MANAGEMENT ACCOUNTING FOR FINANCIAL SERVICES – Stage-III

ISQ Examination (Summer-2008)
Q.1

Please write the alphabate of selected choice in the answer column:

Q.2

(A)

Classify the following costs as fixed (F) , variable (V) or semi-variable
(SV).
(05)

Q.2

(B)

Standard cost for Wahab Corporation are listed below: direct materials price direct material efficiency direct labor price direct labor efficiency variable factory overhead fixed factory overhead application rate

(25)

(02)

Rs. 10 per pound
3 pounds per unit
Rs. 12 per direct labor hour
4 direct labor hours
Rs. 2.20 per direct labor hour
Rs. 5 per direct labor hour

What is the total standard cost per unit?
A)
C)

Q.3

Rs. 106.80
Rs. 122.60

B)
D)

Rs. 114.40
Rs. 128.20

The United Corporation currently earns Rs.10,000,000 before interest and taxes.
The Corporation’s management is planning an expansion for its production facilities at an estimated cost of Rs.25,000,000 which would increase its earning before interest and taxes to Rs.13,750,000.
The necessary finance can be raised either by issuing Term Finance Certificates with a interest rate of 9% or by issuing 781,250 shares. The Corporation’s shares currently has a P/E ratio of 15 which would persist if additional shares were sold. The Term Finance Certificates would reduce the P/E to 13. The
Corporation’s current balance sheet and income statement are as follows:
Fixed assets
Current assets
Less: Current liabilities
Net Current assets

Rs.20,000,000
Rs.30,000,000
5,000,000
25,000,000
Rs.45,000,000

Represented by:
Locally manufactured machinery loan
(interest payable at 6%)
Shareholders’ equity
Share capital
1,500,000 ordinary shares of Rs.10 each
Revenue reserves

Sales
Less: Cost of goods sold
Selling & Administration
Depreciation

Earning before interest and