Mock Test Paper - Series I: November, 2024

Date of Paper: 21st November, 2024

Time of Paper: 2 P.M. to 5 P.M.

INTERMEDIATE: GROUP – II
PAPER – 4: COST AND MANAGEMENT ACCOUNTING
Answers are to be given only in English except in the case of the candidates who
have opted for Hindi medium. If a candidate has not opted for Hindi medium his/
her answer in Hindi will not be valued.
Working notes should form part of the answer.
Time Allowed – 3 Hours Maximum Marks – 100
1. The question paper comprises two parts, Part I and Part II.
2. Part I comprises Case Scenario based Multiple Choice Questions (MCQs)
for 30 marks
3. Part II comprises questions which require descriptive type answers for 70
marks.
PART I – Case Scenario based MCQs
Part I is compulsory.
Write the most appropriate answer to each of the following multiple-
choice questions by choosing one of the four options given. All
questions are compulsory.
Case Scenario I
XYZ Manufacturing Ltd. is a mid-sized enterprise that has established a strong
reputation in the field of precision engineering. The company specializes in
producing high-quality engineering components that meet the stringent
requirements of various industries including automotive, aerospace, medical
devices, and industrial machinery. With a commitment to precision and
excellence, XYZ Manufacturing Ltd. has positioned itself as a reliable supplier
of critical components that demand the highest levels of accuracy and durability.
To maintain stringent control over its production costs and enhance cost
efficiency, XYZ Manufacturing Ltd. operates under a standard costing system.
This system plays a pivotal role in the company’s financial and operational
management. Standard costing involves setting predetermined costs for each
production element, including materials, labor, and overheads. These
predetermined costs, known as standard costs, serve as benchmarks against
which actual production costs are measured.
Particulars Budgeted Data Actual Data
Units Produced 10,000 units 9,500 units
Fixed Overheads ₹ 20,00,000 ₹ 19,50,000 + ₹ 1,00,000
(additional quality control cost for
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 1,000 units chosen on sample
basis)
Hours Worked 15,000 hours 14,250 hours
Variable Overhead ₹ 50 per hour ₹ 50 per hour (first 10,000 hours)
Rate ₹ 60 per hour (additional hours)
Based on the given information, you are being required to answer the
following questions (MCQs 1 to 5):
1. What is the Fixed Overhead Cost Variance for XYZ Manufacturing Ltd. in
May 2024?
(a) ` 50,000 (A)
(b) ` 1,00,000 (A)
(c) ` 1,50,000 (A)
(d) ` 2,00,000 (A)
2. What is the Fixed Overhead Volume Variance for XYZ Manufacturing Ltd.
in May 2024?
(a) ` 50,000 (F)
(b) ` 50,000 (A)
(c) ` 1,00,000 (F)
(d) ` 1,00,000 (A)
3. What is the Variable Overhead Efficiency Variance for XYZ Manufacturing
Ltd. in May 2024?
(a) ` 37,500 (A)
(b) ` 42,500 (A)
(c) `0
(d) ` 25,000 (A)
4. What is the Variable Overhead Expenditure Variance for XYZ
Manufacturing Ltd. in May 2024?
(a) ` 40,000 (A)
(b) ` 42,500 (A)
(c) ` 45,000 (A)
(d) ` 45,030 (A)
5. What is the Fixed Overhead Expenditure Variance for XYZ Manufacturing
Ltd. in May 2024?
(a) ` 50,000 (F)
(b) ` 50,000 (A)
(c) ` 1,00,000 (F)
(d) ` 1,00,000 (A) (5 x 2 Marks)
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Case Scenario II
A garment manufacturer has been producing and selling T-shirts exclusively for
Indian market. His T-shirts are made of a specific material which is eco-friendly.
It means that T-shirts are bio-degradable in soil after it becomes unsuitable for
use.
This invention has been applauded throughout the country. Owner, Vikas,
registered for the patent rights for his invention so that no one else could use it.
Vikas feels that this invention will also be liked in foreign markets, and thus plans
to expand his business outside India. He feels that US market is the first foreign
market he should tap into.
Current cost structure (each T-shirt):
Direct material 90
Direct labour 60
Special service 80
(Used in T-shirt making, 50% fixed)
Fixed overhead 50
Administration overhead (fixed) 20
Total cost per T-shirt 300
(+) Profit margin 200
Selling price in India 500
There is no limitation of any resources in India. Vikas is able to sell 80,000
T-shirts each year. He is currently working at 80% of his total capacity.
After searching for potential customers in US, Vikas received an inquiry for
30,000 units from a wholesale distributor in California. As per the inquiry, order
will be placed if price per T-shirt is reasonable and the order has to be satisfied
in full.
Vikas decided to send a quote and the order was placed by the foreign client,
on the same day. Vikas, without a second thought accepted the order, but did
not feel the need to extend the manufacturing capacity; therefore he decided
forgo a few Indian clients.
This foreign order also required special packaging. It is spent at 20% of the total
prime cost per T-shirt. The production was done quickly and foreign consignment
was transported to custom port via services from a carriage agency. It charged
` 80,000 for 1 truck, whose capacity was 500 kg, to transport whole of the
consignment. Truck was 20% vacant after loading the consignment.
Bill of lading was filed and a professional fee of ` 25,000 for filing this was paid
to a Chartered accountant. Custom port also charged ` 80 per kg per day to
handle the material, storing it in warehouse, and for loading the goods on ship.
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The shipping company, which was booked by Vikas for taking the consignment
to US, got delayed due to bad weather. Stock was held at port for 5 days and on
6 th day it was loaded on ship. Shipping company charged ` 2,800/ 10kg of goods.
Insurance was charged flat at ` 1,11,000.
There is no custom duty on such exports.
Answer the following questions (MCQs 6 to 10):
6. Vikas had sufficient funds in his hands but he still raised a short-term
working capital loan @ 6.5% p.a. for the satisfaction of this foreign order
because he found a one time investment opportunity which was giving him
9.25% returns. Foreign order was accepted on 1 st June and loan was taken
on the same day. Repayment of the loan will be made on 1 st September.
Calculate net cash outflow due to this export order. Which of the following
is correct?
(a) ` 73,91,000
(b) ` 75,47,750
(c) ` 74,76,500
(d) ` 71,06,000
7. What would have been the minimum price that Vikas could have quoted per
T-shirt in US dollars? (exchange rate on 1 st June, $1 = ` 83.86)
(a) $ 4.23
(b) $ 4.20
(c) $ 4.17
(d) $4.05
8. Payment from foreign client was received on 8 th October when exchange
rate was ` 86 for each US $. Calculate the profit earned from this export
order if actual quoted price was $4.90 per T-shirt. Select the correct
amongst following:
(a) ` 40,65,500
(b) ` 41,51,000
(c) ` 39,94,250
(d) ` 44,36,000
9. What is the net cash Inflow from this export order?
(a) ` 55,36,000
(b) ` 51,65,500
(c) ` 52,51,000
(d) ` 50,94,250

