Cost and Management Accounting - May 2025

(a) Axion Industries is a heavy industrial gear manufacturing company with a manufacturing setup based in Pune. Mr. Andrew, the CFO of the company furnished the following information to Mr. Joe who heads the Finance department. For FY 2024-25: Particulars Amount ` (in crores) Total Sales 1,00,000 Raw material cost 50,000 Direct wages 15,000 Fixed & variable overheads 25,000 Profit 10,000 Total Number of Units sold 40,000 units The market being very competitive and with the raw materials rates rising…

(a) Kidz Company manufactures and sells two models of baby toys namely, Max and Pro. During the Financial Year 2024-25, 1,500 units of Max and 3,600 units of Pro were manufactured. However, only 60% of Max and 80% of Pro were sold during the year. Labour cost per unit of Max is two times that of Pro. There was no opening stock of finished goods or work-in progress. The cost particulars of the two models of Baby Toys are given…

Teri Chai Ltd., is engaged in manufacturing three products: Ginger Chai Masala Chai Saffron Chai It calculates activity cost rates based on cost driver capacity. Activity Cost driver Machine Setup Number of setups Capacity Cost (`) 64 7,68,000 COST AND MANAGEMENT ACCOUNTING Machine Processing Machine hours 1,40,000 7,00,000 Quality inspection Number of inspections 544 6,80,000 Packaging Number of packings 600 7,20,000 For the year ended 31st March 2025, the following consumption of cost drivers was reported: Product Number of setups…

(a) NT Ltd. showed a net loss of ` 9,000 as per their cost accounts for the year ended 31-03-2025. However, the financial books disclosed a net profit of ` 7,000 for the same period. The following information was revealed as a result of scrutiny of the figures of both the sets of books: Factory overheads absorbed 52,000 Selling & distribution overheads over absorbed 6,000 Administrative overheads under absorbed 7,500 Interest on Loan 8,800 Dividend received 9,000 Factory overheads charged…

Furniture Wala Ltd., a manufacturer of dining tables, procures wood as its direct material. The dining tables are initially processed in the Moulding department and subsequently transferred to the Laminating department, where a plastic layer is applied. The Moulding department began manufacturing 35,000 initial dining tables during the month of March 2025 for the first time and their cost is as follows: Direct material: ` 1,15,500 Moulding costs: ` 59,500 Total ` 1,75,000 A total of 28,000 dining tables were…

(a) In the following independent situations, identify the type of cost and state whether it is relevant/non-relevant in managerial decision making: (i) A Limited owns a commercial space of 1500 square feet and uses the same for its own office accommodation purposes. Similar office is available nearby on rent of ` 30,000 per month. (ii) MNC Limited has paid ` 1 Lakh as rent for a factory shed which is temporarily closed for the last two months. (iii) Beta Company…