CMA December 2009 Exam Questions

78
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH CMA DECEMBER – 2009 EXAMINATION FOUNDATION LEVEL (NEW) SUBJECT : 001. PRINCIPLES OF ACCOUNTING. Time : Three hours Full Marks : 100 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. As on December 31, 2001 the end of annual accounting period, the trial balance of the ledger of Mahmud Store are as follows: MAHMUD STORE TRIAL BALANCE DECEMBER 31, 2001 Sl. No. Name of Accounting Debit Tk. Credit Tk. 1 Cash 90,000 2 Accounts Receivable 166,000 3 Merchandise inventory 300,000 4 Purchase 3,310,000 5 Prepaid Insurance 38,000 6 Store Equipment 800,000 7 Accumulated D/P – Store Equipment 170,000 8 Accounts Payable 190,000 9 Mahmud – Capital 900,000 10 Mahmud – drawings 220,000 11 Sales 4,830,000 12 Sales Return & allowances 150,000 13 Sales Discount 72,000 14 Purchase Return & allowances 100,000 15 Purchase Discount 64,000 16 Freight in 122,000 17 Freight out 75,000 18 Advertising expenses 155,000 19 Rent expenses 200,000 20 Salaries expenses 395,000 21 General expenses 165,000 22 Vat current account 4,000 Total 6,258,000 6,258,000 Additional information: (a) Merchandise inventory on hand at December 31, 2001 is Tk. 395,000. (b) Merchandise in transit at December 31, 2001 costing Tk. 5,000, which was shipped by a supplier under the terms F.O.B Shipping point and recorded as purchase but not included in ending Merchandise inventory. (c) Insurance expired during the period is Tk. 20,000. (d) Salaries accrued but not paid Tk. 10,000. (e) Depreciation expenses are changed during the period was Tk. 80,000. (f) General expenses include Tk. 15,000 for utilities, which is to be treated as selling expenses. Required: (i) Multiple Income Statement. (ii) Owner’s Equity Statement. (iii) Balance Sheet. [Marks : (10+3+7) = 20] Q. No. 2. (a) Distinguish between perpetual and periodic inventory system. (b) D & E Company has the following inventory, purchases and sales for the month of March, 2008 Inventory March 1 200 units @ Tk. 4.00 Tk. 800 Purchase March 10 500 unit @ Tk. 4.50 Tk. 2,250 Purchase March 20 400 unit @ Tk. 4.75 Tk. 1,900 Purchase March 30 300 unit @ Tk. 5.00 Tk. 1,500 Sales March 15 500 units Sales March 25 400 units The physical inventory count on March 31, 2008 shows 500 units on hand. 1

description

CMA Question Paper of ICMAB-December 2009

Transcript of CMA December 2009 Exam Questions

Page 1: CMA December 2009 Exam Questions

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESHCMA DECEMBER – 2009 EXAMINATION

FOUNDATION LEVEL (NEW)SUBJECT : 001. PRINCIPLES OF ACCOUNTING.

Time : Three hours Full Marks : 100

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.

As on December 31, 2001 the end of annual accounting period, the trial balance of the ledger of Mahmud Store are as follows:

MAHMUD STORETRIAL BALANCE

DECEMBER 31, 2001Sl. No. Name of Accounting Debit Tk. Credit Tk.

1 Cash 90,0002 Accounts Receivable 166,0003 Merchandise inventory 300,0004 Purchase 3,310,0005 Prepaid Insurance 38,0006 Store Equipment 800,0007 Accumulated D/P – Store Equipment 170,0008 Accounts Payable 190,0009 Mahmud – Capital 900,00010 Mahmud – drawings 220,00011 Sales 4,830,00012 Sales Return & allowances 150,00013 Sales Discount 72,00014 Purchase Return & allowances 100,00015 Purchase Discount 64,00016 Freight in 122,00017 Freight out 75,00018 Advertising expenses 155,00019 Rent expenses 200,00020 Salaries expenses 395,00021 General expenses 165,00022 Vat current account 4,000

Total 6,258,000 6,258,000Additional information:(a) Merchandise inventory on hand at December 31, 2001 is Tk. 395,000.(b) Merchandise in transit at December 31, 2001 costing Tk. 5,000, which was shipped by a

supplier under the terms F.O.B Shipping point and recorded as purchase but not included in ending Merchandise inventory.

(c) Insurance expired during the period is Tk. 20,000.(d) Salaries accrued but not paid Tk. 10,000.(e) Depreciation expenses are changed during the period was Tk. 80,000.(f) General expenses include Tk. 15,000 for utilities, which is to be treated as selling

expenses.Required:(i) Multiple Income Statement.(ii) Owner’s Equity Statement.(iii) Balance Sheet.

[Marks : (10+3+7) = 20]Q. No. 2.

(a) Distinguish between perpetual and periodic inventory system.(b) D & E Company has the following inventory, purchases and sales for the month of March,

2008Inventory March 1 200 units @ Tk. 4.00 Tk. 800Purchase March 10 500 unit @ Tk. 4.50 Tk. 2,250Purchase March 20 400 unit @ Tk. 4.75 Tk. 1,900Purchase March 30 300 unit @ Tk. 5.00 Tk. 1,500Sales March 15 500 unitsSales March 25 400 unitsThe physical inventory count on March 31, 2008 shows 500 units on hand.

1

Page 2: CMA December 2009 Exam Questions

Required: Under periodic inventory system, determine the cost of inventory on hand at March 31, 2008 and cost of goods sold for March under the (a) First in First out (FIFO) method (b) Last in First out (LIFO) method and (c) weighted average cost method.

[Marks : {5+(5x3)} = 20]

2

Page 3: CMA December 2009 Exam Questions

CMA DECEMBER – 2009 EXAMINATIONFOUNDATION LEVEL (NEW)SUBJECT : 001. PRINCIPLES OF ACCOUNTING

Q. No. 3.

S. A. Merchant maintains two bank accounts No.-1 account is his business account and No.-2 account is his private account. On June 30, 2006, there was a balance of Tk.890 outstanding to his credit in No.-1 account.

It is discovered that:

(a) The receipt column of the cash book has been overcast by Tk.1,000.(b) Cheques outstanding to Tk.3,760 entered in the cash book as paid into the bank have not

been cleared.(c) Cheques issued amounting to Tk.5,230 have not been presented.(d) Discount allowed Tk.110 has been included through mistake in the cheque entered in the

bank column of the cash book.(e) A trade credit note Tk.290, was received in June, 2006, but not recorded in the books.(f) A cheque for Tk.100, originally issued in 2005 was replaced when out of date and entered

again in the cash book. It was still outstanding (and not out of date) on June 30, 2006. Both the cheques were included in the total of unpresented cheques Tk.5,230.

(g) The bank has charged the No-2 account with a cheque for Tk.2,000 in error. This should have been charged to No.-1 account.

Requirements:

(i) Make the appropriate correction/adjustment in the cash book.

(ii) Prepare a bank reconciliation statement to show the bank balance as per No.-1 account.

[Marks: (5+15) = 20]Q. No. 4.

The following selected transactions relate to ABC Company:March-1: Sold on credit Tk.20,000 to Aziz Brothers Terms 2/0, n/30.March-11: Received payment in full from Aziz Brothers for balance due.March-12: Accepted Juno Company’s Tk.20,000; 6 months 12% note for balance due.March-13: Made ABC Company Credit Card sales for Tk.13,200.March-15: Made American Express Credit Card sales totaling Tk.6,700. A 5% service fee is

charged.March-30: American express company made full payment.April-11: Sold Accounts Receivable of Tk.8,000 to XYZ factor. They take a service charge of 2%

of the account of receivables sold.April-13: Received collections of Tk.8,200 on ABC Company credit card sales and added finance

charges of 1.5% on the remaining balances.May-10: Wrote off as uncollectible Tk.16,000 of Accounts Receivable. ABC uses the percentage

of sales as basis to estimate bad debts.June-30: Credit sales for the first six months total Tk.20,00,000. The bad debts percentage is

1% of credit sales. At June 30, the balance in the allowance account is Tk.3,500.July-16: One of the accounts receivable written off in May was from Mr. Salim who pays the

amount due Tk.4,000 in full.

Required:

Prepare the journal entries for the above transactions.

[Marks: 20]

Q. No. 5.

(a) Distinguish between Capital Expenditure & Revenue Expenditure.(b) Distinguish between Cash basis Accounting & Accrual basis Accounting.(c) Distinguish between current and non-current liabilities.(d) Explain the concept of business entity and going concern.(e) Depreciation is a process of allocating cost for wear and tear, not a process of valuation –

Explain.

[Marks: (4x5) = 20]

==THE END==

3

Page 4: CMA December 2009 Exam Questions

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESHCMA DECEMBER-2009 EXAMINATION

FOUNDATION LEVEL (NEW)

SUBJECT: 002-BUSINESS COMMUNICATION AND OFFICE MANAGEMENT

Time: Three hours Full Marks:100 Answer any THREE questions from each part, where Q. No. 4 and 8 are compulsory. Answer must be brief, relevant, neat and clean. Use a fresh sheet for answering each question. All questions must be answered in English.

PART – A: BUSINESS COMMUNICATIONQ. No. 1.(a) An effective communication is the key to success – Discuss.(b) What are the barriers of effective communication?(c) Differentiate between internal and external communication with examples.

[Marks: (5+5+5) = 15]Q. No. 2.(a) Define Business report.(b) What are the steps to be followed in writing a successful report?(c) Draft a statutory report of a company for presenting the same to the share holder’s meeting.

[Marks: (3+5+7) = 15]Q. No. 3.(a) Draft a Notice for holding the Annual General Meeting of a publicly listed Company.(b) Draft an introductory letter to a new prospect highlighting your interest to make a business

relation with them.(c) Write a letter to the Register of Joint Stock Company to allow three months time extension to

hold the AGM of your Company.[Marks: (5+5+5) = 15]

Q. No. 4.Write short notes on any FIVE of the following:

(a) Credit Rating(b) Extra Ordinary General Meeting(c) Proxy to AGM(d) I.P.O.(e) Automated teller machine (ATM)(f) Bonded warehouse(g) World Bank(h) Capital Market(i) Independent Director of a listed Company

[Marks: (4 × 5) = 15]PART – B: OFFICE MANAGEMENT

Q. No. 5.(a) What is the objective of office Management?(b) Discuss the Major functions of office Management.(c) Discuss the principles of scientific office Management

[Marks: (3+6+6) = 15]Q. No. 6.(a) What do you mean by selection of office location?(b) What are the factors to be considered in selecting office building site?(c) Discuss the effects of the office environment on Employees.

[Marks: (3+6+6) = 15]Q. No. 7.(a) How do you define office employee.(b) “Relationship between employer and employee of an organization is must”. Do you agree

with this comment? Why?(c) Discuss the methods of scientific filing system of office record.

[Marks: (3+6+6) = 15]Q. No. 8.Write short notes on any five of the followings:(a) Mobile Banking (b) Business ethics(c) Co-ordination of office management (d) Office decoration.(e) Job rotation of office work. (f) Record Management program.(g) Share market

[Marks: (5 × 4) = 20]= THE END =

4

Page 5: CMA December 2009 Exam Questions

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH

CMA DECEMBER-2009, EXAMINATIONFOUNDATION LEVEL (NEW)

SUBJECT: 003. QUANTITATIVE TECHNIQUES.

Time: Three hours Full Marks:100 Answer any TEN questions, FIVE from each part. All questions carry equal marks; the notations refer to usual meanings. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

PART – A : BUSINESS MATHEMATICS

Q. No. 1.(a) In a survey of 400 students in a school, 100 were listed as smokers and 150 were chewers of

gum; 75 were listed as both smokers and gum-chewers. Find out how many students were neither smokers nor gum-chewers.

(b) If the roots of the quadratic equation ax2 + bx + c = 0 are in the ratio m : n, prove that (m+n)2ac = b2mn.

[Marks: (5+5) = 10]

Q. No. 2.

(a) If A = {1, 4}, B= {4, 5}, C= {5, 7}, verify that A (B∩C) = (AB) ∩ (AC)

(b) In how many ways can the letters of the word ‘ARRANGE’ be arranged? How many of these arrangements are there in which-

(i) the two Rs come together,(ii) the two Rs do not come together,(iii) the two Rs and the two As come together?

[Marks: (5 + 5) = 10]

Q. No. 3.

(a) Solve the following system of the two linear equations and express it by a graph.

2x + y – 11 = 0

3x + 5y – 27 = 0

(b) In how many months it will take at 10% compounded quarterly of a year for Tk. 5,000 to grow to Tk. 20,000.

[Marks: (5 + 5) = 10]

Q. No. 4.

(a) If the equations x2 + px + q = 0 and x2 + qx + p = 0 have a common root, show that their other roots are the roots of the equation x2 + x + pq = 0.

(b) How many different words each consisting of 3 consonants and 2 vowels, can be formed out of 12 consonants and 5 vowels, the letters of the words being all different?

[Marks: (5 + 5) = 10]

Q. No. 5.

(a) Find the equation of the straight line passing through the intersection of the lines 4x – 3y – 1 = 0, 2x – 5y + 3 = 0 and parallel to the line 4x + 5y = 6.

