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THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH

CMA AUGUST, 2010 EXAMINATION


FOUNDATION LEVEL
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.
The following Trial Balance and adjustments are taken from the Books of Padma Ltd.:
Padma Ltd.
Trial Balance
As on 31.12.2009
Accounts Titles Debit (Tk.) Credit (Tk.)
Cash 1,20,000 ---
Furniture and Fixtures 95,000 ---
Accum. Dep. Furniture and Fixture --- 15,000
Accounts Receivable 75,000 ---
Notes Receivables 35,000 ---
Allowance for Bad debts --- 2,000
Inventory (1.1.2009) 65,000 ---
Unexpired Insurance 15,000 ---
Supplies on Hand 7,000 ---
Accounts Payable --- 48,000
Notes Payable --- 16,000
Common Stock --- 1,70,000
Retained Earnings --- 50,000
Sales --- 2,90,000
Sales Return and Allowances 12,000 ---
Purchases 1,20,000 ---
Transportation in 10,000 ---
Selling Expenses 18,000 ---
Administrative Expenses 25,000 ---
Interest Revenue --- 11,000
Interest Expenses 5,000 ---
Total 602,000 602,000
Adjustments:
(1) Office Salaries accrued Tk.3,000.
(2) Interest payable on Notes Payable Tk.2,000.
(3) Interest earned on Notes Receivable Tk.2,500.
(4) Estimated Bad Debts, 1% on net sales.
(5) Depreciation on Furniture and Fixtures, 5% per annum.
(6) Insurance expired Tk.10,000.
(7) Supplies used Tk.5,000.
(8) Income tax payable at 20%.
Required:
(i) Ten column worksheet as at December 31, 2009.
(ii) Income Statement for the year ended December 31, 2009.
(iii) Balance sheet as at December 31, 2009.
[Marks: (15+5+5) = 25]

Page 1 of 50
CMA AUGUST, 2010 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING.

Q. No. 2.
The following information is available for H. Company as of June 30, 2009:
(a) Cash on the books as of June 30 amounted to Tk.1,13,675. Cash on the Bank Statement on the
same date was Tk.1,41,717.
(b) A deposit of Tk.14,250 representing cash receipts of June 30, did not appear on the Bank
Statement.
(c) Outstanding cheque totaled Tk.7,294.
(d) A cheque for Tk.2,420 returned with the statement was recorded incorrectly in the cash
payments journal as Tk.2,024. The cheque was for advertising.
(e) The Bank service charge for June amounted Tk.26.
(f) The Bank collected Tk.36,400 for H. Company on a note. The face value of the note was
Tk.36,000.
(g) An NSF cheque for Tk.1,140 from a customer returned with the statement.
(h) The Bank mistakenly deducted a cheque for Tk.800 drawn by M company.
(i) The Bank reported that it had credited the account for Tk.960 for interest on the average
balance.
Required:
(i) Prepare Bank Reconciliation Statement as of June 30, 2009.
(ii) Pass necessary Journal Entries to adjust the Cash Account.
[Marks: (10+05) = 15]
Q. No. 3.
The following are data related to Atam Company’s beginning inventory, purchases, and sales for the
year 2009.
Beginning inventory and purchase Sales
Units Unit Cost (Tk.) Units
Beginning inventory 12,500 @ 3.00 February 3 10,500
March 15 10,000 @ 3.12 May 4 9,000
May 10 17,500 @ 3.30 September 16 16,000
Augusts 12 12,500 @ 3.48 October 9 14,500
November 20 7,500 @ 3.72 50,000
60,000
Required:
Compute the ending inventory and cost of goods sold under each of the following methods assuming
periodic inventory procedure: (i) Specific identification (assuming ending inventory is taken equally
from the August 12 and November 20 purchases.) (ii) FIFO, LIFO, Weighted average.
[Marks: 20]
Q. No. 4.
Journalize the following transactions:
(i) Materials purchased and received on account Tk. 2,00,000.
(ii) Materials requisitioned for production Tk. 1,60,000 and for indirect factory use Tk. 24,000
during the month.
(iii) The distribution of the payroll was; Direct Labour 60%, Indirect factory Labour 15%;
Marketing Salaries 18% and administrative Salaries 7%.

Page 2 of 50
CMA AUGUST, 2010 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 001. PRINCIPLES OF ACCOUNTING.

Q. No. 4.(contd…….)

(vi) Factory overhead consisting of Depreciation Tk. 17,000; Prepaid insurance Tk. 2,400.
(v) General factory overhead costs (not itemized) Tk. 52,680; 70% of these expenses was paid in
cash, the balance was credited to Account Payable.
(vi) Amount received from customers in Payment of their accounts Tk. 4,10,000.
(vii) Liabilities of Accounts Payable Tk. 4,14,000; Estimated Income Tax Tk. 71,400 and Due on
Long-term debt Tk. 20,000 were paid.
(viii) Factory overhead accumulated in the factory overhead control accounts was transferred to the
work in process account.
(ix) Work completed and transferred to finished goods Tk. 6,40,000.
(x) Provision for income tax Tk. 52,000.
[Marks: 20]

Q. No. 5.
(a) What is Stock Dividend?
(b) What is Stock Split? What results involved in stock split?
(c) Distinguish between Depreciation, Amortization and Depletion.
(d) What are Matching Principles and Revenue Recognition?
[Marks: (4 x 5) = 20]

= THE END =

Page 3 of 50
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2010 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 002. BUSINESS COMMUNICATION AND OFFICE MANAGEMENT.
Time: Three hours Full Marks: 100
 Answer THREE questions from each part, where Q. No. 4 and 8 are compulsory.
 Answer must be brief, relevant, neat and clean.
 Use a fresh sheet for answering each question.
 Start answering each question from a fresh sheet.

GROUP-A: BUSINESS COMMUNICATION

Q. No. 1.
(a) What is Business Communication? Both written and oral communications are needed for a
successful Manager – Explain.
(b) Why employees of an organization depend on formal Communication?
(c) Identify three techniques to improve business writing those you consider to be very important.
[Marks: (6+6+3) = 15]

Q. No. 2.
(a) Discuss the procedures of report writing?
(b) What are the factors to be considered while drafting a report?
(c) Draft a director’s report of a public limited company.
[Marks: (5+5+5) = 15]
Q. No. 3.
(a) Draft a notice for holding the Annual General Meeting of a publicly listed company.
(b) Write a letter to the Register of Joint Stock Company to allow three months time extension to
hold the AGM of your company.
[Marks: (7+8) = 15]

Q. No. 4.
Write short notes on any FIVE of the following:
(i) Extra ordinary General Meeting, (ii) Bonded warehouse, (iii) Capital Market, (iv) Proxy to AGM,
(v) I.P.O., (vi) Letter of Indemnity, (vii) Credit note, (viii) Organization chart.
[Marks: (4 x 5) = 20]

GROUP-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) “Inter office relationships & co-ordination is must for good office Management”. Do you agree
with this view? Explain.
(b) Discuss the organogram with a diagram of a hypothetical company.
(c) Discuss the various methods of cost control of an office.
[Marks: (5+5+5) = 15]

Page 4 of 50
CMA AUGUST, 2010 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 002. BUSINESS COMMUNICATION AND OFFICE MANAGEMENT.

Q. No. 7.
(a) “Positive relationship between employer and employees is must for a good administration of
office”. Do you accept this option? How & why?
(b) Discuss the importance of office Management.
(c) What are the Methods of job evaluation of an Employee?
[Marks: (5+5+5) = 15]
Q. No. 8.
Write short notes on any FIVE of the following:
(i) Business ethics, (ii) Mobile Banking, (iii) Office decoration, (iv) Job rotation of office work,
(v) Office Filing, (vi) Lay out of office, (vii) Office Security, (viii) Office Manuals.
[Marks: (4 x 5) = 20]

= THE END =

Page 5 of 50
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2010 EXAMINATION
FOUNDATION LEVEL
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) If x2 + y2 = 7xy, prove that log (x + y) = log3 + ½ logxy.
(b) Prove that {cos(sin-1x)}2 = {sin (cos-1x)}2.
[Marks: (5+5) = 10]

Q. No. 2.
− 2 3 −1  1 3 − 1
(a)

If A = − 1 2 − 1  and B =
2 2 − 1 prove that AB = BA.
 
− 6 9 − 4 3 0 − 1
(b) A loan of Tk.1,000 is to be paid in 5 equal annual installment. Interest being at 6% p.a.
compounded and 1st payment was made after a year. What amount will be paid in each
installment?
[Marks: (5+5) = 10]

Q. No. 3.
(a) Find the following integrals:
sinx + cosx 1
(i) ∫ 5tanx
dx (ii) ∫ 1 + sinx dx
(b) Evaluate –
π /2 1
dx
∫ ∫ xe
− 3x
(i) (ii) dx
0
1 + cosx 0
[Marks: (5+5) = 10]

Q. No. 4.
(a) The roots of the equation 2x2 + x + 5 = 0 are α and β and those of 2x2 – 3x + 2b = 0 are (α+1)
and (β+1). Determine the value of b.
(b) How many numbers between 5,000 and 6,000 can be formed with the digits 3, 4, 5, 6, 7, 8 if no
digit is repeated in a number?
[Marks: (5+5) = 10]

Q. No. 5.
(a) A man borrows Tk.750 from a money lender and the bill is renewed after every half year at an
increase of 21%. What time will elapse before it reaches Tk.7,500?
(b) Prove that the lines 3x – 4y + 5 = 0, 7x – 8y + 5 = 0 and 4x + 5y = 45 are concurrent.
[Marks: (4+6) = 10]

Page 6 of 50
CMA AUGUST, 2010 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 003. QUANTITATIVE TECHNIQUES.

Q. No. 6.
(a) If α, β are the roots of the equation (a + b + c)x2 + (a + 2b)x + c = 0, form the equation whose
α β
roots are and .
α −1 β −1
(b) In how many ways can the letters of the word ‘daughter’ be arranged so that the vowels may
never be separated?
[Marks: (5+5) = 10]

Q. No. 7.
cosθ sinθ
(a) Prove that = + = sinθ + cosθ.
1 − tanθ 1 − cotθ
(b) Find that total cost function and average cost function from the marginal cost function MC =
100 – 10q + 0.3q2, when the fixed cost is Tk.1,000.
[Marks: (5+5) = 10]

PART – B : BUSINESS STATISTICS


Q. No. 1.
(a) Define standard deviation and co-efficient of variation.
(b) The Life of Tube bulbs of two different companies are given below:

No. of Bulbs
Life (in hours) Company-A Company-B
1000-1200 18 15
1200-1400 22 24
1400-1600 26 30
1600-1800 25 20
1800-2000 9 16
(i) Which company’s bulbs give a higher average life?
(ii) If the price are same for the bulbs of both companies, which one you will purchase and why?
[Marks: (3+7) = 10]
Q. No. 2.
(a) Explain with example the following concepts:
(i) Positive correlation (ii) Negative correlation (iii) Zero correlation
(b) You are given the following data about the sales and advertisement expenditure of a firm:
Sales (Lac Taka) Adv. Expenditure(Lac Taka)
Mean 85.00 8.21
Standard deviation 7.30 2.62
Correlation of Coefficient + 0.65
(i) Estimate the likely sales for a proposed advertisement expenditure of Tk. 12.50 Lac.
(ii) What should be the advertisement budget if the Company wants to achieve a sales target
of Tk. 1.0 crore.
[Marks: {3+(3+4)} = 10
Q. No. 3.
(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 40-50
No. of Users 6 25 36 20 13
Calculate: (i) Arithmetic mean (ii) Standard deviation.
[Marks: (4+6) = 10]

Page 7 of 50
CMA AUGUST, 2010 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 003. QUANTITATIVE TECHNIQUES.

