Indirect Tax Laws - May 2015 MTP

(a) DLF Ltd. uses a standard absorption costing system. The following details have been extracted from its budget for year 2014-15. Fixed Overhead Cost Rs.3,60,000 Production 18,000 units In 2014-15 the Fixed Overhead Cost was over-absorbed by Rs.1,600 and the Fixed Overhead Expenditure Variance was Rs.10,000(F). Required: What was the actual number of units produced in 2014-15? (5 Marks) (b) Following information are extracted from monthly budgets of APEX Ltd. Feb. Mar. Beginning WIP Inventory 36,000 Beginning Finished Goods Inventory…

(a) A Company has two production departments KTS and KTW. Standards for the forthcoming year is as follows: Particulars Department Department Direct Labour Hours available per period 12,000 8,000 Standard Wage Rate per hour Rs.3 Rs.2.5 Expected Learning Curve 80% 70% Standard Variable Overheads per hour Rs.10 Rs. 6 Standard Fixed Overheads per hour Rs.11 Rs.7 36 per unit 18 per unit Direct Labour Hours required for first 100 units The direct materials are introduced in Department KTS. The company…

Wood Craft Ltd. manufactures weighing machines of standard size and sells its products to two industrial customers namely WX Ltd. and WY Ltd. and to a dealer XY Bros. having shops in different cities. The maximum retail price per unit of weighing machine is Rs. 11,000 and per unit average cost of production is Rs. 5,500 (40% is general fixed overhead cost). The Finance Officer has been asked to undertake a customer profitability analysis and calculate and compare the profit…

(a) SG Ltd. has two divisions Division X and Division Y. Division X produces product A, which it sells to external market and also to Division Y. Divisions in the SG Ltd. are treated as profit centres and divisions are given autonomy to set transfer prices and to choose their supplier. Performance of each division measured on the basis of target profit given for each period. Division X can produce 1,00,000 units of p roduct A at full capacity. Demand…

India Ltd. (MIL) is an automobile manufacturer in India and a subsidiary of Japanese automobile and motorcycle manufacturer Leon. It manufactures and sells a complete range of cars from the entry level to the hatchback to sedans and has a present market share of 22% of the Indian passenger car markets. MIL uses a system of standard costing to set its budgets. Budgets are set semi-annually by the Finance department after the approval of the Board of Directors at MIL.…

Answer any 4 out of the following 5 questions: (a) “Cost is not the only criterion for deciding in favour of shut down” – Briefly explain. (4 Marks) (b) Identify the TYPE OF COST along with the reasons. (i) A Company had paid Rs.5,00,000 a M arketing Research company to find expected demand of the newly developed product of the company. (ii) A company has invested Rs.25 lacs in a project. Company could have earned Rs.2 lacs by investing the…

(a) A SSI unit has effected clearances of goods of the value of Rs. 475 lacs during the financial year 2013-14. The said clearances include the following: (i) Clearance of excisable goods without payment of excise duty Rs. 120 lacs to a 100% EOU (ii) Job work in terms of Notification No. 214/86 CE, which is Rs. 75 lacs exempt from duty (iii) Export to Nepal and Bhutan Rs. 50 lacs (iv) Goods manufactured in rural area with the brand…

(a) Compute the assessable value of the goods manufactured by Shivam Enterprises, under section 4 of the Central Excise Act, 1944, with the help of the following particulars:Particulars Contracted sale price for delivery at buyer’s premises The contracted sale price includes the following elements of cost:(i) Cost of containers supplied by the buyer (iii) Loading and handling charges incurred after removal from the factory (iii) Dharmada charges Note: Sale is completed at factory’s premises. Amount (Rs.) 2,42,000 15,200 6,000 2,100…