(b) Prove that (i) log log log 81 = 2 and

(ii) 2log(x+y) = logx + logy + 3log2 if x2+y2 = 6xy. [Marks: (5 + 5) = 10]

5

Page 6: CMA December 2009 Exam Questions

CMA DECEMBER-2009, EXAMINATIONFOUNDATION LEVEL (NEW)SUBJECT: 003. QUANTITATIVE TECHNIQUES.

Q. No. 6.(a) Find the inverse of the matrix A where:

A′ =

(b) A businessman invest Tk.50,000 at 6% compounded semi-annually. Find the compound interest and compound amount after 3 years.

[Marks: (5 + 5) = 10]

Q. No. 7.

(a) If y = (x3+3) log(2x+1), find . (b) If x3 – 3x2y + 2y2 – 5 = 0, find .

[Marks: (5 + 5) = 10]

PART – B: BUSINESS STATISTICSQ. No. 1.

(a) Distinguish between Karl Pearson’s and Bowley’s co-efficient of Skewness.

(b) You are given the following data pertaining to kilowatt hours of electricity consumed by 100 persons in Dhaka city:

Consumption (kwh) 0 - 10 10 – 20 20 – 30 30 – 40 40 – 50No. of users 6 25 36 20 13

Calculate: (i) Arithmetic mean (ii) Standard deviation[Marks : (4+6) = 10]

Q. No. 2.

(a) The storekeeper of the Dhaka Industries Limited has studied his record and notices that for the past 310 working days in the year, the demand for his product (Malai) has varied as follows:

Demand (units) 5000 6000 7000 8000 9000 10000Number of days 20 60 80 120 20 10

What is the expected demand for his product?

(b) A company learned that inventory shortage were associated with a loss of goodwill with a probability 0.10. The company also knew that a loss of goodwill from all causes occurred with a probability of 0.15. What is the probability of an inventory shortage, given a loss of goodwill?

[Marks: (6+4) = 10]Q. No. 3.

(a) What is statistical average? What are the desirable properties for an average to possess?

(b) Incomes of employees in an industrial concern are given below. The total income of the 10 employees in the class over Tk. 2,500 is Tk. 30,000. Compute the mean income. Every employee belonging to the top 25% of the earners is required to pay 5% of his income to workers’ relief fund. Estimate the contribution to this fund.

Income Frequency Income FrequencyBelow 500 90 1500 -2000 80500 – 1000 150 2000 – 2500 701000 - 1500 100 2500 and over 10

[Marks : (4+6) = 10]

6

Page 7: CMA December 2009 Exam Questions

CMA DECEMBER-2009, EXAMINATIONFOUNDATION LEVEL (NEW)SUBJECT: 003. QUANTITATIVE TECHNIQUES.

Q. No. 4.

(a) Define the coefficient of correlation. What is it intended to measure?

(b) Two house wives, Rozi and Lozi, asked to express their preference for different kinds of detergents, gave the following replies:

Detergent Rozi LoziA 4 4B 2 1C 1 2D 3 3E 7 8F 8 7G 6 5H 5 6I 9 9J 10 10

To what extent the preferences of these two ladies go together?[Marks : (4+6) = 10]

Q. No. 5.

(a) What is business fore-casting? What are the assumptions on which business fore-casting are made?

(b) Calculate the trend values by the method of least squares from the following data given below and estimate the sales for the year 2008.

Year 2000 2001 2002 2003 2004Sales Tk. million 12 18 20 23 27

[Marks : (4+6) = 10]Q. No. 6.

(a) Define dispersions. What are the measures of dispersion?

(b) A purchasing agent obtained samples of electric lamps from two samples. He had the samples tested in his own Laboratory for length of life, with the following results:

Length of Life in hours Sample fromCo. A Co. B

700 – 900 10 3900 – 1100 16 421100 – 1300 26 121300 – 1500 8 3

Which company’s Lamp should be preferred by the buyer and why?[Marks : (4+6) = 10]

Q. No. 7.

Write short notes on the following:

(a) Probability and non-probability sampling.

(b) Dispersion and measures of dispersion.

(c) Skewness and Kurtosis. [Marks : (3+4+3) = 10]

= THE END =

7

Page 8: CMA December 2009 Exam Questions

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESHCMA DECEMBER – 2009 EXAMINATION

FOUNDATION LEVEL (NEW)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”. Show Computations, where necessary. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

GROUP – A : BUSINESS ECONOMICSQ. No. 1.

(a) How does knowledge of economics help efficient management of business?(b) Distinguish between economic profit and business profit.(c) Mr. Sulaiman, a CMA professional, left his job of Tk. 50,000.00 per month and started a

consultancy business under the name Sulaiman Cost and Management Consultancy Limited with a capital of Tk. 5,00,000.00 and a bank loan of Tk. 3,00,000.00, interest rate being 14% p.a. He earned Tk. 15,00,000.00 during the year 2008-2009. He used a room of his father’s business for which he need not spend any rent, which could be rented out @ Tk. 8,000.00 per month. During the year, material cost and service charges were Tk. 80,000.00 and salaries of employees were Tk. 90,000.00. Depreciation of Equipment is estimated at Tk. 6,000.00. Calculate accounting profit and economic profit of Sulaiman Cost and Management Consultancy Limited for the year 2008 – 2009.

[Marks : (6+6+8) = 20]Q. No. 2.

(a) State the law of demand. What are the circumstances when demand falls even if price remains unchanged?

(b) What is the impact of recent global financial crisis on the exports of Bangladesh?(c) Tell whether product ‘X’ and ‘Y’ are complementary or Substitute goods if

i) increase of price of ‘X’ leads to increase of price ‘Y’ii) increase of price of ‘X’ leads to decrease of price ‘Y’iii) increase of price of ‘X’ does not bring any change in the price of ‘Y’

(d) Define price elasticity, income elasticity and cross elasticity.[Marks : (6+5+3+6) = 20]

Q. No. 3.

(a) Distinguish between Perfect Competition and Monopoly market.(b) Show how price is determined under perfect competition.(c) Give example of one product in the market of:

i. Oligopoly,ii. Monopolistic Competition, and iii. Perfect Competition.

[Marks : (7+7+6) = 20]Q. No. 4.

(a) Distinguish betweeni. Fixed cost and Variable cost, andii. Internal economies and External Economies of firms

(b) State the law of diminishing return and indicate exceptions to this law.

(c) Calculate average cost, marginal cost, marginal revenue, average revenue and profit from the following information

Units of Output

Total Cost(Tk.)

Variable Cost(Tk.)

Fixed Cost(Tk.)

Total Revenue(Tk.)

1 300 200 100 1502 350 250 100 2503 400 300 100 4004 450 350 100 5005 550 450 100 6006 610 510 100 6507 670 570 100 7008 750 650 100 760

(d) Identify the Break Even Output Level, Shut down Output Level and Profit maximizing output level from ‘c’ as above.

[Marks : (4+5+5+6) = 20]

8

Page 9: CMA December 2009 Exam Questions

CMA DECEMBER – 2009 EXAMINATIONFOUNDATION LEVEL (NEW)SUBJECT : 004. BUSINESS ECONOMICS AND INTERNATIONAL BUSINESS

Q. No. 5.

(a) Distinguish between:i) GDP and National Income; andii) National Income at market price and National Income at factor cost.

(b) Calculate GDP and National Income of Bangladesh during 2008-2009 from the following information

Dollars in Crores

Gross Private Investment 2500Government Purchase of goods and Services 500Personal Consumption of goods and Services 3500Depreciation Charges 150Exports 1650Imports 1850Value of Shares purchased during the year 150Value of Second hand computer purchased in the country 50Purchase of land during the year 120Gains from sale of old cars during the year 150

[Marks : (8+12) = 20]

GROUP – B : INTERNATIONAL BUSINESSQ. No. 6.

(a) What is the usual procedure of exports from and imports to Bangladesh?(b) What should be the trade strategies for Bangladesh to get maximum possible gains from

International business?(c) What are the factors of competitive advantages of a nation?

[Marks : (8+6+6) = 20]

Q. No. 7.

(a) Define foreign exchange rate.(b) Describe the different methods of determining foreign exchange rate.(c) How is foreign exchange rate determined in Bangladesh?

[Marks : (4+9+7) = 20]

Q. No. 8.

(a) What is FDI ?(b) Critically evaluate the risks of FDI ?(c) Why do you think FDI is not coming to Bangladesh ?

[Marks : (3+9+8) = 20]

=THE END=

9

Page 10: CMA December 2009 Exam Questions

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESHCMA DECEMBER-2009, EXAMINATION

PROFESSIONAL LEVEL-I (NEW)SUBJECT: 101. INTERMEDIATE FINANCIAL ACCOUNTING.

Time: Three hours Full Marks:100 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.(a) In the context of revised IAS – 1, state the method classifying current assets and current

liabilities.(b) STAR Company Private Ltd. registered under Company Act’1994, submits the following trial

balance as of 31 December ’2008.Accounts Title Dr. (Tk) Cr. (Tk)

Cash 1,20,000Investment in Land 1,70,000Customer Receivable 3,02,000Inventory 56,000Prepaid Expenses 54,000Land 2,60,000Plant & Machineries 11,67,000Other Assets (non – current) 15,63,000Sales on Accounts 10,50,000Contractor Payable 2,40,000Accrued Wages 2,20,000Unearned Revenue 33,000Debentures 12,00,000Other Liabilities 3,36,000Common Stock 2,90,000Retained Earnings 11,08,000Cash Sales 19,00,000Interest Revenue 23,000Gain on Condemnation of Land by Govt. 2,00,000Cost of Goods Sold 15,65,000Commercial and General Overhead 6,40,000Loss from tidal bore charge 1,50,000Financial Expenses 70,000Income Tax 2,73,000Operating Loss on discontinued business 60,000Dividends 1,00,000Sales Allowances 50,000Total 66,00,000 66,00,000

Additional Information:

(i) Inventory includes spoiled & not salable goods worth Tk. 6,000.(ii) Commercial and General Overhead incorrectly includes Tk. 15,000 for office furniture

purchases (other assets). The purchases were made on December’30.(iii) The prepaid expenses were paid on September’ 1 and relate to a 3 years insurance policy

that went into effect on September’1.(iv) The unearned revenue relates to rental of an unused portion of the corporate offices Tk.

33,000 received on April’1 and represents payment in advance for one year’s rental.(v) Plant & Machineries includes Tk. 10,000 for equipment repairs that were erroneously

recorded as machineries purchases. The repair made on December’30.(vi) Other assets include Tk. 80,000 for miscellaneous office supplies which were purchased on

mid October. At the end of the year count reveals that only Tk. 6,500 of office supplies remains.

(vii) It has been decided that un-collectible account expenses will be Tk. 2,000 for which provision was not made earlier. The account of M/s Khan & Co. will be written off for this purpose.

10

Page 11: CMA December 2009 Exam Questions

CMA DECEMBER-2009, EXAMINATIONPROFESSIONAL LEVEL-I (NEW)SUBJECT: 101. INTERMEDIATE FINANCIAL ACCOUNTING.

Q. No. 1. (Contd..)

Required:(i) Adjusting Entries needed for above transaction;(ii) Income Statement for the year ended December 31, 2008; and(iii) Balance Sheet as on December 31, 2008.

[Marks: (5 + 15) = 20]

Q. No. 2.

(a) Define cash equivalents and non-cash transactions as per IAS - 7.(b) A portion of the Mower Company’s Balance Sheet appears bellow:

December’ 31, 2008

December’ 31, 2007

Assets:Cash 3,53,300 50,000Notes Receivable - 25,000Inventory To be determined 1,99,875Liability:Accounts Payable To be determined 50,000

Mower Company pays for all operating expenses with cash and purchases all inventory on credit. During 2008, cash totaling of Tk.4,71,000 was paid on accounts payable. Operating expenses for 2008 totaled Tk. 2,00,000. All sales are cash sales. The inventory was restocked by purchasing 1,500 units per month and valued by using periodic FIFO. The unit cost of inventory was 32.60 during January’2008 and increased Tk. 0.10 per month during the year. All sales are made for Tk. 50 per unit. The ending inventory for 2007 was valued at Tk. 32.50 per unit.

Required:

(i) Compute the number of units sold during 2008(ii) Compute the December 31’ 2008 Accounts Payable Balance.(iii) Compute the beginning inventory quantity.(iv) Compute the ending inventory quantity & value.(v) Prepare an income statement for 2008 (including a detailed COGS section). Ignore

Income Tax.[Marks: (5 + 15) = 20]

Q. No. 3.

(a) Distinguish between financial depreciation and physical depreciation of assets.

(b) The Star Mining Company paid Tk. 29,00,000 in 2001 for property with a supply of natural resource estimated at 20,00,000 tons. The estimated cost of restoring the land for use after the resources are exhausted is Tk. 3,25,000. After the land is restored it will have an estimated value of Tk. 2.25,000. Development costs such as drilling and road construction were Tk. 8,00,000. Building, such as bunk houses and messhall were constructed on the site for Tk. 2,00,000. The useful lives of the buildings are expected to terminate upon exhaustion of the natural resources. Operations were not begun until January 01, 2002. In 2002, resources removed totaled 6,00,000 tons. During 2003, an additional discovery was made indicating that available resources subsequent to 2003 will total 18,75,000 tons. Because of a strike, only 4,00,000 tons of resources were removed during 2003.

