Ch 3: COST AUDITOR — Previous Year Exam Questions (PYQ)

1(a): Cost Auditor’s Eligibility, Qualifications, Disqualifications, Appointment, Registration, Rotation, Remuneration, Removal, Rights and Duties, Liabilities

5 Marks

As a Cost Auditor you find that indicative Break-even Point is higher than Actual Sales. Give your suggestions for improvements. Answer:

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1(b): Cost Auditor’s Eligibility, Qualifications, Disqualifications, Appointment, Registration, Rotation, Remuneration, Removal, Rights and Duties, Liabilities

5 Marks

Statement of Estimated Cost and Price Quotation Product – Special type Machine parts Quantity – 2,50,000 units Particulars ₹ ₹ Materials 40,000 kg at ₹ 3 per kg. 1,20,000 Less: estimated scrap value 12,000 1,08,000 Labour – (12000 – 800) hours at ₹ 3 per hour 33,600 (800 hours of Over Time hours at ₹ 6/- 4,800 38,400 Prime Cost 1,46,400 Add: Factory overhead (12000 hrs at ₹ 2.50) 30,000 Factory cost 1,76,400 Add: Selling and distribution overhead 45,400 Total cost 2,21,800 Add: Profit 26,674 Sales 2,48,474 Selling price per unit ₹ 0.9939 Notes: Calculation of Sales Let Sales be S S = Total Cost + 15% of capital employed S = 221800 + 15/100 x (95000 + 0.35 of S) S = 221800 + 0.15(95000 + 035 S) S = 221800 + 14250 + 0.05 S S - 0.05S = 236050 0.95 S = 236050 S = 236050 / 0.95 = 248474 Working Capital requirement = 35% Sales = 0.35 x ₹ 2,48,474 = ₹ 86,966 (b) Profit as per Financial Accounts 28,75,000 Add: 1 Difference in valuation of W-I-P 30,000 2 Proportionate charge i.e. four-fifth for overhaul of machinery 4,40,000 4,70,000 Less: 1 Profit on sale of old assets not included in Cost A/cs 1,25,000 2 Interest received from outside investment 45,000 3 Trading profit not included in cost accounts 1,62,005 4 Difference in Raw material and finished stock valuation 15,000 3,47,005 Profit as per Cost Accounts 2,997,995

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2(a): Cost Auditor’s Eligibility, Qualifications, Disqualifications, Appointment, Registration, Rotation, Remuneration, Removal, Rights and Duties, Liabilities

5 Marks

(i) Under what condition a Cost Accounting Firm can be appointed as Cost Auditor?4 (ii) Can a Cost Accountant continuing as internal auditor / Concurrent auditor for a year can be appointed for Cost auditing for the same year?

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2(b): Cost Auditor’s Eligibility, Qualifications, Disqualifications, Appointment, Registration, Rotation, Remuneration, Removal, Rights and Duties, Liabilities

5 Marks

What disclosures are required to be made in Cost Statement as per CAS-19 as regard to JOINT COSTS? Answer:

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3(a): Cost Auditor’s Eligibility, Qualifications, Disqualifications, Appointment, Registration, Rotation, Remuneration, Removal, Rights and Duties, Liabilities

5 Marks

What is the procedure for appointment of Cost Auditor under the Companies Act, 2013? Answer:

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3(b): Cost Auditor’s Eligibility, Qualifications, Disqualifications, Appointment, Registration, Rotation, Remuneration, Removal, Rights and Duties, Liabilities

5 Marks

Non-Current Liabilities: (d) Cash Long Term Borrowing (i) Debenture 1,400 (3) Current Liabilities: (a) Trade payables

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