Q. No. 4.
(a) Two cards are drawn from a well-shuffled ordinary deck of 52 cards. Find the probability that
are both aces if the first card is (i) replaced (ii) Not replaced.
(b) A bag contains 7 red and 3 white balls. Two balls will be selected at random from the bag one
after another. What is the probability that (i) two balls are same colours. (ii) two balls are
different colours.
[Marks: (5+5) = 10]

Q. No. 5.
(a) What is in difference between a null Hypothesis H0 and alternative Hypothesis H1?
(b) What is the difference between one tail and two tail test?
(c) What are the some ethical issues to be concerned with in performing a Hypothesis test?
[Marks: (3+3+4) = 10]

Q. No. 6.
(a) Define sampling. What is sampling error and non-sampling error?
(b) In a simple random sample of 600 men taken from Dhaka City 400 are found to be smokers. In
another simple random sample of 900 men taken from Rajshahi City 450 are smokers’. Do the
data indicate that there is a significance difference in the habit of smokers in the two cities?
[Marks: (3+7) = 10]

Q. No. 7.
(a) What is business forecasting? What are the assumptions on which business forecasting are
made?
(b) Calculate the trend values by the method of least squares from the following data given and
estimate then sales for the year 2008:
Year 2000 2001 2002 2003 2004
Sale of Beauty Soap (in million) 12 18 20 23 27
[Marks: (4+6) = 10]

= THE END =

Page 8 of 50
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2010 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 004. BUSINESS ECONOMICS AND INTERNATIONAL BUSINESS.

Time: Three hours Full Marks: 100

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

GROUP-A: BUSINESS ECONOMICS

Q. No. 1.
(a) What are the main problems a management accountant professional would face in his work
without the knowledge of economics?
(b) Distinguish between Economic profit and Accounting profit.
(c) Distinguish between Profit and Value Added.
(d) What are the reasons of variation of profit in between the firms?
[Marks: (5+4+5+6) = 20]

Q. No. 2.
(a) What are exceptions to the law of demand? Illustrate your answer.
(b) What is the probable impact of recent global financial crisis on investment in Bangladesh?
(c) Discuss the importance of assessment of elasticity.
(d) Give examples of three price elastic and three income elastic goods in Bangladesh.
(e) What is the nature of income elasticity of inferior goods?
[Marks: (4+5+4+4+3) = 20]

Q. No. 3.
(a) Distinguish between Perfect Competition and Oligopoly market.
(b) State how price is determined under perfect competition. Explain with a diagram.
(c) What is the price discrimination?
[Marks: (7+7+6) = 20]

Q. No. 4.
(a) Differentiate between demand-pull and cost-push inflation.
(b) State whether inflation is always bad? Justify your answer.
(c) Distinguish between GDP and GNP.
(d) Calculate National Income from the following data:

Tk. in crores
Compensation of employees 4222.7
Rents 122.2
Interests 403.6
Profit:
Proprietor’s income 478.3
Corporate income 586.6
Indirect business Taxes 679.0
Capital consumption allowances 754.2
Payments of factor income to rest of the World 215.3
Receipts of factor income from the rest of the World 208.3
[Marks: (5+4+5+6) = 20]

Page 9 of 50
CMA AUGUST, 2010 EXAMINATION
FOUNDATION LEVEL
SUBJECT: 004. BUSINESS ECONOMICS AND INTERNATIONAL BUSINESS.
Q. No. 5.
(a) Distinguish between
(i) Break even point and Shout down point
(ii) Fixed cost and Variable cost, and
(iii) Law of increasing return and law of diminishing return
(iv) Internal economies and External Economies of firms
(b) Calculate average cost, marginal cost, marginal revenue, average revenue and profit from the
following information:
Units of Output Total Cost Variable Cost Fixed Cost Total Revenue
1 250 150 100 150
2 300 200 100 300
3 400 300 100 400
4 450 350 100 500
5 550 450 100 600
6 610 510 100 650
7 670 570 100 700
8 750 650 100 760
(c) State at what output level profit will be maximized using the data of ‘b’ above.
[Mark: (8+8+4) = 20]
GROUP-B: INTERNATIONAL BUSINESS
Q. No. 6.
(a) What is the usual documentation requirement in exports from and imports to Bangladesh?
(b) What are the main comparative advantages of Bangladesh Garments for exports in global
market?
(c) What are the advantages and disadvantages of strategy of export orientation?
[Marks: (7+5+8) = 20]
Q. No. 7.
(a) What do you mean by Product Life Cycle? Discuss the important features of the different stages
of a product.
(b) Discuss about the forces leading international firms to go overseas for their production and
marketing.
(c) Do you think the operations of MNCs are good for the economic development of a country like
Bangladesh? Give your reasons.
[Marks: (8+6+6) = 20]
Q. No. 8.
Write Short Notes on five of the following:
(i) Non-Price Competitiveness.
(ii) Non-Tariff Barriers.
(iii) Trade Facilitation.
(iv) WTO.
(v) FTA.
(vi) Social Compliance in Export Industries.
(vii) Taxation of Imports.
(viii) Transfer Income.
[Marks: (4 x 5) = 20]

= THE END =

Page 10 of 50
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – I
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) As a professional accountant can you compare with the direct method of cash flow and indirect
method of cash flow?
(b) XYZ Ltd. a major retailer of accessories operates several stores and is listed with Dhaka Stock
Exchange. The comparative statement of financial position and income statement for XYZ Ltd.
as of June 30, 2010 are shown below to prepare its statement of cash flow:
XYZ Ltd.
Comparative Statement of Financial Position
As of June 30, 2009 and June 30, 2010
2010 2009
Taka Taka
Current Assets:
Cash 33,250 20,000
Debtors 80,000 58,000
Stock-in-trade 210,000 250,000
Prepaid expenses 9,000 7,000
Total current assets 332,250 335,000
Long term Assets:
Machinery and equipments 600,000 502,000
Less: Accumulated depreciation (150,000) (125,000)
Net long term assets 450,000 377,000
Total Assets 782,250 712,000
Current Liabilities:
Creditors 123,000 115,000
Payable: Interest 47,250 72,000
Salary 27,000 25,000
Short Term loan 70,000 100,000
Total current liabilities 267,250 312,000
Shareholders’ equity:
Common shares (Tk. 10/- each) 370,000 280,000
Retained earnings 145,000 120,000
Net long term assets 515,000 400,000
Total liabilities and shareholders equity 782,250 712,000
XYZ Ltd.
Income Statement for the year ended June 30, 2010
Taka
Sales 1,255,250
Cost of goods sold (722,000)
Total contribution 533,250
Expenses:
Payroll expenses (252,100)
Interest expenses (75,000)
Other expenses (8,150)
Depreciation (25,000)
Total expenses (360,250)
EBT 173,000
Tax (43,000)
EAT 130,000

Page 11 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – I
SUBJECT: 101. INTERMEDIATE FINANCIAL ACCOUNTING.
Q. No. 1. (Contd..)

Other information for consideration:


(i) During the year all sales were made on account;
(ii) All stocks was purchased on account, comprising trade creditors account;
(iii) Machinery and equipments costing Tk. 98,000/- were purchased by paying Tk. 48,000/- in cash and
issuing 5,000 shares of Tk. 10/- each;
(iv) Income taxes incurred during the year were paid during the year;
(v) In order to supplement its cash, XYZ Ltd. Issued 4,000 shares at per value;
(vi) Cash dividends of Tk. 105,000/- were declared and paid at the end of fiscal year;
(vii) The ‘other expenses’ are related to prepaid items.
Required:
Prepare a statement of cash flows as per IAS-7 for XYZ Ltd. for the year ended June 30, 2010 using the
direct method.
[Marks: (4+16) = 20]

Q. No. 2.
(a) Distinguish between the two bases that may be used in estimating uncollectible accounts.
(b) The RAISA Company closes its books monthly. On June 30, selected ledger balance were:
Notes Receivable Tk.19,800.00
Interest Receivable Tk. 132.80
Notes Receivable include the followings:
Date Maker Face Term Interest
May-21 Alder Inc. 6,000 60 days 12%
May-25 Dron Co. 4,800 60 days 11%
June-30 MJH Corp. 9,000 06 months 9%
Interest is computed using 360-days in a year. During July, the following transactions were
completed:
July 1 – Made Sales of Tk.5,000 on “Master Card”. The credit card service charge is 1%.
2 – Made Sales of Tk.2,000 using “American Express Cards”. The credit card service
charge is 2%.
– Sold Tk.10,000 of Merchandise to Rafi Company, terms 1/2, n/30.
4 – Received payment in full from Rafi Company for balance due.
5 – Made Sales of Tk.6,200 on “RAISA Credit Cards”.
14 – Made Sales of Tk.700 on “VISA Credit Cards”. The credit card service charge is 3%.
16 – Added Tk.415 to “RAISA” charge customer balance for finance charge on unpaid
balance.
20 – Received payment in full from Alder Inc. on the amount due.
25 – Received notice that Dron Co. note has been dishonored (assume that Dron Co. is
expected to pay in the Future).
Required:
(i) Journalize the July transactions and the July 31st adjusting entry for accrued interest
receivable.
(ii) Enter the balance at July-1 in the receivable account and post the entries to all of the
receivable account.
(iii) Show the balance sheet presentation of the receivable account at July 31.
[Marks: (5+15) = 20]

Q. No. 3.
(a) Define negative goodwill. How should negative goodwill be reported in the financial
statements?
(b) East West Co. Ltd. assembles the following data relative to the North South Co. Ltd., in
determining the amount to be paid for the net assets and goodwill of the latter company:

Page 12 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – I
SUBJECT: 101. INTERMEDIATE FINANCIAL ACCOUNTING.
Q. No. 3. (Contd..)
Taka
Assets at appraised values (before goodwill) 8,20,000
Liabilities 3,60,000
Stockholders’ Equity 4,60,000
Net Earnings (after elimination of extraordinary items) Taka
2003 80,000
2004 62,000
2005 87,000
2006 85,000
2007 91,000
Required:
Compute the amount of goodwill under each of the following assumptions:
(i) Average earnings are capitalized at 15% in arriving at the business worth.
(ii) A return of 12% is considered normal on net assets at appraised values’ goodwill is
valued at 5 years’ excess earnings.
(iii) A return of 14% is considered normal on net assets at appraised values’ excess earnings
are to be capitalized at 20%.
(iv) Goodwill is valued at the sum of the excess of a 10% annual yield on net assets at
appraised values.
(v) A return of 10% is considered normal on net identifiable assets at their appraised values.
Excess earnings are expected to continue for 10 years. Goodwill is to be valued by
present value method using a 20% rate .(The present value of 10 annual payments of Tk.1
providing a return of 20% is Tk.4.192).
[Marks: {5+(3 x 5)} = 20]
Q. No. 4.
(a) Can you explain ‘Stock Dividends’ and ‘Stock Splits’?
(b) The adjusted trial balance of ZAZM & Co. and other related information for the year 2009 is
presented below:
ZAZM & Co.
Adjusted Trial Balance, December 31, 2009
Debits Credits
Accounts --- 148,000
Accrued Expenses --- 49,200
Notes Payable --- 94,000
Bonds Payable --- 400,000
Capital Stock --- 500,000
Premium on Capital Stock --- 45,000
Retained Earnings --- 138,000
Cash 41,000 ---
Accounts Receivable 163,500 ---
Allowance for Doubtful Accounts --- 8,700
Prepaid Insurance 5,900 ---
Inventory 308,500 ---
Long-term Investments 339,000 ---
Land 85,000 ---
Construction WIP 124,000 ---
Patents 36,000 ---
Equipment 400,000 ---
Accumulated Depreciation on Equipment --- 140,000
Unamortized Discount on Bonds Payable 20,000 ---
1,522,900 1,522,900

Page 13 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – I
SUBJECT: 101. INTERMEDIATE FINANCIAL ACCOUNTING.
Q. No. 4. (Contd..)