Required: Compute the depletion and also the depreciation charge for 2001, 2002 & 2003.

(c) On July 02, 2002 Simanto Delivery Company traded with a dealer an old delivery taxi cab for a newer taxi model. Data related to the old taxi and new taxi follow:

Amount in Tk.

Old Taxi:Original Cost 2,00,000Accumulated Depreciation as of July 02, 2002 1,50,000Average published retail value 42,000New Taxi:Listed Price 2,50,000Cash Price without trade-in 2,25,000

11

Page 12: CMA December 2009 Exam Questions

Cash paid with trade-in 1,95,000

Instruction: Give the journal entry on Simanto’s books to record the purchase of the new Taxi.[Marks: (6 + 8 + 6) = 20]

12

Page 13: CMA December 2009 Exam Questions

CMA DECEMBER-2009, EXAMINATIONPROFESSIONAL LEVEL-I (NEW)SUBJECT: 101. INTERMEDIATE FINANCIAL ACCOUNTING.

Q. No. 4.(a) Cash flow statements are a valuable source of information. However, there may be certain

important non-cash transactions; give 4 (four) examples of such transactions.

(b) The following schedule shows the account balances of Eldora Company at the beginning and end of the fiscal year ended October31, 2008.Debits October

31,2008(Amount in

Taka)

November 1,2007

(Amount in Taka)

Increase(Decrease)

(Amount in Taka)

Cash 2,26,000 50,000 1,76,000Accounts Receivable 1,48,000 1,00,000 48,000Inventories 2,91,000 3,00,000 (9,000)Prepaid Insurance 2,500 2,000 500Long-Term Investment (at cost) 10,000 40,000 (30,000)Sinking Fund 90,000 80,000 10,000Land and Building 1,95,000 1,95,000 ---Equipment 2,15,000 90,000 1,25,000Discount on Bonds Payable 8,500 9,000 (500)Treasury Stock (Cost) 5,000 10,000 (5,000)Cost of Good Sold 5,39,000 ----- 539,000Selling and General Expenses 2,87,000 ----- 287,000Income Tax 35,000 ------ 35,000Loss on Sale of Equipment 1,000 ------ 1,000Total Debits 20,53,000 8,76,000 11,77,000

Credits October 31,2008(Amount in Taka)

November 1,2007 (Amount in Taka)

Increase(Decrease)(Amount in Taka)

Allowance for Doubtful Accounts 8,000 5,000 3,000Accumulated Depreciation-Building 26,250 22,500 3,750Accumulated Depreciation-Equipment 39,750 27,500 12,250Accounts payable 55,000 60,000 (5000)Notes Payable-Current 70,000 20,000 50,000Miscellaneous Expenses Payable 18,000 15,000 3,000Taxes Payable 35,000 10,000 25,000Unearned Revenue 1,000 9,000 (8000)Notes Payable-Long Term 40,000 60,000 (20000)Bonds Payable-Long Term 2,50,000 2,50,000 ------Common Stock 3,00,000 2,00,000 1,00,000Retained Earnings Appropriated for Sinking Fund

90,000 80,000 10,000

Unappropriated Retained Earnings 94,000 1,12,000 (18000)Paid-in Capital in Excess of Par Value 1,16,000 5,000 1,11,000Sales 8,98,000 ------ 898,000Gain on Sale of Investments 12,000 ------ 12,000Total Credits 20,53,000 8,76,000 11,77,000

The following information was also available:(a) All purchase and sales were on account.(b) The sinking fund will be used to retire the long-term bonds.(c) Equipment with and original cost of Tk15,000 was sold for Tk.7000.(d) Selling and general expenses include the following expenses:

Building depreciation Tk.3,750Equipment depreciation Tk.19,250Doubtful accounts expenses Tk.4,000Interest expenses Tk.18,000

(e) A six-month note payable for Tk.50,000 was issued forward the purchase of new equipment.(f) The long-term note payable requires the payment of Tk.20,000 per year plus interest until

paid.(g) Treasury stock was sold for Tk.1,000 more than its cost.(h) All dividends were paid by cash.

Required:

Prepare statement of cash flow for 2008. Also show your workings.[Marks: (4+16) = 20]

13

Page 14: CMA December 2009 Exam Questions

14

Page 15: CMA December 2009 Exam Questions

CMA DECEMBER-2009, EXAMINATIONPROFESSIONAL LEVEL-I (NEW)SUBJECT: 101. INTERMEDIATE FINANCIAL ACCOUNTING.

Q. No. 5.

(a) Distinguish between depreciation, depletion, and amortization.

(c) Analysis of the December bank statement for Locomotive Company discloses the following information:

(i) Statement balance at December 31, 2008 was Tk.33,350

(ii) Check issued by Ludmia Corporation for Tk.630 was charged to Meghan Company in error.

(iii) December bank charges were Tk.60

(iv) Deposit of Tk.1,400 was erroneously credited to Meghan Company account by the bank.

(v) Outstanding cheque at December 31, 2008, were Tk.10,560. They included a Tk.600 cheque outstanding for 8 month to Amco products which was cancelled in December and a new cheque issued. No entry was made for the cancellation.

(vi) Receipts on December 31 were Tk.9,000. Receipts were deposited on January 2

(vii) An error in addition was made on the December 23 deposit slip. This slip showed a total of Tk.2,220. The correct balance as credited to the account by the bank was Tk.2,020. A count of cash on hand showed an overage of Tk.200 as of December 31.

(viii) The cash in Bank balance in the general ledger as of December 31, 2008 was Tk.31,280.

Required:

1. Prepare a bank reconciliation statement which reconciles the bank balance with the balance per books.

2. Give all entries required on the books at December 31, 2008.[Marks: (5+15) = 20]

= THE END =

15

Page 16: CMA December 2009 Exam Questions

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESHCMA DECEMBER-2009, EXAMINATION

PROFESSIONAL LEVEL- I (NEW)SUBJECT: 102. COST ACCOUNTING.

Time: Three hours Full Marks:100 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.

Consider the information below for the year ended December 31, 2008 and complete the cost of goods manufactured statement in good form:

Taka Taka

Finished goods, December 31, 2008 50,000Supplies, January 1, 2008 3,000Property Tax 15,000Income Tax 17,000Raw Material, December 31, 2008 25,000Payroll 98,000Purchase Discount 4,000Work-in-Process, January 1, 2008 60,000Material Purchase 90,000Work-in-Process, December 31, 2008 39,000Finished Goods, January 1, 2008 70,000Freight in 10,000Supplies used 12,000Freight out 15,000Supplies, December 31, 2008 2,000Raw Material, January 1, 2008 15,000Purchase Returns and Allowances 10,000Rent 20,000Depreciation:Factory Building 8,000Factory Plant 9,000Office Building 7,000Office Furniture 6,000 30,000Interest on Borrowings 23,000Insurance 11,000Utility 10,000

(1) Payroll account includes payment made to both direct and indirect labor. As a policy, payment for direct labor is 80% higher than indirect labor.

(2) 80% of rent is related to factory.

(3) 80% of property tax and 70% of utility is related to factory.

(4) For both direct and indirect material, the company uses a single account. Records show that direct material is 8 times higher than indirect material.

[Marks: 20]

16

Page 17: CMA December 2009 Exam Questions

CMA DECEMBER-2009, EXAMINATIONPROFESSIONAL LEVEL- I (NEW)SUBJECT: 102. COST ACCOUNTING.

Q. No. 2.

Five-Star Hotel received a single invoice covering supply of five materials for which five orders were placed. Extract of the invoice is reproduced below:

Material description Order ref.

Unit Unit price

Qty. Total value (Tk.)

Ferus Sulphate 071 Gram Tk.25 1,000 25,000Driet Execicate 075 Kg. Tk.160 200 32,000PVC compound 132 Kg. Tk.212 175 37,100Chemical 185 Ibs Tk.25 1,100 27,500Dyes 205 Ibs. Tk.32 550 17,600

Tk.1,39,200Fright 2,500C & F Tk.1,41,700

Other relevant data were as follows:

Import duty 10%, insurance 4%, clearing charges 5%, supplementary duty 2.5%, ordering cost Tk.500 per order and receiving cost estimated to be Taka 10 per kg. It is the company policy to apportion fright on the basis of weight.

Required: Calculate unit cost for each material that will be entered on the ledger card.[Marks: 20]

Q. No. 3.

The Best Supply Company has been experiencing stock outs on one of it important materials, even though deliveries are dependable within one month from the date of an order. Management asks that a safety stock for this item be established and provides the following records of actual and forecast usages during the past 9 (nine) months:

Month Usage ForecastJanuary 475 490February 480 490March 490 475April 500 485May 510 500June 520 510July 500 510August 490 510September 485 500

It is believed that 90 to 95 percent protection against a stock out is adequate. This protection can be achieved by doubling the deviation found.

Requirement:

(a) A schedule showing the safely stock required.

(b) The safely stock required if the lead time is 2(two) months. [Marks: (10+5) = 15]

Q. No. 4.

3M operates 5 days a week and 8 hours a day. Ajax Rosario, a semi-killed worker, works at a guaranteed rate of Tk. 6 per hour. Standard production for Ajax is 192 units per day. Factory overhead per labor hour is Tk.3. Production for the first week of June was 180, 200, 220, 224, 192 units for Monday through Friday respectively.

17

Page 18: CMA December 2009 Exam Questions

CMA DECEMBER-2009, EXAMINATIONPROFESSIONAL LEVEL- I (NEW)SUBJECT: 102. COST ACCOUNTING.

Q. No. 4. (Contd..)

Required:

(a) Compute conversion cost per unit under straight piecework plan.

(b) Compute conversion cost per unit under 100% bonus plan. [Marks: (8+7) = 15]

Q. No. 5.

Six Sigma is a sheet metal fabricator. Its total factory overhead costs are a linear function of machine usage. Different capacity level (annual) of Six Sigma is given as:

Theoretical Capacity : 25,000 machine hours

Practical Capacity : 15,000 machine hours

Normal Capacity : 8,000 machine hours

Expected Actual Capacity : 10,000 machine hours

Six Sigma computes predetermined overhead rate by dividing expected actual costs by expected actual capacity at the beginning of each year. During 2009, it actually works for 9,500 machine hours (MH) with actual overheads amounting to Tk.33,85,000. But the budgeted amount of factory overhead was Tk.35,00,000 which would be Tk.30,00,000 at normal capacity.

Required:

(a) Calculate the amount of over or under applied factory overhead for the year.

(b) If it had used practical capacity as the activity level in its predetermined overhead rate calculation for the year, what would the predetermined overhead rate have been per MH?

(c) Without influencing your answer to requirement (a) now assume factory overhead was under applied by Tk.10,000. Give the end-of-period entries to close applied factory overhead to factory overhead control and to close factory overhead control to cost of goods sold.

(d) Without prejudice to your answers to the preceding requirements, assume overhead was under applied by Tk.10,000 and applied factory overhead has already been closed to factory overhead control. The under applied amount of overhead is to be allocated to inventories and cost of goods sold in proportion to the balances in those accounts. The balances in work in process, finished goods and cost of goods sold are Tk.2,00,000, Tk.4,00,000 and Tk.74,00,000 respectively. Give the end-of-period entry to close factory overhead control.

[Marks: (4x5) = 20]

Q. No. 6.

(a) What do you mean by ‘service reciprocity?’ Do you believe that step down method of service cost allocation doesn’t consider service reciprocity at all? How?

(b) ‘High degree of labor turnover produces a weaker form of learning curve’ – how do you evaluate the statement?

[Marks: (5+5) = 10]

= THE END =

18

Page 19: CMA December 2009 Exam Questions

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH

CMA DECEMBER – 2009 EXAMINATION

PROFESSIONAL LEVEL – I (NEW)

SUBJECT: 103. MANAGEMENT AND MARKETING MANAGEMENT

Time : Three hours Full Marks: 100 Answer any THREE questions from each part. Answer must be brief, relevant, neat and clean Start answering each question from a fresh sheet.

PART – A: MANAGEMENT (TOTAL MARKS-50)

Q. No. 1.

(a) What is management?

(b) Describe the basic managerial roles and skills.

(c) How can a manager successfully face the contemporary management challenges?

Marks : (5+6+5) = 16

Q. No. 2.

(a) Discuss the significance of environment and culture on managing an organization.

(b) What are the responsibilities of a manager with regard to environment and culture of an organization?

(c) Describe how to develop and nourish organizational culture.

Marks : (5+6+5) = 16

Q. No. 3.

(a) What do you mean by TQM?

(b) What are the basic features of TQM?

(c) Why is TQM getting so much importance in to-days management?

Marks : (5+6+5) = 16

Q. No. 4.

(a) Explain the meaning of motivation, motivators and satisfaction.

(b) To what extent and how is money an effective motivator?

(c) Explain the various leading theories of motivation and their strengths & weaknesses.

Marks : (5+6+5) = 16

Q. No. 5.

(a) What is an assessment centre? How does it work?

(b) What is the system approach to selection of managers? How does it differ from other approaches?

