General:

The paper was very easy considering the level of examinees. The performance of a large number of students was up to the mark except for those who were confused mainly because they lacked preparation.

Question-wise comments are given hereunder:

Q.1

This was a theoretical question, which aimed to assess the basic concepts relating to the subject. The students gave good answers of part (a) and in part (b) listed the factors of financial nature correctly but few could write about factors of non-financial nature such as (a) Loss of control over source of supply (b) employee relations specially if they are laid off and (c) control over delivery time etc.

Q.2

This question was easy but involved detailed calculations. Most of the students correctly calculated the cost of issues and the closing stock under LIFO and Weighted average methods whereas only few performed correct calculations under standard cost and replacement cost. Some students used periodic average method instead of weighted average for which no marks were given.

Q.3

The question was fairly easy and involved simple calculations. It was attempted well by a good number of students.  Quite a number of students secured full marks.

Q.4

This question was easy but involved detailed calculations. A good number of the students secured full marks in this question. A frequent mistake identified was the allocation of depreciation  expense on the basis of machine running hours or horse power hours. The correct basis was the capital value of machines. Some allocated power on the basis of machine hours instead of horse power hours.

Q.5

It was again a very easy question but was the worst attempted question of the paper. The knowledge of the students in the area of Variance Analysis in Process Costing environment was assessed. Most students were even unable to correctly calculate equivalent production units which is extremely straightforward. It was evident that the students have not studied this area of the syllabus.

Q.6

A simple question testing the students’ knowledge of determining the variable and fixed costs under hi-low method. Many students secured full marks.

Q.7

Although this question was attempted fairly well by a number of students, there were a number of common mistakes:

• Prime cost was not considered as variable cost;
• Commission and discounts were not treated as variable cost;
• In part (b) commission and discounts were not changed in line with change in sales.

Q.8

Although a sizeable number of students correctly calculated the cash flows relating to Sales, Wages and Marketing  and Administrative expenses, only few could correctly calculate the cash-out flows relating to purchases. A recurring error was that Nov/Dec/Jan sales receipts were shown as those of Oct/Nov/Dec. Many ignored discount on sales while calculating receipts from sales. Many students ignored the unpaid wages as given in the question. It was evident that the students had studied the topic but were seriously lacking in practice.