Additional Information:
(i) 600,000 shares of common stock at par value of Tk.1 were authorized, of which 500,000
shares were issued and outstanding.
(ii) The bonds payable bear interest at 11% payable every December 31, and are due January
1, 2015.
(iii) The Inventory has a replacement market value of Tk.353,000.
(iv) The cost and fair value of the long-term investments that consist of stocks and bonds is
the same.
(v) The amount of the Construction Work in progress account represents the costs expended
to date on a building in the process of construction. (The company rents factory space at
the present time). The land on which the building is being constructed cost Tk.85,000, as
shown in the trial balance.
(vi) The patents were purchased by the company at a cost of Tk.40,000 and are being
amortized on a straight-line basis.
(vii) Of the unamortized discount on bonds payable, Tk.2,000 will be amortized in 2009.
(viii) The notes payable represent bank loans that are secured by long-term investments carried
at Tk.120,000. These bank loans are due in 2009.
Required: Prepare a balance sheet as of December 31, 2009, so that all important
information is fully disclosed.
[Marks: (3+17) = 20]
Q. No. 5.
(a) EXIM Ltd. bought an asset for Tk. 10,00,000/- at the beginning of 2008. It had a useful life of 5
years. On 1st January 2010 the asset was revalued to Tk. 12,00,000/-. The expected useful life
has remained unchanged (i.e. 3 years remain).
Required: Account for the revaluations state the treatment for depreciation from 2010 onwards.
(b) In a balance sheet prepared in accordance with IAS-16, what does the net book value (carrying
value) represent?
(c) As per Finance Act-2010, Government has imposed tax through introducing new section u/s
53m in ITO-1984 that collection of tax from transfer of share by sponsor shareholders of a
company listed with stock exchange. The SEC, at the time of transfer or according consent to
transfer, by any means, the shares of a sponsor shareholder or director of a company listed with
a stock exchange shall collect tax at the rate of 5% on difference between transfer value and
face value of the shares.
Mr. X is a sponsor shareholder of OPQ Ltd. who is the owner of 95,000 ordinary shares of
Tk. 100/- at par. OPQ is a publicly listed company and currently market price of that share is
Tk. 950/-. Last two years OPQ declared bonus share @ 40% and 30% respectively. After
completion on locking period Mr. X is going to sale all of the shares that he hold in his BO A/C
only for OPQ’s shares.
Required: As per the Finance Act-2010 what would be the Government revenues for selling
the shares in the stock market.
(d) ZMZS Ltd. with 12,000 fully paid-up shares of Tk. 100/- each had Tk. 600,000 in Reserve and
Surplus. It issued 1:3 bonus shares (one bonus share for each three shares held).
Required: Calculate the value per share before the bonus issue and value per share after the
bonus issue.
[Marks: (4+3+7+6) = 20]

= THE END =

Page 14 of 50
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL-I
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.
(a) Enumerate the various classification of costs.
(b) The controller of Maple International limited presented the following income statement for the year
ended June 30, 2008 to the board of directors:
BDT BDT
Sales 12,000,000
Cost of gods sold:
Direct materials 3,800,000
Director labor 2,900,000
Factory overhead 2,450,000 9,150,000
Gross profit 2,850,000
Commercial expenses:
Marketing expenses 1,350,000
Administrative expenses 1,000,000 2,350,000
Operating income 500,000
The board discussed the ratio of operating income to sales and decided that for the year ending June 30,
2009, an increase of at least 25% of the present profit is desirable. An expected sales volume increase of
20% will cause all cost except marketing and administrative expenses to increase accordingly. In addition
to this increase resulting from the volume change, costs are expected to increase as follows: direct
materials, 8%; direct labor, 10%; factory overhead, 3%, marketing expenses, 4%; administrative
expenses, 2%; The 3% increase in factory overhead applies to the variable factory overhead only. Fixed
overhead is considered to remain at the present level of Tk. 1,250,000.
Required:
Prepare a forecast income statement for the year ending June 30, 2009, incorporating all cost increases as well
as management’s goal for a higher operating income.
[Marks: (5+15) = 20]
Q. No. 2.
(a) What is the purpose of cost of production report?
(b) PCBL Company uses process costing in its two producing departments. The following information
pertains to Department-02 for December.
Normal spoilage is 5% of good output, Inspection and identification of spoilage take place at the 90%
stage of completion. Materials are added after inspection.
Department 02 received 14,000 units from Department 01 at a cost of Tk. 1,40,000.
Department 02 costs were Tk. 12,000 for materials and Tk. 89,250 for conversion costs.
A total of 8,000 units were completed and transferred to finished goods. At the end of the month 5,000
units were still in process, estimated to be 60% complete as to conversion costs.
Required:
Prepare a cost of production report for Department 02.
[Marks: (5+15) = 20]
Q. No. 3.
(a) Discuss the importance of good stores- keeping in an organization, what are the duties of a store keeper?
(b) M Ltd. produces a product which has a monthly demand of 4,000 units. The product requires a
component X which is purchased at Tk.20. For every finished product, one unit of component is required.
The ordering cost is Tk.120 per order and the holding cost is 10% p.a.

Page 15 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL-I
SUBJECT: 102-COST ACCOUNTING.
Q. No. 3. (Contd..)
You are required to calculate:
(i) EOQ
(ii) If the minimum lot size to be supplied is 4,000 units, what extra cost the company has to incur?
(iii) What is the minimum carrying cost the company has to incur?
[Marks: 5+ (5 ×3) = 20]
Q. No. 4.
Duncan Limited prepared the following budgeted and actual data.
Departments Budgeted data, 2008 Actual data, Oct 2008
Direct labor Factory overhead Direct labor Factory overhead
hours hours cost
Fixed Variable
BDT BDT BDT
Machining 22,000 12,840 14,400 2,130 3,586
Assembly 28,000 14,100 18,300 2,310 3,341
Tools & Supplies - 3,600 5,600 - 919
Materials Handling - 5,700 6,000 - 1,080
Factory overhead cost of Machining and Assembly departments includes service departments. The fixed cost of
the service department is apportioned to the producing departments on a 60:40 basis and the variable cost at a
predetermined rate on the basis of direct labor hour. Budgeted direct labor hours are based on normal capacity
utilization. Factory overhead is applied on the basis of direct labor hours.
Required:
(i) Compute the departmental factory overhead rates for the producing departments.
(ii) Compute the spending and idle capacity variances of producing and service departments for October.
[Marks: (10+10) = 20]
Q. No. 5.
(a) “In theory labor cost is a variable cost but in practice labor cost is fixed cost” Explain this statement in
context to Bangladesh perspective.
(b) The Mercantile Housing Ltd. is a house building concern that currently has four houses under
construction. Labor costs are assembled with the use of clock cards and time tickets. From the records,
the payroll clerk compiled the following data for the week ended on 7th July, 2009.
Employees Name Total Weekly Job Nos. and Hours
Clock hours
220 221 222 223
A 40 35 -- 5 --
B(Supervisor) 42 -- -- -- --
C 45 20 15 -- 10
D 40 -- -- 30 10
E(Indirect Labor) 40 -- -- -- --
All employees are paid Tk. 14.90 per hour except B who receives Tk. 20.10 per hour. The customer who is
having house no. 220 wanted construction completed two months ahead of its schedule completion date. The
Mercantile Construction agreed to the rush arrangement but required the customer to bear the overtime charges.
The only overtime spent on Job No. 220 this week was 3 hours of C’s time. All other overtime was due to
previous job slowdowns on account of weather.
Required:
(i) Prepare a statement showing the total amount of payroll and the total amount of take home by each
employee pay assuming 10% deduction for provident fund and 1% deduction for Group term insurance.
(ii) Journal entry for the payroll record & payment.
(iii) A distribution of the payroll to the various jobs and other appropriate accounts.

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


= THE END =

Page 16 of 50
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL-I
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) State the significance of TQM for Bangladeshi Firms.
(b) What are the problems of TQM in Bangladesh business environment & culture?
(c) How can these problems be solved?
[Marks: (6+6+4) = 16]
Q. No. 2.
(a) Differentiate between an organization chart and an organization manual.
(b) Discuss the process of developing an effective organization chart.
(c) Discuss the suitability and problems of matrix organizations.
[Marks: (4+7+5) = 16]
Q. No. 3.
(a) What is effective planning?
(b) Explain the different barriers to effective planning.
(c) Explain the logical steps in the planning process of an organization.
[Marks: (4+6+6) = 16]
Q. No. 4.
(a) How can you formulate strategies for your organization?
(b) Define and distinguish between different levels of strategies.
(c) Discuss some significant global strategies.
[Marks: (4+6+6) = 16]
Q. No. 5.
(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]

Two marks are reserved for neatness and relevance

Page 17 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL-I
SUBJECT: 103-MANAGEMENT AND MARKETING MANAGEMENT.

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

Q. No. 6.
(a) What do you understand by marketing management? Do you think that marketing and
marketing management denote same thing? Why?
(b) Discuss the salient features of marketing management.
[Marks: (8+8) = 16]
Q. No. 7.
(a) What is market segmentation?
(b) Explain the factors that should be considered for market segmentation.
(c) Explain the different bases of market segmentation.
[Marks: (5+5+6) = 16]
Q. No. 8.
(a) Define Marketing Report.
(b) How Marketing Report can assist to evaluate and control marketing and Research activities?
[Marks: (8+8) = 16]
Q. No. 9.
(a) What is strategic marketing planning?
(b) Explain the Boston Consulting Group (BCG) Matrix.
[Marks: (8+8) = 16]
Q. No. 10.
Write Short Notes on:
(a) Product Life Cycle;
(b) Marketing Mix;
(c) Customer Satisfaction;
(d) Consumer Behavior.
[Marks: (4 x 4) = 16]

Two marks are reserved for neatness and relevance.

= THE END =

Page 18 of 50
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – I
SUBJECT: 104. INFORMATION TECHNOLOGY.

Time: 2 hours 30 minutes Full Marks: 80


 Questions are of equal marks.
 Answer all 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 are Web services? Provide a brief example of how you might use a web services in
conducting e-commerce?
(b) What is cybermall? How is it different from an electronic exchange?
(c) What are the strategies for successful E-commerce?
[Marks: (5+5+6) = 16]

Q. No. 2.
(a) What is SQL? Write SQL statement to display the name and balance from account database.
(b) Name and describe the three most important SQL commands.
(c) What is Data Flow Diagram (DFD)? Describe the rules of constructing a DFD with figure.
[Marks: (5+5+6) = 16]

Q. No. 3.
Write short notes on:
(a) Virtual Drive.
(b) Digital Bangladesh.
(c) M-Commerce.
(d) Pivot Report.
[Marks: (4 x 4) = 16]

Q. No. 4.
(a) Discuss telecommunication system along with information technology and what are the main
functions of IT based telecommunication system.
(b) What are the telecommunication software and hardware?
[Marks: (10+6) = 16]

Q. No. 5.
(a) What is Electronic Payment System?
(b) Discuss briefly the computer application in Inventory Management System.
[Marks: (4+12) = 16]

= THE END =

Page 19 of 50
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – II
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.
(a) What is the basic difference between an operating lease and a capital lease from the view point
of the lease?
(b) BG Products Ltd. has a Branch at Chittagong. The ledger balances of the Branch for the year
ended 30 June 2010 were as follows:
Heads of account Taka
Interest Received 250,000
Purchases 900,000
Sales 3,000,000
Goods received from Home Office 1,400,000
Accounts payable 120,000
General expenses 40,000
Cash at Bank 330,000
Home Office Current Account 2,200,000
Machinery 1,000,000
Inventory, 1 July 2009 1,500,000
Accounts receivable 400,000
In addition, following information are available from Home Office:
(i) The Home Office sent goods to Branch Taka 100,000 on 30 June 2010, which the Branch
received on 3 July 2010.
(ii) Branch Furniture Account stood in Home Office books at 80,000.
(iii) Branch Current Account in Home Office books had a debit balance of Taka 2,300,000.
(iv) Closing Inventory was Taka 700,000.
Required:
(i) Prepare Income Statement and Balance Sheet in Branch books after depreciating furniture
by 5% and machinery by 10%.
(ii) Give the Branch Current Account in Home Office books after posting/incorporating
entries to that account.
[Marks: {5+(15+5)} = 25]
Q. No. 2.
(a) “Single Entry in fact is an admixture of single entry, Double entry an no entry” – Explain the
statement.
(b) Mr. X asked you to prepare an Income statement for the year ended on 31.12.2009 and a
Balance Sheet for the same date. He has kept no books of accounts but his system is as follows:
He keeps copies of all invoices in respect of credit sales and marks each copy with the date of
payment. He does not keep copies of cash memos but he informs you that all takings, both cash
and credit, are paid into the Bank, except that occasionally with holds certain sums, both for
personal use and for petty cash expenses, which he notes in a note book.