(c) Do you think managers should be appraised regularly? If so, how?

Marks : (5+6+5) = 16

Two marks are reserved for neatness and relevance

19

Page 20: CMA December 2009 Exam Questions

CMA DECEMBER – 2009 EXAMINATION

PROFESSIONAL LEVEL – I (NEW)

SUBJECT: 103. MANAGEMENT AND MARKETING MANAGEMENT

PART – B: MARKETING MANAGEMENT (TOTAL MARKS-50)

Q. No. 6.

(a) What is meant by an effective marketing strategy?

(b) How can a marketer develop effective marketing strategies?

(c) Discuss the marketing strategies for a market leader.

Marks : (5+6+5) = 16

Q. No. 7.

(a) Assess the importance of analyzing consumer buying behavior.

(b) State and explain the factors affecting consumers’ buying behavior.

(c) What is SWOT analysis and why is it done?

Marks : (5+6+5) = 16

Q. No. 8.

(a) Do you think that market segments and market sectors are alike? Explain.

(b) Discuss the bases of market segmentation.

(c) What are the advantages of market segmentation?

Marks : (5+6+5) = 16

Q. No. 9.

(a) Outline the major characteristics affecting consumer behaviour.

(b) Illustrate different types of buying decision behaviour.

(c) Identify and define the steps of the business buying process and list out the characteristics of business buying process.

Marks : (5+6+5) = 16

Q. No. 10.

(a) Is E-business an effective alternative to conventional business practice? Why?

(b) How would you assess the potential foreign market if you are interested to get access of it?

(c) What are the major risks involved in International business?

Marks : (5+6+5) = 16

Two marks are reserved for neatness and relevance

==THE END==

20

Page 21: CMA December 2009 Exam Questions

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESHCMA DECEMBER-2009 EXAMINATION

PROFESSIONAL LEVEL – I (NEW)

SUBJECT: 104. INFORMATION TECHNOLOGY.

Time: 2 hours 30 minutes Full Marks: 80 Questions are of equal marks. Answer any FOUR questions. Answer must be brief, relevant, neat and clean. These questions carry 80 marks (Part – A) and balance 20 marks (Part – B) is for

practical test (to be taken later on).

Q. No. 1.

(a) What is the difference between computer based information system and manual information system?

(b) What is Barcode reader? What are the applications of Barcode reader in business? Mention what factors we should consider for buying a monitor and a printer?

Marks : (10+10) = 20Q. No. 2.

(a) What factors do you take into consideration while adopting an information system in an Organization? Explain at least four of them.

(b) Describe the three principal data base models and their advantage.Marks : (10+10) = 20

Q. No. 3.

(a) What do you mean by Enterprise Resource Planning (ERP) Software? How does if differ from the integrated Accounting Package Software?

(b) What do you understand by electronic commerce? Explain the foundations of electronic commerce.

Marks : (10+10) = 20Q. No. 4.

(a) Compare the traditional data entry with source data automation.(b) Explain the necessity of database maintenance in the Transaction Processing System.(c) What is the final output of Transaction Processing? Explain.

Marks : (6+8+6) = 20Q. No. 5.

(a) Describe technology infrastructure required to support E-commerce and M-commerce.(b) What are the steps to be taken to digitalize NBR (National Board of Revenue) of

Bangladesh?Marks : (10+10) = 20

Q. No. 6.

Write short notes on:

(a) System software & application software.(b) Digital subscribers’ line.(c) Virtual Reality.(d) SAP.(e) Knowledge Management System.

Marks : (5 x 4) = 20

==THE END==

21

Page 22: CMA December 2009 Exam Questions

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESHCMA DECEMBER-2009 EXAMINATION

PROFESSIONAL LEVEL – II (NEW)SUBJECT: 201-ADVANCED FINANCIAL ACCOUNTING-I

Time: Three hours Full Marks: 100 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.

Mr. Kamal Keeps his books on single entry system. His balance sheet on 31.12.2007 is as follows:

Tk. Tk.Kamal’s capital 31,500 Premises 15,600Creditors 7,210 Plant and Machinery 4,200

Stock 8,760Debtors 9,820

_______ Cash 330 38,710 38,710

The following is a summary of his receipts and payments for the year ended on 31.12.2008:

Receipts Tk. Payment Tk.Cash on account of credit sales 42,760 Creditors 39,540Cash sales 18,630 Wages 7,430

General Expenses 6,270Capital 2,000 Machinery (1-7-08) 1,600

_______ Drawings 5,36063,390 60,200

On 31.12.2008, the amount due to creditors was Tk.8,170 and the debtors and stock amounted to Tk.9,200 and Tk.8,540 respectively. You are required to prepare Trading and profit and loss account for the year ended on 31.12.2008 and Balance Sheet as on that date, after making adjustments in respect of the followings:

(i) Depreciation @ 10% for plant and Machinery.(ii) Tk.500 to be provided for bad debts.(iii) General expenses include Tk.1,400 paid as life insurance premium.(iv) Wages include Tk.150 paid for erection of new machinery.(v) A sum of Tk.350 for goods supplied to the proprietor was included in the debtors

balance at 31.12.2008(vi) The amount of Tk.8,170 due to creditors on 31.12.2008 includes admission of an old

claim by a creditor of Tk.600 relating to purchases before 01.01.2008, but the claim was not shown in the balance sheet as on 31.12.2007.

[Marks: (10+10) = 20]Q. No. 2.Please write the answer in the context of the Framework for the preparation and presentation of Financial statements.

(a) What are the objectives of Financial Statements?(b) Describe the four principal qualitative Characteristics that determine the usefulness of

information in the financial statement.(c) Explain the two concepts of capital maintenance. What is the principal difference between

the two concepts?[Marks: (5+5+10) = 20]

Q. No. 3.Mr. Karim consigned 100 cases of medicine to Mr. Rahim of Comilla on 01.01.08 costing Tk.1,000 per case. The goods are to be sold at 25% above cost. Any deficiency in selling price are to be borne by Mr. Rahim. Mr. Rahim is, however, entitled to a special commission of 25% of any surplus price realized. Mr. Rahim is further entitled to an ordinary commission of 5% and del-credere commission of 2.50% on all sales in addition to special commission. Mr. Karim incurred the following expenses:

22

Page 23: CMA December 2009 Exam Questions

CMA DECEMBER-2009 EXAMINATIONPROFESSIONAL LEVEL – II (NEW)SUBJECT: 201-ADVANCED FINANCIAL ACCOUNTING-I

Q. No. 3 (Contd…….)

Tk.

Packing charges 6,000

Loading charges 1,000

Lorry hire 12,000

Railway freight 21,000 The cases are received by Mr. Rahim on 15.01.08. The account sales received from Mr. Rahim on 30.06.08 revealed the following:

40 cases sold on 21.03.08 @ Tk.1,500 per case, 30 cases sold on 24.05.08 @ Tk.1,200 per case and 10 cases sold on 15.06.08 @ Tk.1,300 per case. 5 cases of medicine was stolen by a dishonest employee. A compensation Tk.2,000 was realized form him. Mr. Rahim incurred unloading charges of Tk.2,000 and warehouse rent Tk.3,000.

Required:Prepare a consignment Account.

[Marks: 20]

Q. No. 4.Sony Co. Ltd., Japan established its branch Sony-BD in Bangladesh. Sony-BD maintains separate set of books. Following are the transactions of Sony-BD:

(i) Receipt of cash from Sony-Japan Tk.60,000.(ii) Merchandise received from home office at an invoice price of cost plus 25% costing

Tk.1,20,000.(iii) Purchase of furniture by branch for cash Tk.30,000.(iv) Sale on credit of Tk.65,000.(v) Collection from accounts receivable Tk.35,000.(vi) Expenses incurred by the branch are:

Sales salaries Tk.2,000

Sales commission Tk.2,000

Rent Tk.2,000

Miscellaneous Tk.1,500

(vii) Remittance to home office Tk.20,000.(viii) Home office charged to branch the following expenses:

Insurance on branch assets Tk.350

Depreciation on branch assets Tk.500

Taxes on branch assets Tk.250

Advertising Tk.3,000

Interest on investment in branch Tk.1,000

(ix) Ending inventory of branch Tk.85,000

Required:

(a) Give Journal entries in the books of Sony-BD and Sony-Japan.

(b) Give adjusting and closing entries both in branch and home office books.

[Marks: (12+8) = 20]

23

Page 24: CMA December 2009 Exam Questions

CMA DECEMBER-2009 EXAMINATIONPROFESSIONAL LEVEL – II (NEW)SUBJECT: 201-ADVANCED FINANCIAL ACCOUNTING-I

Q. No. 5.

The following information was assembled for M/s. ABC Pipeline Company:

Balance SheetDecember 31

2008 2007Cash (overdraft in 2007) Tk.38,625 (Tk.5,625)Accounts Receivable 82,000 95,500Inventories 73,250 50,000Long-term investments 12,000 27,000Land, building and Equipment Tk.1,30,00

0Tk.95,0

00Less: Accumulated Depreciation 21,500 1,08,500 20,000 75,000Patents --- 35,000Total assets Tk.3,14,37

5Tk.2,76,87

5Accounts payable 55,875 49,375Bonds payable 50,000 20,000Premium on bonds payable 2,375 ---Preferred stock, Tk.100 par --- 50,000Common stock, Tk. 10 par 1,60,000 1,00,000Premium on common stock 24,000 ---Retained earnings 22,125 57,500 Total liabilities and stock holder’s equity Tk.3,14,37

5Tk.2,76,87

5

Account: Retained Earnings

Date Item Debit Credit Balance2008: Debit (Tk.) Credit

(Tk.)Jan-1 Balance --- --- --- 57,500Oct-15 Cash dividends Tk.25,0

00--- --- 32,500

Dec-12 Premium on retirement of preferred stock

5,000 --- --- 27,500

Dec-31 Net loss 5,375 --- --- 22,125

Income statement data for the year ended December 31, 2008, summarized operations as follows:

Loss before extraordinary items Tk.4,375Extraordinary loss on retirement of bonds 1,000Net loss Tk.5,375

Equipment, cost Tk.15,000, book value Tk.3,000, was scrapped, salvage of Tk.900 being recovered on the disposal. Additional equipment, cost Tk.50,000, was acquired during the year. Long-term investments, cost Tk.15,000, were sold for Tk.18,250; 7% bonds, face value Tk.20,000, were called in at 105, and new 10-year, 5% bonds of Tk.50,000 were issued at 105 on July 1. Preferred stock was retired at a cost of Tk.110 while 6,000 shares of common stock were issued at Tk.14. Depreciation on building and equipment for the year was Tk.13,500. Patents, costing Tk.35,000, were written off.

Required: A cash flow statement.[Marks: 20]

THE END********

24

Page 25: CMA December 2009 Exam Questions

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH

CMA DECEMBER-2009, EXAMINATION

PROFESSIONAL LEVEL- II (NEW)

SUBJECT: 202. MANAGEMENT ACCOUNTING.

Time: Three hours Full Marks:100

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.

(a) In a just-in-time (JIT) system, what is meant by the pull approach to the flow of goods, as compared to the push approach used in conventional systems?

(b) What is the role of Cost Management with respect to the objective of continuous improvement?

(c) Where does the theory of constraints recommend that improvement efforts be focused?(d) Samir company’s projection for the coming year is as follows:

Total (Tk.)

Per Unit (Tk.)

Sales 200,000 20Less Variable expenses 120,000 12Contribution margin 80,000 8Less Fixed expenses 64,000Operating income 16,000

Required:

(i) Compute the break-even point in units.(ii) How many units must be sold to earn a profit of Tk.30,000?(iii) Compute the contribution margin ratio. Using the ratio compute the additional profit that

Samir would earn if sales were Tk.25,000 more than expected.(iv) Suppose Samir would like to earn operating income equal to 20 percent of sales revenue.

How many units must be sold for this goal to be realized? Prepare an income statement to prove your answer.

[Marks: (4+3+3+10) = 20]Q. No. 2.

Ovi Manufacturing Co. is interested in comparing net earnings for two periods. The company’s operating data are as follows:

Period-1 Period-2

Standard Production (units) 30,000 30,000Actual Production (units) 30,000 25,000Sales (units) 25,000 25,000Sales price per unit Tk.15.00 Tk.15.00Variable manufacturing costs per unit:Direct materials Tk.1.50 Tk.1.50Direct labor 2.50 2.50Variable factory overhead 2.00 2.00Total Variable Manufacturing costs per unit Tk.6.00 Tk.6.00Fixed factory overhead (Tk.4 per unit) Tk.120,000.0

0Tk.120,000.0

0Selling and administrative overhead (fixed) Tk.50,000.00 Tk.60,000.00

Required:

(a) Prepare a statement of earnings for both periods under the: (1) Absorption costing method, (2) Direct costing method.

(b) Account for the difference in net earnings between the two methods.(c) Explain why net earnings under the two methods for the two periods are equal combindly.(d) If the firm used direct costing in its formal accounting records, what adjustments are

necessary for external reporting?[Marks: (14+2+2+2) = 20]

25

Page 26: CMA December 2009 Exam Questions

CMA DECEMBER-2009, EXAMINATIONPROFESSIONAL LEVEL- II (NEW)SUBJECT: 202. MANAGEMENT ACCOUNTING.

