
companies. Do these provisions of the Act apply to all companies engaged in manufacture
or similar activities?
(b) In the context of Bangladesh, what factors should be considered for the development of
cost audit practice in the private sector manufacturing concern? Briefly discuss.
(c) Cost Audit of industries should follow a uniform pattern. Do you agree?
[Marks: (5+5+4) = 14]
Q. No. 2.
You, as a Cost Auditor, have proposed in your persuasive letter to a manufacturing companys
Managing Director that Cost Audit can help achieve the following:
(a) Determine the efficiency of operations;
(b) Enables implementation of structured Cost Reduction Programmes;
(c) Improves Performance Governance as a part of Corporate Governance;
(d) Enables negotiation of a fair price with the buyer;
(e) Supports the management decision making process by ensuring the credibility of cost
based Information; and
(f) Ensures that wastages in the operations are identified and reduced.
The Managing Director has asked you to justify them. Justify each of the above with one
example.
[Marks: (6 x 2) = 12]
Q. No. 3.
(a) A publicly listed textile mills is incurring losses over the years. The Bangladesh securities
and Exchange Commission, as a regulator of the listed companies of the country, has
appointed you as Cost Auditor to investigate and find out the real reasons of loss. What
would be your responsibility to find out the reasons?
(b) A plastic goods manufacturing company produces and markets various types of consumer
products at market price. The management is not aware of which products are contributing
to earn profit an which are not. The management, in a bid to improve shareholders wealth,
has decided to drop the losing products, if any. Failing to get the desired information from
its existing financial account has appointed you to study and identify the profit and loss
earning products. Do you think that you can help management in this regard? If so, how
would you distinguish the products in terms of profit and loss earning?
[Marks: (6+6) = 12]
Q. No. 4.
(a) Why it is important to have Cost Accounting Standards while there are IAS and IFRS in
practice?
(b) Discuss the importance of the following for a practicing Cost Auditor:
(i) Professional ethics
(ii) Professional Competence.
(c) Do you think that Cost Audit can yield results for a trading organization? If yes, identify
some areas where it can help reap the benefits.
[Marks: (3+4+5) = 12]
Page 1 of 2

SUBJECT: 404. COST AND MANAGEMENT AUDITING.
PART B : MANAGEMENT AUDITING (MARKS 50)
Q. No. 5.
(a) What is Management Audit? How would you distinguish Management Audit from Cost
Audit? Explain.
(b) As per IFAC, value creation is a part of Performance Governance process. Explain how
performance governance helps create value to the organization and shareholders wealth.
(c) Explain how value erosion takes place in and organization. As a Management Accountant
how would you recommend to change from value erosion to value creation in the
organization?
[Marks: (4+5+4) = 13]
Q. No. 6.
(a) Efficiency and effectiveness are the two important elements of management in an
organization. Explain how you would measure them while doing the management audit of
an organization.
(b) What do you understand by Management Control System of an organization? Describe
how you would evaluate them in an organization.
[Marks: (6+5) = 11]
Q. No. 7.
(a) Describe scope of Corporate Development Audit.
(b) Zeal Pharmaceuticals Company Limited has been spending a substantial amount of
money for last three years in Research and Development (R&D). You have been
appointed as a Management Auditor of the Company. How would you evaluate R & D
activities of the Company.
[Marks: (5+7) = 12]
Q. No. 8.
(a) Modhumoti Bank is one of the newly licensed banking companies and they have taken
decision to start their operation very soon. You have been appointed as Consultant to
design General Banking Division of the bank. How would you suggest the bank in
designing control system of General Banking Division with a separate covering letter to the
Managing Director.
(b) Mention salient features of changes in Banking Companies Act as per Banking Company
(amendment) Act 2013. Do you think that such changes will improve corporate
governance in banking Companies?
[Marks: (9+5) = 14]
= THE END =
Page 2 of 2

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THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH

CMA AUGUST 2013, EXAMINATION

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.

CMA AUGUST 2013, EXAMINATION

CMA AUGUST 2013, EXAMINATION

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH

Answer must be brief, relevant, neat and clean.

Use a fresh sheet for answering each question.

Start answering each question from a fresh sheet.

GROUP - A : BUSINESS COMMUNICATION

CMA AUGUST 2013, EXAMINATION

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH

Answer must be brief, relevant, neat and clean.

Use a fresh sheet for answering each question.

Start answering each question from a fresh sheet.

GROUP - A : BUSINESS ECONOMICS

[Marks: (7+6+7) = 20]

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH

Show computations, where necessary.

Answer must be brief, relevant, neat and clean.

Start answering each question from a fresh sheet.

Share Capital (Tk. 10 par)

CMA AUGUST 2013, EXAMINATION

CMA AUGUST 2013, EXAMINATION

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH

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.

CMA AUGUST 2013, EXAMINATION

Compute the new EOQ.

CMA AUGUST 2013, EXAMINATION

Cost per unit of

CMA AUGUST 2013, EXAMINATION

Calculate the total cost per unit for Switch 3901.

Work in process, 1 February:

(100% complete as to material;

The equivalent units for February were as follows:

During February, 89,000 units were completed and transferred out.

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH

Answer THREE questions from each part .

[Marks: (3+8+5) = 16]

Management is both science and Art;

CMA AUGUST 2013, EXAMINATION

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH

Answer any FOUR of the following questions.

Answer must be brief, relevant, neat and clean.

Start answering each question from a fresh sheet.

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH

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.

CMA AUGUST 2013, EXAMINATION

CMA AUGUST 2013, EXAMINATION

CMA AUGUST 2013, EXAMINATION

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH

All questions are to be attempted.

Show computations, where necessary.