Page 20 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – II
SUBJECT: 201. ADVANCED FINANCIAL ACCOUNTING-I.
Q. No. 2. (Contd..)
Analysis of the Bank statement reveals the following:
Account Titles Tk.
Total amount paid into Bank 47,800
Expenditure:
Personal Drawings 3,000
Purchases 36,400
Salaries expense 2,500
Rent expense 1,200
Utility expense 350
Printing and stationery 250
Advertising expense 450
The cash at Bank at 31.12.2009 was Tk. 400. The personal drawing shown in the note book amounted
to Tk. 1,200 and for petty cash Tk. 500.
Scrutiny of the copy of invoices shows that Tk. 2,250 was paid into the bank during 2009 in respect of
sales during 2008 and that Tk. 4,675 is outstanding in respect of 2009 sales exclusive of four bills
totaling of Tk. 425 which have been marked irrecoverable.
Liabilities were:
31.12.2008 31.12.2009
Purchases 2,400 3,500
Rent expense 100 100
Utility expense 20 15
Advertising expense - 250
The stock at 31.12.2009 was Tk. 3,500 (at cost); but the trader has no record of stock on 31.12.2008.
He informs you, however, that he invariably sells his goods at cost plus 25%.
[Marks: (5+15) = 20]
Q. No. 3.
On 1 July 2010 Mr. SKS finds himself insolvent. His position was stated below:
Accounts Receivable (Good: Taka 100,000; Doubtful: Taka 305,000 estimated to produce Taka
200,000; Bad: Taka 100,000).
1,000 shares in P Ltd. (estimated to produce Taka 150,000) 250,000
Mining shares (estimated to realize Taka 760,000) 850,000
Loss through betting 150,000
Accounts payable on open accounts 900,000
Accounts payable holding a second charge on the Mining shares to the extent of Taka 300,000 350,000
Accounts payable holding a first charge on the Mining shares 400,000
Notes payable 50,000
Notes Receivable discounted (of which Taka 35,000 are likely to be discounted) 70,000
Rent, Rates, Taxes, Wages, etc. payable (of which Taka 25,000 are preferential) 30,000
Furniture (estimated to realize Taka 30,000) 40,000
Cash at Bank 1,000
Cash in hand 200
Inventories (estimated to realize Taka 300,000) 388,800
Notes Receivable (estimated to realize, Taka 70,000) 100,000
He started his business with a capital of Taka 600,000 on 1 July 2007 and the business resulted in a
profit of Taka 100,000 and Taka 75,000 for the first two years respectively and in a loss of Taka
50,000 for the third year, after allowing Taka 30,000 as interest on capital each year. Withdrawals for
the whole period amounted to Taka 260,000.
Required: Prepare a Deficiency Account and a Statement of Affairs of Mr. SKS.
[Marks: 20]

Page 21 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – II
SUBJECT: 201. ADVANCED FINANCIAL ACCOUNTING-I.

Q. No. 4.
(a) How to compute the profit of life assurance companies?
(b) Compute the amount of statutory reserve of a commercial bank from the under mentioned data:
Net profit before provision Tk. 1,00,000
Net profit before tax Tk. 75,500
Net profit after tax Tk. 55,500
(c) The following is the Trial Balance of Popular Life Assurance Company as at 31.12.2009:
Account Titles Tk. Account Titles Tk.
Cash in hand 5,200 Paid up capital 1,00,000
Cash at Bank 15,600 Premium 2,53,500
Bonus 92,000 Life Assurance Fund 33,91,390
(01.01.2009)
Annuities 25,000 Consideration for annuities 95,500
granted
Management expenses 1,02,000 Interest and Dividends 1,52,900
Claims paid 1,72,500 Profit on sale of investment 8,000
Agent’s Balance 4,600 General Reserve 1,50,000
Income tax on interest and 13,500 Fees and fines 910
dividends
Surrenders 24,500 Investment Fluctuation Fund 1,80,000
Bad debts 2,800 Sundry creditors 22,000
Free hold property 70,000 Bills payable 25,000
Outstanding premium 16,000
Outstanding interest and 27,500
dividends
Mortgage Loan 3,20,000
Loans on policies 1,12,000
Investment 33,50,000
Depreciation on Furniture 26,000 ________
Total 43,79,200 43,79,200
Adjustments:
(i) Unpaid claims – Tk. 25,000;
(ii) Commission payable to agents – Tk. 5,600;
(iii) Bonus used in reduction of premium – Tk. 3,000;
(iv) Advance premium – Tk. 2,500 and
(v) Transfer Tk. 20,000 to Investment Fluctuation Fund.
Required:
(i) Revenue Account; and
(ii) Balance Sheet after considering above Trial Balance and adjustments.
[Marks (4+4+12) = 20]
Q. No. 5.
(a) “The Accounting Profession has identified two main categories of accounting changes”. What
are those? Explain briefly why such changes are made.
(b) What are the permanent and temporary differences under accounting for deferred taxes? Give
example of each difference.
[Marks: (12+8) = 20]

= THE END =

Page 22 of 50
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – II
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) Powermann Ltd. manufactures and markets a single product. The following information is
available:
Tk. Per unit
Materials 8.00
Conversion costs (variable) 6.00
Dealer’s Margin 2.00
Selling price 20.00
Fixed costs: Tk.250,000
Present sales: 80,000 units
Capacity utilization: 60%
There is acute competition. Extra efforts are necessary to sell. Suggestions have been made for
increasing sales: (i) by reducing sales price by 5%; and (ii) by increasing dealer’s margin by
25% over the existing rate.
Required: Which of the two suggestions would you recommend if the company desires to
maintain the present profit? Give reasons.
(b) A company manufactures 2,40,000 units per annum of product X at normal capacity with unit
cost as under:
Tk.
Direct materials 7
Direct labour 2
Variable overheads 3
Fixed manufacturing overheads 4
Fixed selling and administrative overheads 4
Variable selling and administrative overheads 1
Selling price per unit 21
During the next quarter only 10,000 units can be produced and sold. If the plant is shut down,
fixed manufacturing expenses can be reduced to Tk.70,000 at an additional cost of Tk.20,000.
When the plant is operating, the fixed overheads are incurred at uniform rate on time basis.
Required: As Management Accountant of the company, write a letter to the Managing
Director giving your opinion on the alternatives, supported by data.
[Marks: (10+10) = 20]
Q. No. 2.
(a) The Eastern Computer Company is a manufacturer of video conferencing products to meet
marketing projection regularly and specialized entries are produced after an order is received.
Maintaining the video-conferencing equipment is an important area of customer satisfaction.
With the recent downturn in the computer industry the video-conferencing segment has suffered
leading to decline in the Eastern’s financial performance. The following income statement
shows the results for the year ending December 31, 2003.

Page 23 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – II
SUBJECT: 202. MANAGEMENT ACCOUNTING.
Q. No. 2. (Contd..)
The Eastern Computer Company
Income Statement
For the year ended December 31, 2003
Taka in ‘000’
Revenues Taka Taka
Video-conferencing equipment 6,000
Maintenance contracts 1,800 7,800
Less: Cost of goods sold 4,600
Gross profit 3,200
Less: Operating costs:
Marketing 600
Distribution 150
Customer maintenance 1,000
Administrative 900
Total operating cost 2,650
Operating income 550
The controller of the company is in the process of preparing the budget for the year ended
December 31, 2004.
(1) Selling price of equipment is expected to increase by 10%. As the economic recovery
begins the selling price of each maintenance contract is unchanged.
(2) Equipment sales in units are expected to increase by 60% with a corresponding 6%
growth in units of maintenance contracts.
(3) The cost of each equipment sold is expected to increase by 3% to pay necessary
technology and quality improvements.
(4) Marketing costs are expected to increase by Tk.250,000 but the administrative costs are
expected to be the same as for 2003.
(5) Distribution costs vary in proportion to the number of units equipment sold.
(6) Two maintenance technicians are to be added at a total cost of Tk.130,000 which covers
salaries and related travel costs. The objective is to improve customer service and shorten
response time.
(7) There is no beginning or ending inventory of equipment.
Required: Prepare a budgeted Income Statement for the year ended December 31, 2004.
(b) The Mathematical Engineering Co. Ltd. manufactures a range of products. While compiling the
budget for the next financial year, the management realizes that a decision has to be made
concerning the method of manufacture of a product, a precision-made blade. The blade is
designed to sell for Tk.1 each. A choice must be made between three alternative production
processes and the management seeks to find the most profitable method.
The following information relates to the three processes A, B and C:
Processes A B C
Variable cost per product Tk.0.80 Tk.0.85 Tk.0.90
Fixed cost of process Tk.95,000 Tk.60,000 Tk.37,500
Maximum production in any process is one million blades.
Required:
(i) Determine the range of sales volumes for which each process is the most profitable.
(ii) Enumerate other matters which would be taken into account before deciding which
process to use.
[Marks: (10+6+4) = 20]

Page 24 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – II
SUBJECT: 202. MANAGEMENT ACCOUNTING.
Q. No. 3.
The Keya Company operates a simple chemical process to reduce a single basic material in to
products X, Y and Z (all three products being separated simultaneously at a single split-off point).
Products X and Y are ready for sale immediately upon split-off without further processing or any
other additional cost. Product Z however is processed further before being sold. There is no available
market price for Z at the split-off point.
The selling prices quoted below have not changed for three years and nor future changes are foreseen.
During 2003, the selling prices of the items and the total quantity sold were as follows:
Product Quantity Price
X 120 Tons Tk.1,500 per ton
Y 340 Tons Tk.1,000 per ton
Z 475 Tons Tk.700 per ton
There were no beginning inventories of X, Y or Z.
The total joint manufacturing costs for the year were Tk.4,00,000. An additional Tk.2,00,000 was
spent in order to finish product Z.
At the end of the year, the following inventories of completed units were in hand: X-180 tons, Y-60
tons, Z-25 tons. There was no beginning or ending work in process.
Required: What will be the cost of inventories of X, Y and Z for balance sheet purposes and the
cost of goods sold for income statement purposes as of December 31, 2003 using:
(a) Estimated net realizable value joint cost allocation method;
(b) Constant gross margin percentage cost allocation method.
[Marks: (10+10) = 20]
Q. No. 4.
(a) Division RSPD has the following financial performance:
Operating profit Tk.40,000;
Operating assets Tk.150,000;
Cost of borrowing 10%.
Required: Would the division wish to accept a new possible investment costing Tk.10,000
which would earn profit of Tk.2,000 per annum if the evaluation was on the
basis of (i) Return on Investment (ROI) and (ii) Residual Income (RI)?
(b) The operating statement of Transcend Ltd. exhibited the following results for the month of June
2008:
Taka Taka
Net Sales 1,00,000
Less: Cost of goods sold 60,000
Gross Profit 40,000
Less: Distribution Cost 20,000
Administration Cost 10,000 30,000
Net profit 10,000
The breakdown of the various costs into fixed and variable is as follows:
Fixed Variable
Taka Taka
Cost of goods sold 20,000 40,000
Distribution Cost 15,000 5,000
Administration Cost 10,000
Required: From the above information ascertain:
(i) What the Break Even Point in value for June 2008 was?
(ii) What effect on profit would be if variables expenses come to be 50% of the sales?
(iii) What the effect on the profit would be, if sales increased by 10%?
[Marks: (5+5+5+5) = 20]

Page 25 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – II
SUBJECT: 202. MANAGEMENT ACCOUNTING.