Q. No. 3.

(a) All future costs are relevant in decision-making. Do you agree? Why?

(b) Dancy-clean Corporation produces a variety of cleaning compounds and solutions for both industrial and house hold use. While most of its products are processed independently, a few are related, such as the company’s Grit 337 and its sparkle silver polish. Grit 337 is a coarse cleaning powder with many industrial uses. It costs Tk.1.60 a pound to make, and it has a selling price of Tk.2.00 a pound. A small portion of the annual production of Grit 337 is retained in the factory for further processing. It is combined with several other ingredients to form a paste that is marketed as sparkle silver polish. The polish sells for Tk.4.00 per jar.

This further processing requires one-fourth pound of Grit 337 per jar of silver polish. The additional direct costs involved in the processing of a jar of silver polish are:

Other ingredients Tk.0.65

Direct labor 1.48

Total direct cost Tk.2.13

Overhead costs associates with the processing of the silver polish are:

Variable manufacturing overhead cost 25% of direct labor.

Fixed manufacturing overhead cost (per month):

Production (overhead) supervisor Tk.1,600.00

Depreciation of mixing equipment Tk.1,400.00

The production supervisor has no duties other than to oversee production of the silver polish. The mixing equipment is a special purpose equipment acquired specifically to produce the silver polish. It has only negligible resale value.

Direct labor is a variable cost at Dancy-clean corporation.

Advertising costs for the silver polish total Tk.4,000.00 per month. Variable selling costs associated with the silver polish are 7.5% of sales.

Due to a recent decline in the demand of silver polish, the company is wondering whether its continued production is advisable. The sales manager feels that it would be more profitable to just sell all of the Grit 337 as a cleaning powder.

Required:

(i) What is the incremental contribution margin per jar from further processing of Grit 337 into silver polish?

(ii) What is the minimum number of jars of silver polish that must be sold each month to justify the continued processing of Grit 337 into silver polish? Show all computation in good form.

[Marks: (4+9+7) = 20]

Q. No. 4.

(a) In what way is the flexible budget involved in product costing?

(b) The management of the Gulshan Company wants to prepare budgets for one of its products, Dura flex for July 2010. The firm sells the product for Tk. 40.00 per unit and has the following expected sales units for these months in 2010.

April May June July August September5,000 5,400 5,500 6,000 7,000 8,000

The production process required 4 pounds of Dura-1000 and 2 pounds of flex-plus. The firm’s policy is to maintain a minimum of 100 units of Dura flex on hand at all time. The units on hand at the end of a period, however, should not fall below 10 percent of the expected sales for the following month. All materials inventories are to be maintained at 5 percent of the production needs for the next month, but not to exceed 1,000 pounds. The firm expects all inventories at the end of June to be within the guide lines. The purchased department expects the materials to cost Tk. 1.25 per pound and Tk. 5.00 per pound of Dura – 1,000 and flex-plus respectively.

26

Page 27: CMA December 2009 Exam Questions

CMA DECEMBER-2009, EXAMINATIONPROFESSIONAL LEVEL- II (NEW)SUBJECT: 202. MANAGEMENT ACCOUNTING.

Q. No. 4. (Contd..)

The production process requires direct labor at two skill levels. Workers at the K102 level earn Tk. 50.00 per hour and can process one batch of Dura flex per hour. Each batch consists of 100 units.

The manufacturing of Dura flex also requires one – tenth of an hour of K 175 worker’s time for each unit manufactured. K 175 Worker’s earn Tk. 20.00 per hour. Manufactured overhead is allocated at the rate of Tk. 200.00 per batch and Tk. 30.00 per direct labor hour.

Required:

On the basis of the preceding data and projections, prepare the following budgets for July, 2010:

(i) Sales budget (in taka)(ii) Production budget (in units)(iii) Production budget for August ( in Units)(iv) Direct materials purchase budget (in pounds)(v) Direct materials purchase budget (in taka)(vi) Direct manufacturing labor budget (in taka)

Marks : (3+17) = 20Q. No. 5.

(a) Distinguish between Absolute profitability and relative profitability.

(b) According to the economist’s approach to setting prices, the profit maximizing price should depend on what two factors?

(c) Iqbal manufactures custom – made pleasure boats ranging in price from Tk. 10,000 to Tk. 250,000. For the past thirty years, Iqbal has determined each boat’s sales price by estimating the costs of materials, labor and a prorated portion of overhead and by adding 20% to those estimated costs. For example, a recent price quotation was determined as follows:

Direct materials Tk. 5,000Direct labor 8,000Overhead 2,000

Tk. 15,000Plus 20% 3,000Sales price Tk. 18,000

The overhead figure was determined by estimating the total overhead cost for the year and allocating it at 25% of direct labor.

If a customer rejects the price and business is slack, Iqbal is often willing to reduce the mark up to as little as 5% over estimated costs. Thus average markup for the year is estimated at 15%.

Iqbal has just completed a pricing course and believes that the company could use some of the modern techniques taught in the course. The course emphasized the contribution margin approach to pricing, and Iqbal feels that such an approach would be helpful in determining the sales prices of custom-made pleasure boats.

Total overhead (including marketing and administrative expenses for the year) has been estimated at Tk. 150,000 of which Tk. 90,000 is fixed and the remainder is variable in direct proportion to direct labor.

Required:(i) (a) Compute the difference in profit for the year if a customer’s offer of Tk. 15,000

instead of Tk. 18,000 price quotation shown above is accepted.(b) Determine the minimum sales price Iqbal could have quoted without reducing or

increasing profit.(ii) State the advantages of the contribution margin approach to pricing used by Iqbal.(iii) Identify the pitfalls, if any to contribution margin pricing.

Marks : (4+4+6+3+3) = 20

= THE END =

27

Page 28: CMA December 2009 Exam Questions

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESHCMA DECEMBER – 2009 EXAMINAION

PROFESSIONAL LEVEL-II (NEW)

SUBJECT : 203. COMMERCIAL & INDUSTRIAL LAWS

Time : Three hours Full Marks : 100

Answer FIVE questions taking at least TWO from each group “A” and “B”. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

GROUP – A : COMMERCIAL LAW

Q. No. 1.

(a) What is meant by discharge of a contract? What are the modes of discharge of contract?(b) “All contracts are agreements but all agreements are not contracts” – Discuss.(c) Who are competent to enter into a contract? Discuss the contractual liability of a minor

with reference to a leading case.[Marks : (7+6+7) = 20]

Q. No. 2.

(a) Describe the rules regarding the presentation of a Bill of Exchange with exception.(b) Discuss the features of negotiable instruments.(c) Difference between Holder and Holder in Due-Course.

[Marks : (8+6+6) = 20]Q. No. 3.

Define and distinguish between an Agent and the Principal. Under what circumstances an agency may be terminated.

[Marks = 20]

GROUP – B : INDUSTRIAL LAW

Q. No. 4.

(a) Classify different types of workers?(b) What is the procedure for punishment of a worker?(c) Describe the grievance handling procedures.

[Marks : (6+7+7) = 20]Q. No. 5.

(a) Describe the requisites for registration of a ‘trade union’ of workers.(b) What constitutes ‘unfair labour practices’ by an employer?

[Marks : (10+10) = 20]Q. No. 6.

State the procedures for ‘settlement of an industrial dispute’.[Marks = 20]

==THE END==

28

Page 29: CMA December 2009 Exam Questions

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH

CMA DECEMBER-2009, EXAMINATIONPROFESSIONAL LEVEL-II (NEW)

SUBJECT: 204. TAXATION.

Time: Three hours Full Marks:100 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.

(a) Write short notes in relation to Income Tax Ordinance, 1984(i) Speculative Business (ii) Permanent Establishment (PE)(iii) Profits in lieu of salary (iv) National Board of Revenue (NBR)

(b) Briefly explain the tax implications in the following cases:(a) Non-Governmental Organizations (NGO) (b) Private Educational Institutions (c) Co-operative Societies (d) Local authorities

[Marks: {(4x3)+(4×2)} = 20]

Q. No. 2.

M/S John Morris Inc. is a multinational company doing business in Bangladesh Branch. The company filed return of income for the assessment year 2009-2010 showing income at Tk. 30,00,000. Examination of the audited statement of accounts filed with the return of income revealed the following:-

(a) Salary includes Tk.3,30,000 paid to a Director working at the head office at California. He has never visited Bangladesh and no tax, as such, has been deducted at the time of making the payment.

(b) Head office expenses charged Tk.11,00,000. No evidence could be produced for this other than HO auditor’s certificate.

(c) Fine Tk. 11,000 paid for violation of customs law charged to P& L Account.

(d) Two Nissan Petrol Jeeps purchased for Tk. 45,00,000 during the year. Depreciation @20% charged on the full cost of the vehicles.

(e) To procure business Tk. 10,00,000 has been paid as commission to a local agent. In making the payment, the provision of section 53E of. I.T. Ordinance, 1984 has not been complied with.

(f) The company sold a motor vehicle for Tk. 4,65,000. Original cost of the vehicle was Tk. 5,25,000 and the written down value was Tk,. 3,25,000. This has not been reflected in the accounts.

(g) Tk. 15,000 donated to a non-recognized school.

(h) Miscellaneous expenses include Tk. 72,000 paid as salaries to three servants who are working at the residence of the Managing Director.

(i) Conveyance expenses include Tk, 2,20,000 paid for the plane fare of the wife and son of the Managing Director for the visit of the neighboring countries.

(j) Interest expense claimed at Tk. 33,50,000. The company has outstanding bank loan of Tk. 2.10 crores. The company advanced Tk. 75,00,000 interest-free loan to a sister concern in Bangladesh.

From the above information compute the total income and tax liability of the company for tax purpose.

[Marks: 20]

29

Page 30: CMA December 2009 Exam Questions

CMA DECEMBER-2009, EXAMINATIONPROFESSIONAL LEVEL-II (NEW)SUBJECT: 204. TAXATION.

Q. No. 3.

M/s. ABCD is a partnership firm with four partners having equal shares. The business that the firm performed during the financial year was:

(i) Dealings in grocery goods;

(ii) Contract business;

(iii) Worked as broker of sale & purchase of land;

(iv) Buying house commission.

During the year the sale of grocery goods was Tk.5,00,00,000.

Other information were –

Opening stock Tk.35,00,000, purchase Tk.4,50,00,000; closing stock Tk.1,50,00,000.

Rent Tk.2,40,000; salary & other expenses Tk.25,50,000.

Receipts from contract works Tk.4,25,00,000, tax deducted as sources Tk.17,00,000.

Receipts from brokery Tk.26,30,000. Direct expenses Tk.15,10,000.

Buying house commission Tk.2,25,00,000. Tax deducted at source Tk.9,00,000.

The firm had Bank OD to the tune of Tk.5,00,00,000. Interest on OD was Tk.72,00,000.

The interest to be apportioned among the business listed above in the following ratio 3:3:2:2.

Capital introduced in the business by the partners @Tk.5,00,000 each. Mr. B&C got the rent as they are the proprietor of the shop.

From the above information compute income under different heads and also the total income and taxes payable by the firm.

[Marks: 20]

Q. No. 4.

(a) What consequences an importer shall face if he fails to submit mandatory PSI certificate?

(b) What is the use of ‘Bond License’? For what purpose it is issued?

(c) ‘Gift tax revenue is dwindling day by day’. Do you agree with the statement? If not show the reasons.

(d) Is there any inner bondage/link among Customs, VAT & Income Tax Policy?

(e) What is deemed Export? What conditions are to be fulfilled by a deemed exporter?

[Marks: (5x4) = 20]

Q. No. 5.

(a) What is foreign Travel Tax? Discuss the mode of levy on travel by Air and travel by land and sea. Who is responsible to collect tax on travel by Air? Is there any scope to exempt or reduce such tax? What is the procedure to get refund to foreign Travel Tax?

(b) How the values of goods and services are determined for imposition of VAT?

(c) What are the services brought under VAT coverage though Finance Act, 2009?

[Marks: (10+5+5) = 20]

= THE END =

30

Page 31: CMA December 2009 Exam Questions

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESHCMA DECEMBER – 2009 EXAMINATION

PROFESSIONAL LEVEL-III (New)

SUBJECT: 301. ADVANCED FINANCIAL ACCOUNTING – II.

Time : Three hours Full Marks: 100 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.(a) Why are Segment Disclosures needed in the Financial Statements?

(b) Hitech Corporation has its Home Office in Dhaka and a Branch in Chittagong. The following information were available from the books of Home Office and the Branch as on 31 December 2008:

Home Office (Tk.) Branch (Tk.)Inventories as on 1 January 2008 100,000 45,000Purchases 1150,000 --Sales 2050,000 1550,000Other Expenses 152,000 62,000Inventories as on 31 December 2008 52,000 31,000

The Branch books show the Home Office account at Tk. 90,000 (Cr.) and the Home Office books show the Branch account at Tk. 300,000 (Dr.)The Branch receives all its supplies from the Home Office, which are invoiced at 25 percent over cost. During the year, the Home Office sent invoices to the Branch to the tune of Tk. 1045,000. The Home Office credits its Sales Account with the invoice price of the goods sent to the Branch.The Home Office billed the Branch for Tk. 120,000 on 31 December 2008 representing the Branch’s share of expenses incurred by the Home Office. The said expenses had not been recorded in the books of the Branch.

All cash collections made by the Branch are deposited in a local bank in the account of the Home Office. Deposits of this nature included the following:

Amount Date of Deposit by Branch Date of Receipt by Home Office50,000 25 December 2008 31 December 200820,000 28 December 2008 2 January 200940,000 31 December 2008 3 January 2009

The expenses of the Branch are net by the Home Office from time to time for which amounts are sent in advance to the Branch. A sum of Tk. 30,000 sent to the Branch by the Home Office on 29 December 2008, in this connection, was received by the Branch on 3 January 2009.

Required: Prepare the Income Statement in columnar form after showing the reconciliation of Branch account and Home Office account balances.

[Marks: (5+20) = 25]

Q. No. 2.

(a) What is functional currency? What factors are used to determine a reporting entity’s functional currency?

(b) Greener Inc. is a small company based in Australia, which has a subsidiary Greener BD Private Ltd. in Bangladesh. At the end of the financial year the following balances appeared in the books of Greener BD Private Ltd.:

Trial Balances as at 31 December 2008

Amount in TakaDebit Credit

Plant and Equipment 1000,000

Accumulated Depreciation 140,000

Long-term note receivable 200,000

Accounts Receivable 100,000

31

Page 32: CMA December 2009 Exam Questions

Prepayments, advances and deposits 90,000

Inventories at cost 120,000

Cash and cash equivalents 360,000

32

Page 33: CMA December 2009 Exam Questions

CMA DECEMBER – 2009 EXAMINATIONPROFESSIONAL LEVEL-III (New) SUBJECT: 301. ADVANCED FINANCIAL ACCOUNTING – II

Q. No. 2. (Contd………..)

Capital Stock 350,000Share money deposit 250,000Retained earnings as on 1 January 2008 180,00010% Bonds payable 500,000Sales 2000,000Cost of goods sold 1200,000Selling and distribution expenses 100,000Administrative expenses 140,000Depreciation expense 100,000Accounts payable 110,000Other income 30,000Interest expenses 50,000Income tax expense 100,000

3560,000 3560,000Other relevant following information are also available:i) Greener BD Private Ltd. uses an average cost of goods sold. Inventory increased by

Tk.20,000 during the year. Purchases were made uniformly during 2008.ii) Plant and Equipment were acquired as follows:

Date Cost1 January 2007 400,0001 January 2008 600,000

iii) Plant and Equipment are depreciated using the straight-line method, on 10 year life and no residual value.

iv) The 5-year bonds were issued on 1 October 2007. The premium is amortized on a straight-line method. The interest is paid on 1 April and 1 October.

v) The long-term note receivable represents a 10 percent loan to a supplier made in December 2007 and due in 2011.

vi) All income and expense items except interest expense and income tax expense occurred evenly through out the year.

vii) Exchange rates were as follows:1 January 2007 A $ 1 = BDT 401 October 2007 A $ 1 = BDT 411 January 2008 A $ 1 = BDT 421 April 2008 A $ 1 = BDT 441 October 2008 A $ 1 = BDT 4831 December 2008 A $ 1 = BDT 50Average 2008 A $ 1 = BDT 46

viii) Share money deposit was received 1 January 2008.

Required: 1. Prepare a schedule translating the 31 December 2008 trial balance of Greener BD Private Ltd. from BDT to Australian Dollars.

2. Prepare Income Statement and Balance Sheet of Greener BD Private Ltd. in Australian Dollars.

[Marks: {5 +(10+10)} = 25]

Q. No. 3.

The following particulars are stated in the Balance Sheet of M/s. Saiham Limited as on 30th June, 2003:

Taka in lacs

Deferred tax liability (Cr.) 20.00Deferred tax assets (Dr.) 10.00

The following transactions were reported during 2003 – 2004:

(i) Tax rate 40%(ii) Depreciation – as per Book 50.00

Depreciation – for tax purpose 30.00There were no additions to fixed assets during the year.(iii) Items disallowed in 2002 – 2003 and allowed for tax purposes in 2003 – 2004 10.00

33

Page 34: CMA December 2009 Exam Questions

CMA DECEMBER – 2009 EXAMINATIONPROFESSIONAL LEVEL-III (New) SUBJECT: 301. ADVANCED FINANCIAL ACCOUNTING – II

Q. No. 3. (Contd………..)

(iv) Interest to financial institutions to be accounted in the books on accrual basis,but actual payment was made on 30.09.2004 20.00

(v) Donations to private trusts made in 2003 – 2004 10.00(vi) Share issue expenses allowed for the year 2003 – 2004 (10% of Tk. 50.00 lacs

incurred in 1999 – 2000) 5.00(vii) Repairs to plant and machinery Tk. 100.00 lacs was spread over the period 2003 – 2004

and 2004 – 05 equally in the books. However, the entire expenditure was allowed for income tax purposes.

Required: Indicate clearly the impact of above items in terms of deferred tax liability/deferred tax assets and the balances of deferred tax liability /deferred tax asset on 30.06.2004.

[Marks: 25]Q. No. 4.(a) What is negative good will? Is a negative purchase discrepancy the same as negative

goodwill? Explain.

(b) The Balance Sheet of Eastern Co. Ltd. disclosed the following position on 31 December 2008:

Assets TakaPlant and Machinery 400,000Land and Building 350,000Inventories 200,000Accounts Receivable 150,000Cash and Bank balances 50,000

1150,000Liabilities and Share Capital:Common Stock (10 par value) 100,000Preferred Stock (10 par value) 100,000Retained Earnings 10,000Net Profit during the year 40,0007% Bond payable 500,000Accounts payable 400,000

1150,000

Additional Information:i. Adequate provision has been made in the accounts for taxation.ii. The fixed assets of the company have been adequately depreciated.iii. The present market value of Plant and Machinery is 500,000.

iv. The turn over and net profit or losses of the company since incorporation, after charging depreciation and taxation have been as follows:

Year Turnover Profit/(Losses)

2002 1100,000 140,0002003 1200,000 110,0002004 900,000 (120,000)2005 600,000 40,0002006 1200,000 100,0002007 1400,000 150,0002008 1750,000 170,000

The reasonable return on capital invested in the class of business done by Eastern Co. Ltd. is 10 per cent.The loss incurred in 2004 was due to exceptional circumstances. It is expected that the company will be able to maintain its profit for the next few years at the same level in the past.Required: Calculate the value of goodwill of Eastern Co. Ltd. (Assume that tax rate is

40% and also consider any further facts, if, necessary).[Marks: (5+20) = 25]

==THE END==

34

Page 35: CMA December 2009 Exam Questions

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH

CMA DECEMBER-2009, EXAMINATIONPROFESSIONAL LEVEL- III (NEW)

SUBJECT: 302. ADVANCED COST ACCOUNTING.

Time: Three hours Full Marks:100 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.

(a) Is a standard cost system equally applicable to Job Order Costing and Process Costing ?

(b) The standard cost card for Torno Company’s product is:

Amount (Tk.) Materials 7 liters @ Tk. 0.50…………………………………………………….

3.50

Labor ½ hour @ Tk. 6.00……………………….……………………………..

3.00

Variable Factory Overhead ½ hour @ Tk. 2.00…………………………

1.00

Fixed Factory Overhead ½ hour @ Tk. 4.00……………………………..

2.00

Standard production cost per unit 9.50

Data for November:(a) 1,000 units (40% converted) were in process at the beginning of the month.

5,050 units were started during the month. 5,000 units were transferred to finished goods.800 units (25% converted) were in process at the end of the month.

(b) Materials are all added at the beginning of the process. Conversion costs are incurred evenly throughout the process. Inspection takes place when the units are 80% converted. Under normal conditions, no spoilage should occur.

(c) 40,000 liters of materials were purchased for Tk.19,200 and were charged to inventory at standard cost.

(d) 37,000 liters of materials were issued to production. (e) Direct labor payroll was Tk.15,600 for 2400 hours. (f) Actual factory overhead costs were:

Amount

(Tk.)Amount

(Tk.) Indirect labor (variable) ………………………………………..

4,000

Supervision……………………….………………………………..

4,000

Depreciation (based on time)…………………………………

2,500

Supplies…………………………………………………………….

1,000

Heat, light, and power (variable)…………………………….

300

(Fixed)………………………………….

1,200 1,500

Property tax……………………………………………………….

200

Insurance…………………………………………………………..

500

Total ………………………………………………………………..

13,700

(a) Marketing and administrative expenses were: variable, Tk.1 per unit sold; fixed, Tk.13,500.

(b) Normal output for a month is 4000 units. Required:(1) Compute the November equivalent production for materials and for conversion costs.(2) Determine the standard cost of:

35

Page 36: CMA December 2009 Exam Questions

(a) Units transferred to finished goods.(b) Abnormal spoilage, to be charged directly to a current period expense account.(c) Ending inventory of work in process.

(3) Compute the (a) materials price and quantity variances, (b) labor rate and efficiency variances, and (c) factory overhead variances, using the four-variance method.

[Marks: {4+(4+3+9)} = 20]

36

Page 37: CMA December 2009 Exam Questions

CMA DECEMBER-2009, EXAMINATIONPROFESSIONAL LEVEL- III (NEW)SUBJECT: 302. ADVANCED COST ACCOUNTING.

Q. No. 2.(a) Distinguish between join product and by product. In making decision about the further

processing of joint products, what costs are relevant?(b) Doxy Company manufactures three products from a common input in a joint processing

operation. Joint processing costs up to the split-off point total Tk.350,000 per quarter. The company allocates these costs to the joint products on the basis of their total sales value at the split-off point. Unit selling prices and total output at the split-off point are as follows:

Product Selling Price Quarterly Output

A Tk.16 per pound 15,000 poundsB 8 per pound 20,000 poundsC 25 per gallon 4,000 gallon

Each product can be processed further after the split-off point. Additional processing requires no special facilities. The additional processing costs (per quarter) and unit selling price after further processing are given below:

Product Additional Processing

costs

Selling price

A Tk.63,000 Tk.20 per poundB 80,000 13 per poundC 36,000 32 per gallon

Required: Which product or products should be sold at the split-off point and which product or products should be processed further? Show computations.

[Marks: (5+10) = 15]

Q. No. 3.

(a) A practicing Cost and Management Accountant spends Tk.1.80 per km on taxi fare. He is considering two other alternatives- purchasing a new small car or an old big car. The estimated cost figures for these two alternatives are as follows:-

Particulars New Small Car (Tk.) Old Big Car (Tk.)Purchase price 70,000 40,000Sale price after 10 years 30,000 20,000Servicing and other fixed expenses per annum 1,500 2,400Tax and Insurance per annum 3,500 1,000Km. run per liter 10 7

Petrol price per litre is Tk.7. His estimated annual requirement of travel is 10,000 km. You are required to find out:

(a) Which of three options will be most economical for him;(b) In case of his annual travel requirement is 20,000 km. what should be his decision?(c) At how many Kms. p.a. the cost of the two cars will break-even?

(b) The XYZ Company sells three products. The following is an analysis of profitability of each of the products:

Per unit basisA (Rs.) B (Rs.) C (Rs.)

Selling price 25.00 40.00 55.00Variable costs 9.00 19.00 32.00Fixed costs 15.00 15.00 15.00Total costs 24.00 34.00 47.00Profit 1.00 6.00 8.00Profit % to selling price 4.00% 15.00% 14.50%Annual volume (in units) 11,000 7,500 6,500

37

Page 38: CMA December 2009 Exam Questions

CMA DECEMBER-2009, EXAMINATIONPROFESSIONAL LEVEL- III (NEW)SUBJECT: 302. ADVANCED COST ACCOUNTING.

Q. No. 3. (Contd..)

The company has total fixed costs of Tk.3,75,000 per year. The fixed cost per unit has been arrived at by dividing the total fixed cost with the total volume of 25,000 units. On the basis of the above analysis, it has been suggested by the Cost Accountant that product A should be discontinued if a substitute could be found that would be more profitable. This conclusion upsets the sales manager, who had planned to undertake a Tk.60,000 promotional campaign for product A. He has estimated that a Tk.50,000 expenditure would increase the volume of the product selected by 30%; sales of other products would be unaffected as would existing fixed costs.

Required: To determine whether promotional campaign should be undertaken or not. If your answer is yes, then which product should be selected for special promotion? Will your decision get changed if the required expenditure on promotional campaign were Tk.50,000 only?

[Marks: (10+15)} = 25]

Q. No. 4.

(a) Express an opinion as to the usefulness of data derived from a process cost system for control of cost.

(b) Builder Product, A processing factory manufacturing a single product processes the same through two departments. Particulars of expenses incurred on the different processes for a period are given below:

Process-A:Raw Material Tk.1,50,000Wages Tk.1,30,000Overhead expense Tk.1,45,000Total Tk.4,25,000

After crediting the process account with Tk.25,000 being the estimated realizable value of waste and by-product and Tk.40,000 against process profits, the balance is transferred to Process-B.Process-B:Transferred from Process-A Tk.4,40,000Wages Tk.1,00,000Overheads Tk.1,40,000Total Tk.6,80,000

There is no wastage of by-product in Process-B and the output is transferred to Finished Stock Account with a margin of 25% on total cost of Tk.6,80,000.