Q. No. 5.
(a) A company manufactures and markets three products A, B, C. All the three products are made
from the same set of machines. Production is limited by machine capacity. From data given
below indicate priorities for products A, B and C with a view to maximize profits:

Product - A Product - B Product - C


Tk. Tk. Tk.
Raw materials cost (per unit) 2.25 3.25 4.25
Direct labour (per unit) 0.50 0.50 0.50
Other variables cost (per unit) 0.30 0.45 0.71
Selling price (per unit) 5.00 6.00 7.00
Standard machine time required (per unit) 39 minutes 20 minutes 28 minutes
In the following year, the company faces extreme shortage of raw materials. It is noted that
3 kg, 4 kg, and 5 kg of raw materials are required to produce one unit of A, B and C
respectively.
Required: How would product priorities change?
(b) Fortune Company has determined that an investment of Tk. 750,000 is needed in order to
produce and market 25,000 units of a particular new product each year. The company estimates
that variable costs associated with the product will be Tk. 24 per unit, and that fixed costs will
total Tk. 300,000 per year.
Required: Compute the markup percentage for the new product assuming that the
company uses the contribution approach to costing, and has a 20% desired
rate of return on investment.
[Marks: (10+10) = 20]

= THE END =

Page 26 of 50
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – II
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.
What are the basic requirements under sections 138 & 140 of the Negotiable Instruments Act, 1881 against a
dishonored cheque?
[Marks: 20]
Q. No. 2.
Define and distinguish between an Agent and the Principal. Under what circumstances an ‘agency’ may be
terminated.
[Marks: 20]
Q. No. 3.
(a) What do you mean by ‘Caveat Emptor’? Discuss the exceptions of this principal.
(b) Why determination of time is necessary for transfer of goods?
(c) Discuss the rights of unpaid seller.
[Marks: (7+6+7) = 20]
Q. No. 4.
(a) Discuss the different types or methods of Arbitration.
(b) Describe the provisions related to registration under Trade Mark Act, 1940.
(c) Describe the law related to application for and grant of Patent as per Patent and Design Act, 1911.
(d) Mention in what type of works copy right is applicable as per Copy Right Act, 2000.
[Marks: (5+5+5+5) = 20]
Q. No. 5.
Write short notes on the followings (any five):
(a) Quasi Contract, (b) Copy Right Board, (c) Negotiable Instruments,
(d) Bill of Lading, (e) Common Carrier, (g) Sub-Agent & Co-Agent.
[Marks: (5 x 4) = 20]

GROUP – B : INDUSTRIAL LAW


Q. No. 6.
(a) Describe the grievance handing procedures as laid in the Labour Act, 2006.
(b) Discuss the right and liability for payment of maternity benefit. How the amount of maternity benefit
calculated?
(c) In which places is the employment to work of a woman worker prohibited under the Bangladesh Labour
Act, 2006?
[Marks: (6+7+7) = 20]
Q. No. 7.
(a) What are the procedures of retrenchment? Is an employer under any obligation has to re-employ a
retrenched worker?
(b) Discuss the provisions of providing drinking water as per Bangladesh Labour Act, 2006.
(c) Define Trade Union and describe its objectives.
[Marks: (8+6+6) = 20]
Q. No. 8.
Describe the kinds of amenities which the factory authorities are bound to provide for the welfare of the workers
as per the provision of the Bangladesh Labour Act, 2006.
[Marks: 20]
Q. No. 9.
State the provisions of law with regard to safety as enshrined in the Labour Act, 2006.
[Marks: 20]
Q. No. 10.
State the procedures for ‘settlement of an industrial dispute’.
[Marks: 20]

Page 27 of 50
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – II
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.
Differentiate the following terms (as per Income Tax Ordinance, 1984):
(a) Assessment Year, Income year, Accounting year and Fiscal year;
(b) Salary and Profits in lieu of salary;
(c) Resident and Non Resident;
(d) Partner and Person; and
(e) Normal assessment and Universal self assessment.
[Marks: (5 x 4) = 20]

Q. No. 2.
Briefly explain the tax implications in the following cases:
(a) Non-Governmental Organizations (NGO);
(b) Pensioner’s savings certificate and family savings certificate;
(c) Share Issue at Premium;
(d) CSR activities; and
(e) Real Estate and Land Development Business.
[Marks: (5 × 2) = 10]

Q. No. 3.
Mr. Tiwary is a CEO of a multinational company. He had the following income and receipts during
the year ended on 30th June, 2010:
1. Basic pay @Tk.60,000/- per month.
2. Free furnished accommodation for which the company pays rents @Tk.30,000/- per month to
the landowner of the house.
3. Entertainment allowance Tk.10,000/- per month.
4. Medical allowance @Tk.7.5% of the basic.
5. Employer’s contribution to the recognized provident fund @10% of the basic.
6. Received festival allowance equivalent to two months’ salary and incentive bonus equivalent to
one month’s salary.
Income from House Property:-
Mr. Tiwary owns a 4 storied building each floor measuring 2,000 sft. He lives in the third floor of the
building and the remaining floors were let out @ Tk.20/- per sft. The building was constructed by
taking loan from a Bank. Monthly installment for repayment of loan was Tk.55,000/-. Mr. Tiwary
received one year’s rent as advance which are to be adjusted in two years and Tk.50,000/- as security
money.
Other expenses relating to the building are-
Municipal Tax - Tk.15,000/- per quarter.
Land rent - Tk.2,700/-
Salary of 2 Guards - Tk.60,000/-
Salary of electrician and plumber - Tk.30,000/-

Page 28 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – II
SUBJECT: 204. TAXATION.
Q. No. 3. (Contd..)

Other income –
Interest from FDR - Tk.3,90,000/- (Gross).
Tk.1,25,000/- received by leasing agricultural lands.
Dividend received from listed companies Tk.2,50,000/- (Gross).
Income from an unregistered firm Tk.3,50,000/-.
Investments –
Purchased Bangladesh Sanchay Patra for Tk.5,00,000/-
Paid LIP on assured sum of Tk.10,00,000/- − Tk.1,30,000/-
Paid advance Tax Tk.75,000/-
From the above information compute total income and tax payable by Mr. Tiwary.
[Marks: 20]
Q. No. 4.
(a) What do you mean by Advance Payment of Taxes? What is the income limit for payment of
advance taxes? When interest is payable on the deficiency in payment of advance taxes and for
what period and from when?
(b) Mr. Kayes filed his return for the assessment year 2009-2010 as per provision of section 82BB
showing total income at Tk.15,00,000/-. During the preceding year the disclosed income was
Tk.24,00,000/-. The entire income was Directors remuneration from a limited company.
Required taxes was deducted at sources. Mr. Kayes also declared receipt of Tk.10,00,000/- in
his wealth statement, as loan from his elder brother. As the assessee declared lesser income
from the previous year and showed loan of Tk.10,00,000/-, so as per direction of the NBR the
case is selected for Audit. Accordingly the DCT issued notices u/s 83(1) and 79 to make
assessment under normal procedure. If you are entrusted to advise the assessee, then how will
you proceed to settle the case?
(c) State in brief the provision of the following sections newly inserted by the Finance Act, 2010-
(i) 19C;
(ii) 53L;
(iii) 53M;
(iv) 184E.
[Marks: (3 x 5) = 15]
Q. No. 5.
(a) Distinguish between Value Added Tax and Turnover Tax as per Value Added Tax Act, 1991.
(b) What is Truncated Base VAT? Mention five services where this type of VAT is levied.
(c) Discuss the procedure and time of paying VAT U/S 6 of VAT Act, 1991.
(d) ‘VAT is an Accounts and Audit based Taxation System’. Discuss.
[Marks: (3+3+4+5) = 15]

Q. No. 6.
(a) Givenchy Ltd imports A4 size paper from Singapore. Invoice Value is $5000(C&F),Assessable
Value is $6000, Exchange rate is 1$=70TK, Customs Duty is 25%, Supplementary Duty is
35%, Regulatory Duty is 5%, VAT is 15%, AIT is 3%, 1% handling Charge and 1% is landing
Charge. You have to calculate total tax and other charges liabilities at the import stage.
(b) What does PSI stand for? Do you think PSI system is necessary for the Government, why?
(c) Why is Baggage rule necessary? Mention at least five consumable items which are tax free
under baggage rule.
(d) Discuss Bill of Entry as per Section 79 of The Customs Act, 1969.
[Marks: (8+4+4+4) = 20]

= THE END =

Page 29 of 50
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – III
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) Describe professional “Code of Conduct” with regard to “Competence”, “Confidentiality”,
“Integrity” and “Objectivity”.
(b) The accounting for a Governmental entity’s enterprise fund in many respects is similar to the
accounting for a business enterprise; yet there are a member of differences between the two
types of accounting. Identify at least three of the differences.
(c) What factors create a foreign exchange gain on a foreign currency transaction? \what factors
create a foreign exchange loss?
(d) Tamim Ltd. has a capital base of Tk.20,00,000 and it earned profits of the amount of
Tk.2,00,000. The return on investment (ROI) of the particulars industry to which the company
belongs is 12%. If the services of a particular executive are acquired, it is expected that the
profits will increase by Tk.60,000 over and above the target profit.

Compute the maximum amount the Tamim Ltd. would be prepared to bid for the executive
under opportunity cost method of Human Resource Accounting – HRA.
[Marks: (5 x 4) = 20]
Q. No. 2.
M/s. Dhaka Retail Store Ltd. bills merchandise to Khulna Branch at Cost and that Khulna Branch
maintains complete accounting records and prepares financial statements. Both the head office and the
branch office use the perpetual inventory system. Equipment used at the branch is carried in the head
office accounting records. Certain expenses, such as advertising and insurance, incurred by the head
office on behalf of the branch, are billed to the branch. Transactions and events during 2009 are
summarized below:
(a) Cash of Tk. 1,000 was forwarded by the head office to Khulna Branch.
(b) Merchandise with a head office cost of Tk. 60,000 was shipped by the head office to Khulna
Branch.
(c) Equipment was acquired by Khulna Branch for Tk. 500, to be carried by the head office
accounting records.
(d) Credit sales by Khulna Branch amounted to Tk. 80,000; the branch’s cost of the merchandise
sold was Tk. 45,000.
(e) Collections of trade accounts receivable by Khulna Branch amounted to Tk. 62,000.
(f) Payments for operating expenses by Khulna Branch totaled Tk. 20,000.
(g) Cash of Tk. 37,500 was remitted by Khulna Branch to the head office.
(h) Operating expenses incurred by the head office and charged to Khulna Branch Tk. 3,000.
(i) Head office own activities:
(i) Sales Tk. 4,00,000
(ii) Cost of goods sold Tk. 2,35,000
(iii) Operating expenses Tk. 90,000.
Required:
(a) Journal entries in Head office books and in Branch office books upto (h) above.
(b) Branch account in Head office books and Head office account in Branch office books
(balancing form).
(c) Income statement in Head office.
[Marks: (10+5+5) = 20]

Page 30 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – III
SUBJECT: 301. ADVANCED FINANCIAL ACCOUNTING-II.