The Finished Stock inventories at the end of the period, show a balance of Tk.1,05,000 which has been transferred to Balance Sheet and included under closing stock.

Required:

(i) Prepare Process and Finished Stock Account. Can the figure be accepted and adopted for Balance Sheet purpose?

(ii) If not, indicate the figure which you would accept as cost of closing stock after making such adjustments which you deem necessary.

[Marks: {5+ (10 x 2)} = 25]

38

Page 39: CMA December 2009 Exam Questions

CMA DECEMBER-2009, EXAMINATIONPROFESSIONAL LEVEL- III (NEW)SUBJECT: 302. ADVANCED COST ACCOUNTING.

Q. No. 5.

The Rochester Company assembles a washing machine that is sold to three classes of customers: department stores, retail appliance stores, and wholesalers. The data with respect to these three classes of customers are shown below:

Customer Class TakaSales

GrossProfit (Tk)

Number ofSales Calls

Number of

Orders

Number ofInvoice Lines

Department Stores 1,80,000

26,000 240 120 2,100

Retail appliance stores

240,000 80,000 360 580 4,600

Wholesalers 300,000 71,000 400 300 3,300

Total 720,000 177,000 1,000 1,000 10,000

Actual marketing costs for the year are:

Function Costs (Tk) Measure of Activity

Selling…………………. 65,000 Salespersons’ calls

Packing and shipping.. 12,000 Customers’ orders

Advertising……………… 10,000 Taka sales

Credit and collection…… 15,000 Invoice lines

General accounting…….. 18,000 Customers’ orders

Required: An income statement by customer classes with functional distribution of marketing expenses. (When allocating the advertising expense, round to the nearest Tk.100).

[Marks: 15]

= THE END =

39

Page 40: CMA December 2009 Exam Questions

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH

CMA DECEMBER-2009, EXAMINATIONPROFESSIONAL LEVEL- III (NEW)

SUBJECT: 303. CORPORATE LAWS, GOVERNANCE & SECRETARIAL PRACTICES.

Time: Three hours Full Marks:100 Answer FIVE questions taking any THREE from Part-A and TWO from Part-B including

question No. 5 which is compulsory. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

PART – A: CORPORATE LAWS

Q. No. 1.

(a) What is a prospectus? When should a statement in lieu of prospectus be issued?

(b) Is there any significant difference between a prospectus and a statement in lieu of prospectus?

(c) Suppose you have purchased shares based on a prospectus, which was eventually proved to be

false and misleading. What remedies are available to you as per the Companies Act 1994?

[Marks: (5+5+10) = 20]

Q. No. 2.

(a) Differentiate between a private and a public company.

(b) How a company can be listed with and de-listed from Stock Exchange?

(c) What is Book Building?

[Marks: (6+10+4) = 20]

Q. No. 3.

(a) What do you mean by ‘net capital’ as described in the Securities & Exchange Rules, 1987?

(b) As per the Securities & Exchange Rules, 1987 what are the qualification of members of stock exchange?

(c) Under the above stated Rules, what are the financial report to be submitted to the SEC by an issuer and when?

[Marks: (5+7+8) = 20]

Q. No. 4.

(a) Define EGM & AGM.

(b) In what circumstances a company calls for an EGM?

(c) How can a general meeting be called?

[Marks: (5+10+5) = 20]

Q. No. 5.

Write short notes on any 4 (four) of the following:

(a) Insider Trading.(b) Disqualification of Directors.(c) Director’s Report.(d) Divisible Profit.(e) Appointment of Auditor.(f) Stock Dividend.

[Marks: (4x5) = 20]

40

Page 41: CMA December 2009 Exam Questions

CMA DECEMBER-2009, EXAMINATIONPROFESSIONAL LEVEL- III (NEW)SUBJECT: 303. CORPORATE LAWS, GOVERNANCE & SECRETARIAL PRACTICES.

PART – B: CORPORATE GOVERNANCE & SECRETARIAL PRACTICES

Q. No. 6.

(a) What is Right Offer?

(b) Being a company secretary what are the procedure you have to follow in offering right shares?

[Marks: (5+15) = 20]

Q. No. 7.

(a) What is ordinary resolution and extra-ordinary resolution?

(b) In what circumstances a resolution by circulation can be made?

(c) Define special resolution.

[Marks: (10+5+5) = 20]

Q. No. 8.

a) Draft a notice of the Annual General Meeting?

b) Discuss the role of a Company Secretary to uphold Corporate Governance in the organization?

[Marks: (10+10) = 20]

= THE END =

41

Page 42: CMA December 2009 Exam Questions

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESHCMA DECEMBER-2009, EXAMINATION

PROFESSIONAL LEVEL-III (NEW)SUBJECT: 304. AUDITING.

Time: Three hours Full Marks:100 All questions are to be attempted. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

Q. No. 1.(a) What do you mean by auditor’s independence, integrity and objectivity as per general

principles of an audit?(b) Define related party transaction. How can you verify the related party transactions at the

time of audit?(c) What do you meant about electronic data processing (EDP) environment? Describe briefly

the basic principles of audit in an EDP environment.[Marks: (5x3) = 15]

Q. No. 2.(a) What do you meant about audit Sampling? Explain the meaning of the following term in the

context of audit Sampling.(i) Stratified Sampling.(ii) Random Sampling.(iii) Block Sampling.

(b) Why cost audit is essential for a manufacturing company? Write briefly the benefits enjoyed by the management after effective implementation of cost audit.

(c) Draw a speciment clean cost audit report for a manufacturing company.[Marks: (10+6+4) = 20]

Q. No. 3.(a) What do you meant about Cut of procedure? Describe briefly the manner in which the auditor

gains satisfaction as to the physical existence of stocks.(b) Who are responsible for implementation of Internal control system? Why and to what extent

an internal control system mostly essential for an organization? [Marks: (5+5) = 10]

Q. No. 4.(a) What do you mean by IAASB?(b) Describe the process of promulgation of ISA.(c) What are the responsibilities of management of public limited company to financial

statement under Companies Act, 1994?[Marks: (6+6+8) = 20]

Q. No. 5.(a) An Auditor is expected to have an absolute basis for the expressions of an opinion. Do you

agree?(b) Should the auditor give an unqualified opinion on financial statement which shows stocks not

kept properly by the Management but a Management representation letter provided by the Management during the time of audit?

[Marks: (5x2) = 10]Q. No. 6.(a) Explain the meaning of the term ‘materiality’ and its significance for an auditor. Why does an

auditor need to study and evaluate internal control system?(b) What do you meant about:

(i) Auditors Liability to third party.(ii) Professional Competence and due care.

[Marks: (5+10) = 15]Q. No. 7.(a) Briefly describe the Rights & Power of Auditor u/s 213 of the Companies Act, 1994. Can this

rights be restricted by the terms of an Auditor’s appointment or in any other manner?(b) What do you meant about electronic data processing (EDP) environment? Describe briefly

the common types of frauds that take place in EDP environment and suggest how the occurrence of such frauds can be minimized.

[Marks: (5+5) = 10]

= THE END =

42

Page 43: CMA December 2009 Exam Questions

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH

CMA DECEMBER – 2009 EXAMINATIONPROFESSIONAL LEVEL – IV (NEW)

SUBJECT: 401. FINANCIAL MANAGEMENT.

Time : Three hours Full Marks: 100 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.

(a) What do you mean by working capital management? Explain how working capital management policies affect profitability, liquidity and structural health.

(b) M. A. Limited is commencing a new project for manufacture of a plastic components. The following cost information has been ascertained for annual production of 12000 units which is the full capacity:

Cost per unit (Tk.)

Materials 40Direct labor and variable expenses 20Fixed manufacturing expenses 6Depreciation 10Fixed administrative expenses 4Total cost 80

The selling price per unit is expected to be Tk.96 and the selling expenses Tk.5 per unit, 80% of which is variable.

In the first two years of operations, production and sales are expected to be as follows:

Year Production in units

Sales in Units

1 6000 50002 9000 8500

To assess the working capital requirements the following additional information is available:-

(a) Stock of materials 2.25 month’s average consumption(b) Work in process Nil(c) Debtors 1 month’s average sales(d) Cash balance Tk.10,000(e) Creditors for supply of material 1 month’s average purchase during the year.(f) Creditors for expenses 1 month’s average of all expenses during the year.

Required:

Prepare for the two years:-

(i) A projected statement of profit/loss (Ignoring taxation)(ii) A projected statement of working capital requirements

[Marks: (5+15) = 20]

Q. No. 2.

(a) JAMUNA plastic manufacturing company has been following a dividend policy which can maximize the market value of the firm as per Walter’s model. Accordingly, each year at dividend time, the capital budget is reviewed in conjunction with the earnings for the period and alternative investment opportunities for the shareholders. In the current year, the firm reports net earnings of Tk. 5,00,000. It is estimated that the firm can earn Tk. 1,00,000 if the amounts are retained. The investors have alternative investment opportunities that will yield them 10%. The firm has 50,000 shares outstanding. What should be the dividend payout ratio of the company if it wishes to maximize the wealth of the shareholders?

(b) Calculate the degree of operating leverage, financial leverage and combined leverage for the following firms and interpret the results, given the following data.

43

Page 44: CMA December 2009 Exam Questions

CMA DECEMBER – 2009 EXAMINATIONPROFESSIONAL LEVEL – IV (NEW)SUBJECT: 401. FINANCIAL MANAGEMENT.

Q. No. 2. (Contd..)

P Q R

Output (units) 3,00,000 75,000 5,00,000

Fixed costs (Tk) 3,50,000 7,00,000 75,000

Unit variable cost (Tk) 1.00 7.50 0.10

Interest expenses (Tk) 25,000 40,000 Nil

Unit selling price (Tk) 3.00 25.00 0.50[Marks: (10+10) = 20]

Q. No. 3.

(a) “Ratios can be classified into five broad groups” – What are these? Explain.(b) As a financial analyst of M/S. PHILIPS BANGLADESH LTD. you are required to determine the

weighted average cost of capital of the company using (i) book value weights and (ii) market value weights. The following information is available for your perusal. The company’s present book value capital structure is:

Debentures (Tk. 100 per debenture) Tk. 8,00,000

Preference shares (Tk.100 per share) 2,00,000

Equity shares (Tk. 10 per share) 10,00,000

20,00,000All these securities are traded in the capital markets. Recent prices are:

Debentures, Tk. 110 per debenture

Preference share, Tk. 120 per share

Equity shares, Tk. 22 per share

Anticipated external financing opportunities are:

i) Tk. 100 per debenture redeemable at per; 10 year maturity, 13 per cent coupon rate, 4 per cent flotation costs, sale price, Tk. 100.

ii) Tk. 100 preference share redeemable at per; 10 year maturity, 14 per cent dividend rate, 5 per cent flotation cost, sale price, Tk. 100.

iii) Equity share: Tk. 2 per share flotation cost, sale price = Tk. 22

In addition, the dividend expected on the equity share at the end of the year is Tk. 2 per share; the anticipated growth rate in dividend is 7 per cent and the firm has the practice of paying all its earnings in the form of dividends.

The corporate tax rate is 35 per cent. [Marks: (5+15) = 20]

Q. No. 4.

POLIMER plc has decided it must replace its major turbine machine on 31 December 2009. The machine is essential to the operations of the company. The company is, however, considering whether to purchase the machine outright or to use lease financing.

Purchasing the machine outright

The machine is expected to cost Tk.360,000 if it is purchased outright, payable on 31 December 2009. After four years the company expects new technology to make the machine redundant and it will be sold on 31 December 2013 generating proceeds of Tk.20,000. Capital allowances for tax purposes are available on the cost of the machine at the rate of 25% per annum reducing balance. A full year’s allowance is given in the year of acquisition but no writing down allowance is available in the year of disposal. The difference between the proceeds and the tax written down value in the year of disposal is allowable or chargeable for tax as appropriate.

44

Page 45: CMA December 2009 Exam Questions

CMA DECEMBER – 2009 EXAMINATIONPROFESSIONAL LEVEL – IV (NEW)SUBJECT: 401. FINANCIAL MANAGEMENT.

Q. No. 4. (Contd..)

Leasing

The company has approached its bank with a view to arranging a lease to finance the machine acquisition. The bank has offered two options with respect to leasing which are as follows:

Finance OperatingLease Lease

Contract length (years) 4 1

Annual rental Tk.135,000 Tk.140,000

First rent payable 31 December 2010 31 December 2009General

For both the purchasing and the finance lease option, maintenance costs of Tk.15,000 per year are payable at the end of each year. All lease rentals (for both finance and operating options) can be assumed to be allowable for tax purposes in full in the year of payment. Assume that tax is payable one year after the end of the accounting year in which the transaction occurs. For the operating lease only, contracts are renewable annually at the discretion of either party. POLIMER plc has adequate taxable profits to relieve all its costs. The rate of corporation tax can be assumed to be 30%. The company’s accounting year-end is 31 December. The company’s annual after tax cost of capital is 10%.