Q. No. 3.
On January 1, 2010, Rajshahi Company acquired 70% of the outstanding common shares of Bogra
Company for Tk. 88,500 in cash. On that date Bogra Company had common stock of Tk.50,000 and
retained earning of Tk.45,000. At acquisition, the identifiable assets and liabilities of Bogra Company
had fair values that were equal to book value except for plant assets, which had fair values Tk.20,000
greater than book value; inventory which had a fair value Tk.8,000 less than book value; and bonds
payable, which had fair values Tk.10,000 greater than book value. The plant assets had a remaining
useful life of 8 years on January 1, 2010, and the bonds payable mature on December 31, 2008. Both
companies amortize on a straight line basis.
Financial statements for the 2006 year are as follows:
Income Statement Rajshahi Company Bogra Company
Sales Tk.4,00,000 Tk.1,00,000
Rent revenue 15,000 ---
Investment revenue 765 ---
4,15,765 1,00,000
Cost of sales 2,00,000 45,000
Depreciation 55,000 20,000
Interest expenses 32,000 7,700
Other expenses 28,000 17,300
3,15,000 90,000
Net income 1,00,765 10,000
Retained Earning Statement
Balance, January-1 4,57,225 1,35,000
Net income 1,00,765 10,000
5,57,990 1,45,000
Dividends 30,000 5,000
Balance, December-31 5,27,990 1,40,000
Balance Sheets
Cash 11,500 10,000
Accounts Receivable 60,000 25,000
Inventory 2,00,000 40,000
Investment in Bogra-equity 1,42,990 ---
Plant and equipment 12,00,000 4,70,000
Accumulated depreciations (3,00,000) (2,20,000)
13,14,490 3,25,000
Accounts payable 86,500 25,000
Bonds payable 4,00,000 1,10,000
Common stock 3,00,000 50,000
Retained earnings 5,27,990 1,40,000
13,14,490 3,25,000
Additional information:
In 2002, a goodwill impairment loss of Tk.7,000 was recorded subsequent goodwill testing yielded no
further evidence of impairment until 2006, when a substantial decline in the fair value of Bogra
Company occurred and management decided to reflect an impairment loss of Tk.5,360 in the year’s
consolidated statements.

Page 31 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – III
SUBJECT: 301. ADVANCED FINANCIAL ACCOUNTING-II.
Q. No. 3. (Contd..)
On December 31, 2006, Bogra Company owes Rajshahi Company Tk.9,000.
Required:
(a) Prepare the following 2006 consolidated statements (Direct approach):
(i) Income statement;
(ii) Retained earning statement;
(iii) Balance sheet.
(b) Prepare a schedule of the 2006 changes in non-controlling interest.
[Marks: {(8+3+6)+3} = 20]
Q. No. 4.
UNSOUND Ltd. went into voluntary liquidation with liabilities amounting to Tk.9,00,000 and the
assets eventually realized Tk.53,40,000, the capital of the company consisted of 30,000 preference
shares of Tk.100 each of which Tk.70 per share was called and paid up. Holders of 4/5 of the total
number of preference shares had however paid up the full share value of Tk.100 in advance of calls.
There were also 30,000 ordinary shares of Tk.100 each on which 9/10 of the share amount had been
called. Holders of 1/5 of the total number of ordinary shares had, however, only paid up Tk.80 per
share, while the holders of 2/5 of the total number of ordinary shares had paid up the full Tk.100 in
advance of calls on the assumption that preference shares have preference only to dividends.
Show in the form of liquidators’ account all the receipts and payments. How would you divide the
available balance among the shareholders assuming that the cost of the winding an amounts to
Tk.60,000 and that calls in appears are duly collected?
[Marks: 20]
Q. No. 5.
(a) You are given the following information relating to the National Income Account:
Taka in billion
Undistributed corporate profits 122.50
Personal Taxes 140.00
Interest paid by consumer 14.00
Net private domestic investment 175.00
Personal consumption expenditures 875.00
Social security contributions 52.50
Corporate income taxes 140.00
Transfer payments 77.00
Indirect business taxes 70.00
Export 84.00
Government purchase of goods & services 315.00
Gross private domestic investment 262.50
Imports 77.00
Required: Compute the following:
(i) GNP & NNP, (ii) NI, (iii) Personal Income (Household Income), (iv) Disposable Personal
Income, (v) Personal Savings.
(b) The GNP of an economy in a given year is Tk.5,000, of which Tk.1,000 consists of capital
goods and the rest of consumption goods. The labour cost of output is Tk.3,500 and Tk.400 is
paid in interest. Depreciation is Tk.300 and the remainder is taken as profit. Three fourth of the
profit is distributed in dividends.
Prepare a set of national product accounts (production accounts, household account, capital
accounts, etc.) for the above transactions.
[Marks: (10+10) = 20]
= THE END =

Page 32 of 50
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – III
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) What is the purpose of a cost of production report?
(b) Distinguish between normal (unavoidable) spoilage and abnormal (avoidable) spoilage.
(c) Explain how normal and abnormal spoilage should be reported for management purpose.
(d) Padma Incorporation produces antibiotic product in its three producing departments. The
following quantitative and cost data have been made available:
Department
Blending Testing Terminal
Production data:
Started into production 8000kg 5400kg 3200kg
Transferred to next dept. 5400 3200 ----
Transferred to finished goods ---- ---- 2100
In process(100% materials, 1/3 labor and overhead) 2400 1800 ----
In process(100% materials, 2/3 labor and overhead) ---- ---- 900
Cost charged to departments:
Materials Tk.20670 Tk.7980 Tk.14400
Labor Tk.11160 Tk.5016 Tk.11520
Factory overhead Tk.5580 Tk.2280 Tk.5040
Total Tk.37410 Tk.15276 Tk.30960

Lost units are normal and apply to all production.


Required:
(i) Prepare a quantity schedule for each of the three departments.
(ii) Prepare an equivalent production schedule for each of the three departments
(iii) Compute the unit cost of factory overhead in the Blending Department.
(iv) Compute the lost unit cost adjustment in the Testing Department if the unit cost
transferred in from the Blending Department is Tk.5.35
[Marks: {2+2+2+(4+4+3+3)} = 20]

Q.No.2.
(a) Explain how materials, labor, and factory overhead standards are set, including the types of
people involved and the method used.
(b) How does the calculation of a mix variance differ from that of quantity variance?
(c) Padma Corporatin uses a standard cost system. Cement is produced by mixing two major
components. A(Lime) and B(Clay), with water and by adding a third component, C
quantitatively insignificant.

Page 33 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – III
SUBJECT: 302. ADVANCED COST ACCOUNTING.
Q.No.2. (Contd..)
Material standards and costs for the production of 100 tons of output are:

Tons Cost Percent of Input Quantity Amount


Material A 55 Tk.43.00 50% Tk.2365
Material B 44 Tk.35.00 40% Tk.1540
Material C 11 Tk.25.00 10% Tk.275
Input 110 100% Tk.4180 =Tk.38.00 per ton
Output 100 Tk.4180 =Tk.41.80 per ton
The monthly factory overhead budget for a normal capacity level of 16500 direct labor hours is
as follows:
Fixed Overhead Variable Overhead
Plant Manager Tk.2000 -----
Supervisors Tk.1800 ------
Indirect labor Tk.2220 Tk.810
Indirect supplies Tk.850 Tk.2040
Power and light Tk.300 Tk.2200
Water Tk.480 Tk.2000
Repairs and maintenance Tk.500 Tk.1200
Insurance Tk.450 ------
Depreciation-Production facilities Tk.3775
Total Tk.12375 Tk.8250
To convert 110 tons of materials into 100 tons of finished cement requires 500 direct labor
hours at Tk.7.50 per hour or Tk.37.50 per ton. Factory overhead is applied on a direct labor
basis.
In producing 3234 tons of finished cement in April, the following costs were incurred:
Direct labor 15800 hours @ Tk.7.95
Fixed factory overhead Tk.11075
Variable factory overhead Tk.8490

Materials Purchased Materials Requisitioned Quantity


Quantity Cost per Ton
Material A 2000 tons Tk.44 1870 tons
Material B 1200 tons Tk.37 1100 tons
Material C 500 tons Tk.24 440 tons

There were no inventories of materials or work in process at the beginning of April.


The materials price variance is recognized at the time of purchase.
Required:
(i) Compute the materials price, mix, and yield variances.
(ii) Compute the direct labor rate, efficiency, and yield variances.
(iii) Compute the factory overhead spending, idle capacity, efficiency, and yield variance.
[Marks: {4+4+(3 x 4)} = 20]

Page 34 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – III
SUBJECT: 302. ADVANCED COST ACCOUNTING.

Q.No.3.
(a) Under what circumstances would you expect the volume variance to be favorable?
Unfavorable? Does the variance measure deviations in spending for fixed overhead items?
Explain.
(b) Tutul Company records incoming materials at invoice price less cash discounts plus applied
receiving and handling cost. For product Z, the following data are available:
Budgeted for the month Actual cost for the month
Freight in and cartage in Tk.1500 Tk.1580
Purchasing Department cost Tk.4800 Tk.4500
Receiving Department cost Tk.3900 Tk.4200
Storage and handling Tk.4200 Tk.3800
Testing, spoilage, and rejects Tk.2600 Tk.3120
Total Tk.17000 Tk.17200
The purchasing budget shows estimated net purchases of Tk.136000 for the month actual
invoices net of discounts total Tk.141500 for the month.
Required:
(i) Determine the applied acquisition costing rate for the month.
(ii) Determine the amount of applied cost added to materials purchased during the month
(iii) Indicate the possible disposition to be made of the variance.
(c) Star Company processes an ore in Department 1, from which comes three, L, W and X. Product
L is processed further in Department 2. Product W is sold without further processing. Product X
is considered a by-product and is processed further in Department 3. Costs in Department 1 are
Tk.8,00,000, Department 2 costs are Tk.10,00,000, and Department 3 costs are Tk.50,000.
Processing 6,00,000 pounds in Department 1 results in 50,000 pounds of product L, 3,00,000
pounds of product W, and 1,00,000 pounds of product X.
Product L sells for Tk.10 per pound. Product W sells for Tk.2 per pound. Product X sells for
Tk.3 per pound.
The company wants to make a gross margin of 10% of revenues on product X and needs to
allow 25% of revenues for marketing costs on product X.
(1) Compute unit costs per pound for products L, W and X, treating X as a by product. Use
the NRV method for allocating joint costs. Deduct the NRV of the by product produced
from the joint cost of products L and W.
(2) Compute unit costs per pound for products L, W and X, treating all three as joint products
and allocating costs by the NRV method.
[Marks: (5+5+10) = 20]
Q. No. 4.
(a) What are the objectives of profit analysis by sales territories?
(b) How should marketing expenses be classified in order to find the cost of selling jobs or
products?
(c) The feasibility of allocating marketing and administrative expenses to products or amount-of-
order classes for managerial purpose has been considered by Padma Corporation. It is apparent
that some cost can be assigned equitably to these classifications, while others cannot. The
company’s cost analyst proposed the following bases for apportionment:

Page 35 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – III
SUBJECT: 302. ADVANCED COST ACCOUNTING.
Q.No.4. (Contd..)
Expenses Type of Analysis
By Products By Amount of Order
Sales salaries Not allocated Sales Taka times number of
customers in class
Sales travel Not allocated Number of customers in class
Sales office Not allocated Number of customers in class
Sales commissions Direct Direct
Credit management Volume of sales in Taka Numbers of customers in class
Packing and shipping Weight times number of units Weight times number of units
Warehousing Weight times number of units Weight times number of units
Advertising Not allocated Not allocated
Bookkeeping and billing Volume of sales in dollars Number of orders
General marketing and Not allocated Not allocated
administrative
From books, records, and other sources, the following data have been complied:
Amount of Number of Number Cost of Total Sales Product Sales
order customers of orders Goods Sold
X Y Z
Under Tk.25 1000 6000 Tk.59000 Tk.100000 Tk.35000 Tk.40000 Tk.25000
Tk.26-Tk.100 250 4000 Tk.177000 Tk.300000 Tk.105000 Tk.120000 Tk.75000
Tk.101-Tk.200 100 4000 Tk.354000 Tk.600000 Tk.210000 Tk.240000 Tk.150000
Over Tk.200 50 1000 Tk.236000 Tk.400000 Tk.140000 Tk.160000 Tk.100000
Total 1400 15000 Tk.826000 Tk.1400000 Tk.490000 Tk.560000 Tk.350000
Other data:
Product Weight Cost of Goods Sold Units Sold
X 1kg Tk.252000 98000
Y 3kg Tk.294000 70000
Z 2kg Tk.280000 175000
Marketing and administrative expenses for the year:
Sales salaries Tk.38250
Sales travel Tk.28000
Sales office (variable) Tk.15400
Sales commission (5%) Tk.70000
Credit management Tk.14000
Packing and Shipping Tk.32900
Warehousing Tk.16450
Advertising Tk.150000
Bookkeeping and billing Tk.42000
General marketing and administrative Tk.90000
Total Tk.497000
Required:
(i) Prepare a product income statement showing the allocation of marketing and
administrative expenses to each product.
(ii) Prepare an income statement showing the allocation of marketing and administrative
expenses to each order class.
(For both requirements, round off all base computations to five decimal places and all
allocated amounts to the nearest dollar.)
[Marks: {3+3+ (7+7)} = 20]

Page 36 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – III
SUBJECT: 302. ADVANCED COST ACCOUNTING.