Required:

Calculate the net present value at 31 December 2009, using the after tax cost of capital, for

(i) Purchasing the machine outright;

(ii) Using the finance lease to acquire the machine; and

(iii) Using the operating lease to acquire the machine. Recommend the optimal method.

[Marks: 20]

Q. No. 5.

(a) Explain the exchange rate system that existed during the 1950s and 1960s. How does today’s exchange rate system differ?

(b) PURBO Cordage Company is considering the acquisition of SUMY Wire and Mesh Corporation with stock. Relevant financial information is as follows:

PURBO SUMY

Present earnings (in thousands) Tk. 4,000 Tk. 1,000

Common shares (in thousands) 2,000 800

Earnings per share Tk. 2.00 Tk. 1.25

Price/earnings ratio 12x 8x

PURBO plans to offer a premium of 20 percent over the market price of SUMY stock.

(i) What is the ratio of exchange of stock? How many new shares will be issued?

(ii) What are earnings per share of the surviving company immediately following the merger?

(iii) If the price/ earnings ratio stays at 12 times, what is the market price per share of the surviving company? What would happen if it went to 11 times?

[Marks: (6+14) = 20]

= THE END =

45

Page 46: CMA December 2009 Exam Questions

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH

CMA DECEMBER-2009, EXAMINATIONPROFESSIONAL LEVEL- IV (NEW)

SUBJECT: 402. STRATEGIC MANAGEMENT ACCOUNTING.

Time: Three hours Full Marks:100 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.

The Managing Director of M/s. ABC Ltd. has been planning to acquire a ‘Bus’ available for use by the Company’s staff. The ‘Bus’ that the company wishes to acquire can be either purchased or leased from the manufacturer. The company has made the following evaluation of the two alternatives.

Purchase alternative:

If the ‘Bus’ is purchased, then the costs incurred by the company would be as follows:

Purchase cost of the ‘Bus’ Tk.8,50,0

00Annual cost of servicing, licenses and taxes 9,000Repairs:First three years, per year 3,000Fourth year 5,000Fifth year 10,000

The ‘Bus’ would be sold after five years. Based on current resale values, the company would be able to sell it for about one-half of its original cost at the end of the five-year period.

Lease alternative:

If the ‘Bus’ is leased, then the company would have to make an immediate deposit of Tk.50,000 to cover any damage during use. The lease would run for five years, at the end of which time the deposit would be refunded. The lease would require as annual rental payment of Tk.2,00,000 (the first payment is due at the end of year-1). As part of this lease cost, the manufacturer would provide all servicing and repairs, license the ‘Bus’, and pay all taxes. At the end of the five year period, the ‘Bus’ would be reverted to the manufacturer as owner.

The cost of capital of the company is 18%.

Required:

(a) Use the total cost approach to determine the present value of the cash flows associated with each alternative. Ignore income taxes. The present value factor of Taka 1 at 18% cost of capital for 1-5 years period is 3.127 while it is 2.174 for 1-3 years period and 0.516 for the 4 th

year and 0.437 for the 5th year.

(b) Which alternative would you recommend that the company should accept? Why?

[Marks: (15+5) = 20]

Q. No. 2.

M/s. Jaypur Hat Company has two divisions. The Mining Division makes ‘Toldine’, which is then transferred to the Metals Division. The ‘Toldine’ is further processed by the Metals Division and is sold to customers at a price of Tk.150 per unit. The Mining Division is currently required by the company to transfer its total yearly output of 4,00,000 units of ‘Toldine’ to the Metals Division at 110% of full manufacturing cost. Unlimited quantities of ‘Toldine’ can be purchased and sold on the outside market at Tk.90 per unit.

The following table gives the manufacturing costs per unit in the Mining and Metals Divisions for 2009:

Mining Division Metals Division

Direct materials Tk.12 Tk.6Direct manufacturing labour costs 16 20Manufacturing overhead costs 32 25Total manufacturing costs per unit Tk.60 Tk.51

46

Page 47: CMA December 2009 Exam Questions

CMA DECEMBER-2009, EXAMINATIONPROFESSIONAL LEVEL- IV (NEW)SUBJECT: 402. STRATEGIC MANAGEMENT ACCOUNTING.

Q. No. 2. (Contd..)

Manufacturing overhead costs in the Mining Division are 25% fixed and 75% variable.

Manufacturing overhead costs in the Metals Division are 60% fixed and 40% variable.

Required:

(a) Calculate the operating incomes for the Mining and Metals Divisions for the 4,00,000 units of ‘Toldine’ transferred under the following transfer-pricing methods:

(i) Market price; and

(ii) 110% of full manufacturing costs.

(b) Suppose the company rewards each divisions manager with a bonus, calculated as 1% of division operating income (if positive). What is the amount of bonus that will be paid to each division manager under the transfer-pricing methods in requirement (a)? Which transfer-pricing method will each division manager prefer to use?

(c) What arguments would the manager of the Mining Division make to support the transfer-pricing method that he prefers?

[Marks: (12+5+3) = 20]

Q. No. 3.

M/s. Dhaka Medical Instruments Company is considering JIT (Just-in-time) purchasing policy implementation in 2010. The company’s annual demand for a product XJ-200, a surgical instrument is 20,000 units. If the company implements JIT, the purchase price of the product XJ-200 is expected to increase from Tk.10 to Tk.10.05 because of frequent deliveries by M/s. Mirpur Manufacturing Industries Ltd. M/s. Mirpur Manufacturing Industries enjoy a sterling reputation for quality and reliability. Ordering costs will remain at Tk.5 per order. However, the annual number of orders placed will be 200 instead of the current 20. As a result of frequent ordering, the order size of M/s. Dhaka Medical Instruments Company will decrease proportionately. Dhaka Medical Instruments Company’s required rate of return on investment is 20%. Other carrying costs (insurance, materials handling and so on) will remain at Tk.4.50 per unit. Currently the Dhaka Company has no stockout costs. Lower inventory levels from implementing JIT will lead to Tk.3 per unit stockout costs on 100 units during the year.

Required:

(a) Calculate the estimated Taka savings (loss) for M/s. Dhaka Medical Instruments Company from adoption of JIT purchasing policy.

(b) Under what conditions would it be beneficial for M/s. Dhaka Medical Instruments Company to have management from M/s. Mirpur Manufacturing Industries Ltd. for all inventories in the supply chain?

[Marks: (15+5) = 20]

Q. No. 4.

Consider the following data for the two geographical divisions of M/s. Chittagong Electric Company that operate at profit centers:

Rajshahi Division

Khulna Division

Total assets Tk.10,00,000 Tk.50,00,000Current liabilities 2,50,000 15,00,000Operating income 2,00,000 7,50,000

47

Page 48: CMA December 2009 Exam Questions

CMA DECEMBER-2009, EXAMINATIONPROFESSIONAL LEVEL- IV (NEW)SUBJECT: 402. STRATEGIC MANAGEMENT ACCOUNTING.

Q. No. 4. (Contd..)

Required:

(a) Calculate the ROI (Return on Investment) for each division using operating income as the measure of income and total assets as the measure of investment.

(b) Chittagong Electric Company has used RI (Residual Income) as a measure of management performance, the variable it wants a manager to maximize. Using this criterion, what is the RI for each division using operating income and total assets, if the required rate of return on investment is 12%?

(c) M/s. Chittagong Electric Company has two sources of funds: Long-term debt with a market value of Tk.35,00,000 and interest rate of 10%, and equity capital with a market value of Tk.35,00,000 at a cost of equity of 14%. The company’s income tax rate is 40%. The Chittagong Electric Company applies the weighted-average cost of capital to both divisions, because each division faces similar risks. Calculate the EVA (Economic Value Addition) for each division. Which of the measures calculated in requirements (a), (b) and (c) would you recommend Chittagong Electric Company to use? Why? Explain.

[Marks: (5+5+10) = 20]

Q. No. 5.

(a) Explain the condition when conflicting ranking would be given by IRR and NPV to the mutually exclusive project?

(b) What should be the criteria for Management to adopt a particular performance measure?

(c) What are the four key perspectives in the balanced scorecard?

(d) Describe three ways to improve the performance of a bottleneck operation.

[Marks: (5x4) = 20]

= THE END =

48

Page 49: CMA December 2009 Exam Questions

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH

CMA DECEMBER-2009, EXAMINATIONPROFESSIONAL LEVEL- IV (NEW)

SUBJECT: 403. STRATEGIC MANAGEMENT AND ORGANIZATIONAL BEHAVIOR.

Time: Three hours Full Marks:100 Answer any THREE questions from Group-“A” and TWO question from Group-“B”. All questions carry equal marks. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

PART – A: STRATEGIC MANAGEMENT

Q. No. 1.

(a) What is a strategy? What is strategic management?

(b) How can you classify different strategies of a firm?

(c) Can you avoid strategic management to-day? Why? [Marks: (5+8+7) = 20]

Q. No. 2.

(a) How does internet reshape the competitive environment?

(b) Discuss the e-commerce business strategies for future.

(c) What are the effects of internet on the value chain of an industry?[Marks: (5+8+7) = 20]

Q. No. 3.

(a) What are the elements to be incorporated in the mission statement of a company? Discuss those elements in brief.

(b) Discuss in brief the concept of strategic intent.

(c) How a company should communicate the strategic vision down the line to lower-level managers and employees? Discuss in brief.

[Marks: (9+5+6) = 20]

Q. No. 4.

(a) What do mean by competitive strategy?

(b) How is it decided upon for a company?

(c) Discuss the five generic competitive strategy of Michel Porter.

[Marks: (4+6+10) = 20]

Q. No. 5.Discuss any four of the following: (i) Strategy and Entrepreneurship (ii) Strategic Vision and Strategic Mission (iii) Company Competence and Competitive Capability(iv) Unbundling and Outsourcing(v) Joint Venture and Strategic Partnership (vi) Strategic Objectives and Financial Objectives

[Marks: (5 × 4) = 20]

49

Page 50: CMA December 2009 Exam Questions

CMA DECEMBER-2009, EXAMINATIONPROFESSIONAL LEVEL- IV (NEW)SUBJECT: 403. STRATEGIC MANAGEMENT AND ORGANIZATIONAL BEHAVIOR.

PART – B: ORGANIZATIONAL BEHAVIOR

Q. No. 6.

(a) What is group dynamics?

(b) Distinguish between formal and informal organization.

(c) Discuss the pros and cons of the informal organization.

[Marks: (4+6+10) = 20]

Q. No. 7.

(a) Why is change management significant in an organization?

(b) Describe the common resistance to change.

(c) Discuss the process of effective change management.

[Marks: (4+6+10) = 20]

Q. No. 8.

(a) What do you mean by group structure? What are the group structural variables?

(b) Is there any difference between role conflict and role ambiguity? Give a practical example from your position that makes the distinction more clear?

(c) Why is the study of role ambiguity important in organization behavior ? Discuss

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

= THE END =

50

Page 51: CMA December 2009 Exam Questions

THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESHCMA DECEMBER-2009 EXAMINATION

PROFESSIONAL LEVEL – IV (NEW)

SUBJECT: 404-COST & MANAGEMENT AUDITING.

Time: Three hours Full Marks: 100 All questions are to be attempted. Answer must be brief, relevant, neat and clean. Start answering each question from a fresh sheet.

PART – A: COST AUDITING (MARKS: 50)Q. No. 1.

How Cost Auditor will suggest the measure for improvements in performance, if any, in respect of the following:

(a) Rectification of general imbalance in production facilities; (b) Fuller utilization of installed capacity;(c) Concentration on areas offering scope for cost reduction and increased productivity;(d) Improved inventory policies.

[Marks (4×4) = 16Q. No.2.

(a) Enumerate the provisions of the Companies Act, 1994 and Cost Audit Ordinance/Rules regarding qualification, appointment and removal of a Cost Auditor of a Company.

(b) Discuss the provisions of professional misconduct in relation to Cost Accountants in respect of his professional duties.

[Marks (8+8) = 16]Q. No.3.

(a) “Cost accounting and cost audit are effective management control mechanisms and as such, a management tool”. Briefly discuss.

(b) “Cost audit Is an aid to shareholders of corporate bodies and to Government” briefly discuss.(c) 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.[Marks (6+6+6) = 18]

PART – B: MANAGEMENT AUDITING (MARKS: 50)Q. No. 4.

(a) “Management auditors act as consultants both to senior management and to the board of directors of a manufacturing company”. Briefly explain.

(b) What is the importance of management audit report? Briefly discuss the essential “features and contents” of a management audit report.

[Marks (6+8) = 14]Q. No.5.

(a) Distinguish between principle-based and law-based Corporate Governance. How far SEC circular is in conformity with other countries?

(b) You are the management auditor of a manufacturing company. State various techniques you would adopt in measuring the performance of resources of Factory.

[Marks (8+8) = 16]Q. No. 6.

(a) Why many industries are relocated from the developed countries to the LDC like Bangladesh? Do you find it a sign of localization of industries or development of the nation?

(b) Why e-business with foreign countries and e-transactions involving foreign exchange could not be implemented in Bangladesh?

(c) Who does dictate disclosure requirements of audited financial statements of scheduled banks, insurance companies, listed companies and Private Limited Companies? Why?

.[Marks (7+ 5+8) = 20]

THE END********

51