Q. No. 5.
(a) What is target costing? How do target costs enter into the pricing decision?
(b) Falcon Incorporation is considering the introduction of new product. To determine a target
selling price, the company has gathered the following information:
Number of units to be produced and sold each year Tk.14000
Unit product cost Tk.25
Projected annual selling, general, and administrative expenses Tk.50000
Estimated investment required by the company Tk.750000
Desired return on investment (ROI) Tk.12%
Required: The Company uses the absorption costing approach to cost-plus pricing.
(i) Compute the markup the company will have to use to achieve the desired ROI.
(ii) Compute the target selling price per unit.
(c) The Reliable TV Repair shop had budgeted the following costs for next year:
Repair technicians:
Wages Tk.120000
Fringe benefits Tk.30000
Selling, administrative and other Cots of the repairs operation Tk.90000
Materials:
Cost of ordering, handling, and storing parts Tk.20% of invoice cost.
In total, the company expects 10000 hours of repair time it can bill to customers. According to
competitive conditions, the company believes it should aim for a profit of Tk.6 per hour of
repair time. The competitive markup on materials are 40% of invoice cost. The company uses
time and material pricing.
Required:
(i) Compute the time rate and the material loading charge that would be used of bill jobs.
(ii) One of the Company’s repair technicians has just completed a repair job that required 2.5
hours of time and Tk.80 in parts (Invoice cost). Compute the amount that would be billed
for the job.
[Marks: {4+(4x2)+(4x2)} = 20]

= THE END =

Page 37 of 50
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – III
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.
Briefly comment on the following statements:
(a) Minimum five persons are required for formation of a public company.
(b) All listed companies are public companies but not the vice-versa.
(c) Acts done outside the Objects and outside the Articles of the company are ultra-vires.
(d) A company meeting must be duly convened and properly constituted.
[Marks: (4x5) = 20]

Q. No. 2.
(a) What do you mean by Statutory Meeting? When does a company hold statutory meeting?
(b) What are the contents of statutory meeting?
(c) What are differences between Statutory Meeting and Extra Ordinary General Meeting?
[Marks (4+8+8) = 20]

Q. No. 3.
(a) Whether is the renewal of every company a must in every year? If it is not done, what are the
penalties for the failure?
(b) What are the documents to be submitted to RJSC (Registrar of Joint Stock Companies) and SEC
(Securities and Exchange Commission) every year as per present rules and regulations?
(c) Whether can RJSC and SEC take any action against the Directors for the loss of the company?
[Marks (6+6+8) = 20]

Q. No. 4.
(a) How and why is a company dissolved?
(b) Explain the steps to be taken for the dissolution of a company by the Government.
(c) What are the preferential payments in the case of dissolution of a company?
[Marks (6+6+8) = 20]

Q. No. 5.
Distinguish between the following:
(a) Chairman and Managing Director.
(b) Ordinary business and Special business.
(c) Fixed charge and Floating charge.
(d) Minutes and Resolution.
(e) Member and Shareholder.
[Marks: (5 x 4) = 20]

Page 38 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – III
SUBJECT: 303. CORPORATE LAWS, GOVERNANCE & SECRETARIAL PRACTICES.

PART – B: CORPORATE GOVERNANCE & SECRETARIAL PRACTICES

Q. No. 6.
(a) What are the main functions of DSE (Dhaka Stock Exchange) and CSE (Chittagong Stock
Exchange)?
(b) How does SEC control these organizations?
(c) Discuss the formation and activities of the SEC. Do you think that functions of SEC should be
more effective for the development of capital market in Bangladesh?
[Marks (8+6+6) = 20]

Q. No. 7.
Advise the Chairman of your Company on the following:
(a) One of the Directors of the Board submitted his resignation to the Chairman.
(b) The Managing Director’s office is going to be vacant on September 20, 2010.
(c) The Company wants to pay Interim Dividend from its past profits.
(d) Mr. Smith, Director of a listed company wants to visit UK for six months and the Board of
Directors wants to appoint an Alternate Director in his place.
[Marks: (4x5) = 20]

Q. No. 8.
(a) A Company Secretary is an important person in the management of a Public Limited Company.
Discuss.
(b) What are the qualifications and experience of a Company Secretary?
(c) Whether are Company Secretaries of Bangladesh discharging their duties properly in respect of
running their respective companies for those Cost Audit order has been issued by the
Government? Explain.
[Marks (6+6+8) = 20]

= THE END =

Page 39 of 50
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – III
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.
Briefly explain:
(a) The role of audit committee for strengthening the credibility of the audit report and audited
financial statements.
(b) The measures which have been or may be taken by the Securities & Exchange Commission
(SEC) for enhancing the “current status” of corporate governance in the country.
[Marks: (4+6) = 10]

Q. No. 2.
(a) How does a review engagement differ from an assurance engagement?
(b) Describe the auditor’s responsibilities with regard to
(i) Subsequent events
(ii) Going concern status of companies.
[Marks: (5+10) = 15]

Q. No. 3.
There are a number of different methods of obtaining audit evidence. Methods include:
(i) Analytical procedures (ii) Audit sampling (iii) Test of controls (iv) Details testing of transactions
and balances (v) CAATs.
Explain the advantages and disadvantages of each of the five methods.
[Marks: (3 x 5) = 15]

Q. No. 4.
(a) “Audit documentation is the integral part of audit”. Do you agree with the statement? Why?
(b) In what circumstances an auditor may disclose confidential information about a client?
(c) What is the difference between Materiality and Tolerable error?
[Marks: (5+5+5) = 15]

Q. No. 5.
(a) Explain the meaning of the following terms in the context of audit sampling:
(i) Stratified Sampling.
(ii) Random Sampling.
(b) Distinguish between Internal Check and Internal Audit and give examples to elucidate your
answer.
[Marks: (6+6) = 12]

Page 40 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – III
SUBJECT: 304. AUDITING.

Q. No. 6.
“The auditor should obtain sufficient appropriate audit evidence through the performance of
compliance and substantive tests to enable to draw reasonable conclusions there from on which to
base his opinion on the financial information.” In the light of above statement, explain the following:
(a) Documentation.
(b) Sufficient appropriate audit evidence.
(c) Sources of Audit evidences.
(d) Reasonable conclusion.
(e) Compliance and Substantive tests.
[Marks: (5 x 4) = 20]

Q. No. 7.
(a) What do you understand by Audit Materiality as per ISA/BSA 320? What is its significance to
an auditor?
(b) You are a Auditor of a public limited company for the year 2009. Your audit team identified
that the company did not account for deferred tax liability of Tk.20 million as per IAS/BAS 12.
What steps would you take in this regard?
[Marks: (8+5) = 13]

= THE END =

Page 41 of 50
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – IV
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) Messi & Kaka Ltd. has annual earnings before interest and tax of BDT 15 Million. These
earnings are expected to remain constant. The Market price of the Company’s ordinary shares is
BDT .86 per share cum dividend and of debentures Tk. 105.50 per debenture ex-interest. An
interim dividend of six paisa per share has been declared. Income Tax is at the rate of 35% and
all available earnings are distributed as dividends.
Messi & Kaka Ltd.s long-term capital structure is shown below:
BDT in ‘000’
Ordinary shares (BDT .25 per share value) 12,500
Reserve 24,300
36,800
16% debenture (per value Tk. 100) as on 31.12.2004 23,697
60,497
Required:
Compute the Cost of capital of the company according to the traditional theory of capital structure.
Assume that it is now 31.12.2001.
(b) Vovozela Ltd. is an all equity Company with an equilibrium market value of Tk. 32.5 million
and a cost of capital of 18% p.a. The company proposes to repurchase Tk. 5.0 Million of equity
and to replace it with 13% irredeemable loan stock.
Vovozela earnings before Tax & interest are expected to be constant for the foreseeable future.
Income Tax is @ 13%. All profits are paid out as dividends.
Required:
Using the assumptions of Modigliani & Miller explain and demonstrate how this change in capital
structure will affect:
- The market value.
- The cost of equity.
- The cost of capital of the company.
[Marks: (10+10) = 20]
Q. No. 2.
(a) Soccer Ltd. presently pays a dividend of Tk. 1 per share and has a share price of Tk. 20.
(i) If this dividend were expected to grow @ 12% p.a. forever, what is the company’s
expected or required return on equity using a dividend- discount model approach?
(ii) Instead of the situation in part (i) above suppose the dividends were expected to grow @
20% p.a. for 5 years and 10% p.a. there after. Now what is the company’s expected or
required return on equity?

Page 42 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – IV
SUBJECT: 401. FINANCIAL MANAGEMENT.

Q. No. 2. (Contd..)

(b) (i) Explain the term “Foreign Exchange Rate Risk” Name the tools available to cover
Exchange Rate Risk.
(ii) He & She Ltd. is planning to import a machine form Japan at a cost of 340 million Yen.
The company can avail loans @ 16% interest with quarterly rests which it can import the
machine. However, there is an offer from the Japanise supplier’s Bank extending credit of
180 days @ 2% p.a. against opening of an irrevocable confirmed LC. relevant
information are as follows:

Present Exchange Rate : Tk. 100 = 210 Yen


180 days forward Rate : Tk. 100 = 225 Yen
Commission charges to LC @ 2% per 12 months.
Required:
Which option is adviceable for the company?
[Marks: (10+10) = 20]
Q. No. 3.
(a) Calculate operating, financial and combined leverage from the following Balance Sheet and
other information provided here:
Cape Horn Ltd.
Balance Sheet
As of 31st Dec. 2009
Tk. in ‘000’
Assets:
Net Fixed Assets 1500
Current Assets 500
Less: Liability 400 100
1600
Represented by
Equity Tk. 100 per share 600
Retained Earnings 200
Long term loan (10%) 800
1600
The Company’s total assets turn over ratio is 3.0, its fixed operating costs are Tk. 1,00,000 and its
variable operating cost ratio is 40%. Income Tax rate is assumed @ 5%.
(b) Determine the likely level of Earning Before Income Tax (EBIT) if earnings per share is-
(i) Tk. 10 (ii) Tk. 30 (iii) Tk. 100
(c) How are these information regarding leverages useful to the Financial Manager of a Company?
[Marks: 20]

Q. No. 4.
(a) Explain “wealth maximization” and “value maximization” objective of financial management.
(b) Assume that you are about to move from a finance position in a public limited company to work
in government financial management. Explain what major differences you are likely to
experience between the financial management in a public limited company and in the
government.

Page 43 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – IV
SUBJECT: 401. FINANCIAL MANAGEMENT.

Q. No. 4. (Contd..)

(c) G4 Ltd. is comprised of only four major investment projects, details of which are as follows:

Project % of company MV % of annual return Risk % SD Correlation with


during 1st 5 years the market
1 28 10 15 .55
2 17 18 20 .75
3 31 15 14 .84
4 24 13 18 .62

The risk free rate is expected to be 5% p.a., the market return 14% p.a. and the SD of MV is
13%.

Required:
(i) Assume the MV Ltd.’s shares currently priced based upon the assumption that the last
five years experience of returns will continue for the foreseeable future. Evaluate whether
or not the share price of G4 Ltd. is undervalued or overvalued.
(ii) Discuss why your results is (i) above might not correctly identify whether or not the share
price of G4 Ltd. is undervalued or overvalued.
[Marks: (4+4+6+6) = 20]

Q. No. 5.
(a) What are the various types of ratios?
(b) From the following details, prepare the balance sheet of the firm concerned:

Stock velocity 8
Capital turn over ratio 4
Fixed assets turn over ratio 2
Gross profit 30%
Debt collection period 4 months
Creditors payment period 73 days

The gross profit was Tk.800,000. Closing stock was Tk.100,000 in excess of the opening stock.
[Marks: (4+16) = 20]

= THE END =

Page 44 of 50
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL-IV
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
(a) (i) Discuss JIT purchasing versus holding inventories.
(ii) What are the limitations of JIT purchasing system?
(ii) Discuss Manufacturing Resource Planning with reference to JIT purchasing system.
(b) ORBIT furniture manufacturing company has provided the following data:
2008 2009
Output: Sales value of production BDT 22,00,000 BDT 35,00,000
Input Labor 10,00,000 15,00,000
Raw materials & supplies 8,00,000 12,50,000
Capital equipment depreciation 70,000 1,20,000
Others 2,20,000 4,80,000
Required:
Compute the Labor, Raw materials & supplies, Multifactor and Total productivity for 2008 and 2009.
[Marks: (15+10) = 25]
Q. No.2.
Tallu International Park (TIP) is a theme park and has for many years been a successful business,
which has traded profitably. About three years ago the directors decided to capitalize on their success
and reduced the expenditure made on new thrill rides, reduced routine maintenance where possible
(deciding instead to repair equipment when it broke down) and made a commitment to regularly
increase admission prices. Once an admission price is paid customers can use any of the facilities and
rides for free.
These steps increased profits considerably, enabling good dividends to be paid to the owners and
bonuses to the directors. The last two years of financial results are shown below.
2008(Tk.) 2009(Tk.)
Sales 5,250,000 5,320,000
Less expenses:
Wages 2,500,000 2,200,000
Maintenance – routine 80,000 70,000
Repairs 260,000 320,000
Directors salaries 150,000 160,000
Directors bonuses 15,000 18,000
Other costs (including depreciation) 1,200,000 1,180,000
Net profit 1,045,000 1,372,000
Book value of assets at start of year 13,000,000 12,000,000
Dividend paid 500,000 650,000
Number of visitors 150,000 140,000
TIP operates in a country where the average rate of inflation is around 1% per annum.
Required:
(a) Assess the financial performance of TIP using the information given above.

Page 45 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL-IV
SUBJECT: 402-STRATEGIC MANAGEMENT ACCOUNTING.
Q. No.2. (contd……..)
During the early part of 2008 TIP employed a newly qualified management accountant. He quickly
became concerned about the potential performance of TIP and to investigate his concerns he started to
gather data to measure some non-financial measures of success. The data he has gathered is shown
below:
Table 1 2008 2009
Hours lost due to breakdown of rides (see note 1) 9,000 hours 32,000 hours
Average waiting time per ride 20 minutes 30 minutes
Note 1: TIP has 50 rides of different types. It is open 360 days of the year for 10 hours each day.
(b) Assess the quality of the service that TIP provides to its customers using Table 1 and any other
relevant data and indicate the risks it is likely to face if it continues with its current policies.
[Marks: (15+10) = 25]
Q. No.3.
Cosmopolitan Traders, has recently established a subsidiary in another country, Petronia. An essential
component that is produced in Bangladesh by Cosmopolitan Traders will need to be provided to the
subsidiary in Petronia. The finance team is discussing what transfer price should be set for sales
between the parent company and subsidiary.
Three suggestions have been made:
(i) Use the estimated Bangladeshi market price of the component as the transfer price. This is Tk.
18 per unit.
(ii) Use fixed cost per year plus variable cost per unit.
(iii) Use a negotiated price of Bangladeshi total cost plus 25%
The following is a breakdown of the cost structure of an important component that must be sent
between parent company and the overseas subsidiary. Annual sales are 50,000 units.
Parent company costs:
Variable costs Tk. 13 per unit
Fixed cost Tk. 120,000
Once received by the subsidiary the component undergoes further processing and is sold locally at
P$250 per unit.
Costs in Petronia: P$
Local variable costs 82
Local fixed cost 351,000
The current exchange rate is P$7·8/Tk.
The corporate tax rate in Petronia is 25%, and in the Bangladesh 30%.
A 15% withholding tax is levied on all dividend payments in Petronia.
A bilateral tax treaty exists between Bangladesh and Petronia. This allows tax paid on income and
distributions in one country to be credited against a tax liability on the same income in the other
country.
Assume that all available profits in Petronia are to be remitted back to Bangladesh.
Required:
a) Calculate the expected after tax profits that would result from each of the three transfer pricing
methods.
b) Discuss the advantages and disadvantages of each of the methods.
[Marks: (20+5) = 25]

Page 46 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL-IV
SUBJECT: 402-STRATEGIC MANAGEMENT ACCOUNTING.

Q. No.4.
Ice-Time Ltd (ITL) manufactures a range of sports equipment used in a variety of winter-sports in
Snow land. Development engineers within ITL have recently developed a prototype of a small engine-
propelled bobsleigh named the ‘Snowballer’, which has been designed for use by young children. The
directors of ITL recently spent Tk.200,000 on market research, the findings of which led them to
believe that a market exists for the Snowballer.
The marketing director has suggested that ITL should use the ‘Olympic’ brand in order to market the
Snowballer.
The finance director of ITL has gathered relevant information and prepared the following evaluation
relating to the proposed manufacture and sale of the Snowballer.
(i) Sales are expected to be 3,200 units per annum at a selling price of Tk.2,500 per unit.

(ii) Variable material, labour, and overhead costs are estimated at Tk.1,490 per unit.

(iii) In addition, a royalty of Tk.150 per unit would be payable to Olympic plc, for the use of their
brand name.
(iv) Fixed overheads are estimated at Tk.900,000 per annum. These overheads cannot be avoided
until the end of the year in which the Snowballer is withdrawn from the market.
(v) An initial investment of Tk.5 million would be required. A government grant equal to 50% of
the initial investment would be received on the date the investment is made. However, because
the Snowballer would be classified as a luxury good, no tax allowances would be available on
this initial investment. The estimated life cycle of the Snowballer is six years.
(vi) Corporation tax at the rate of 30% per annum is payable in the year in which profit occurs.

(vii) All cash flows are stated in current prices and, with the exception of the initial investment and
the government grant will occur at the end of each year.
(viii) The nominal cost of capital is 15·44%. Annual inflation during the period is expected to amount
to 4%.
Required:
(a) Calculate the net present value (NPV) of the Snowballer proposal and recommend whether it
should be undertaken by the directors of ITL.
(b) Using sensitivity analysis, estimate by what percentage of the annual contribution would need
to change before the recommendation in (1) above is varied.
(c) Using sensitivity analysis, estimate by what percentage the life cycle of the Snowballer would
need to change before the recommendation in (1) above is varied.
(d) Comment on THREE factors other than NPV that the directors of ITL should consider when
deciding whether to manufacture the Snowballer.
[Marks: (10+5+5+5) = 25]

= THE END =

Page 47 of 50
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – IV
SUBJECT: 403. STRATEGIC MANAGEMENT AND ORGANIZATIONAL BEHAVIOR.
Time: Three hours Full Marks: 100
 Answer any THREE questions from Group-A and TWO questions from Group-B.
 All questions carry equal marks.
 Answer must be brief, relevant, neat and clean.
 Start answering each question from a fresh sheet.

Group – A: STRATEGIC MANAGEMENT


Q. No. 1.
(a) “Strategy making is fundamentally a market-driven and customer-driven entrepreneurial activity.” –
explain.
(b) What does a company’s strategy consists of? Explain in brief.
[Marks: (10+10) = 20]
Q. No. 2.
(a) How has the internet changed (or will change) the strategy of firms and institutions delivering
education? What new value is created by the Internet? How can organizations offering e-learning
opportunities capture the value? Illustrate with examples.
(b) State the key factors that need to be considered in strategy formulation in the age of E-commerce.
(c) Describe various entrepreneurial defensive strategies for survival.
[Marks: (10+5+5) = 20]
Q. No. 3.
Why is it important to integrate R & D into corporate strategy? Briefly discuss the factors which should be
taken into consideration if the innovation process is to be managed successfully. Explain giving examples.
[Marks: 20]
Q. No. 4.
Write short notes on the followings (any four):
(a) Unbundling and outsourcing.
(b) Internet technology and distribution channel efficiency.
(c) Defensive strategy and Fast mover strategy.
(d) E-business and value chain.
(e) Strategic alliance.
(f) Strategic vision.
[Marks: (4 x 5) = 20]
GROUP – B: ORGANIZATIONAL BEHAVIOR
Q. No. 5.
(a) How can a manager create customer responsive culture? Explain with example.
(b) In these dynamic organizations, how the employees are learning the cultures? Explain.
(c) What can a manager do to create and sustain organizations culture? Explain.
[Marks: (5+5+10) = 20]
Q. No. 6.
Discuss the issues and challenges in Knowledge Management in the present day competitive environment.
[Marks: 20]
Q. No. 7.
How do conflicts get generated in an organizational situation? How does it impact the group behavior and
functioning of the organization? Explain with relevant examples.
[Marks: 20]
Q. No. 8.
(a) What is Organizational Behavior?
(b) What is indicated by positive organizational behavior and negative organizational behavior?
(c) What techniques a manager can apply to obtain desired organizational behavior? Discuss in brief.
[Marks: (4+8+8) = 20]
= THE END =

Page 48 of 50
THE INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF BANGLADESH
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – IV
SUBJECT: 404. COST AND 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.
“Cost Audit, in addition to the essential features of auditing, has following additional features:
(a) Assessing compliance by the Company with the cost accounting record rules.
(b) Study of the costing system to assess whether it is adequate for the cost ascertainment of the
product under review.
(c) Evaluation of the operating and management efficiencies of the organization under audit.”
Explain what do you understand by “compliance”, “adequacy” and “efficiency” in the context of the
above three features.
[Marks: (6+6+6) = 18]

Q. No. 2.
(a) Briefly discuss the basic requirements of cost accounting record rules of manufacturing
organization (in general), as per the record rules in Bangladesh.
(b) “A cost auditor has to examine all records, cost statements and financial statements and other
relevant data in the course of his audit work.” Discuss.
[Marks: (8+6) = 14]

Q. No. 3.
(a) “Cost accounting and cost audit are effective management control mechanism and as such, a
management tool”. Briefly discuss.
(b) Within decentralized organizations there may be cost centers, investment centers and profit
centers. As an auditor, how you will evaluate its performance?
(c) Discuss the provision of professional misconduct in relation to Cost & Management Accountant
in practice as prescribed under the Cost Audit Rules 1997.
[Marks: (6+6+6) = 18]

PART – B : MANAGEMENT AUDITING (MARKS:50)

Q. No. 4.
(a) You have been appointed as Management Auditor of a publicly listed manufacturing company.
Prepare a checklist of key functions that you would be in auditing.
(b) What is the importance of management audit report? Prepare an outline of the management
audit report.
[Marks: (9+5) = 14]

Page 49 of 50
CMA AUGUST, 2010 EXAMINATION
PROFESSIONAL LEVEL – IV
SUBJECT: 404. COST AND MANAGEMENT AUDITING.

Q. No. 5.
Explain how the following affects establishment of corporate governance in an organization:
(i) Professional ethical standards.
(ii) Professional competence.
(iii) Independence.
[Marks: (4 x 3) = 12]

Q. No. 6.
(a) “Management audit entails review appraisal and evaluation of management performance of an
entity” – discuss.
(b) As a management auditor, you have been asked to conduct a review of the role of the ‘Supply
Chain’ and ‘Quality Control’ department of a company. State the various points which will be
covered in the review.
[Marks: (5+7) = 12]

Q. No. 7.
Briefly discuss the following:
(a) Value for money audit;
(b) Efficiency measurement;
(c) Management by exception and objectives.
[Marks: (4 x 3) = 12]

= THE END =

Page 50 of 50