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10. What is the Incremental benefit from this export order?
(a) ` 19,94,250
(b) ` 21,51,000
(c) ` 20,65,500
(d) ` 24,36,000 (5 x 2 Marks)
11. The rate of change in the composition of employee force over the average
number of employees for the year is computed as 9% under ‘separation
method’. However, the same rate is computed as 15% and 30% under
‘replacement method’ and ‘flux method’ respectively.
Considering the average number of employees on roll during the year as
200, FIND OUT the number of employees -
(i) replaced, (ii) left and discharged and (iii) recruited and joined
(a) Replaced- 18 employees, left and discharged- 30 employees and
recruited & joined- 42 employees
(b) Replaced- 30 employees, left and discharged- 42 employees and
recruited & joined- 18 employees
(c) Replaced- 30 employees, left and discharged- 18 employees and
recruited & joined- 42 employees
(d) Replaced- 42 employees, left and discharged- 18 employees and
recruited & joined- 30 employees (2 Marks)
12. WHICH of the following item is not the cause of differences in Financial and
Cost Accounts?
(a) Income tax not treated in Cost Accounts
(b) Dividends credited in Financial Accounts
(c) Losses on the sale of investments not treated in Financial Accounts
(d) Cost Accounts showing notional depreciation on the assets fully
depreciated for which book value is nil (2 Marks)
13. Mefttal Ltd. is currently operating at 60% of its total capacity which is 1.5
times than the previous year. The total capacity of the company is 2,00,000
units.
Other information relating to the production is provided below:
(i) The total cost of production for the current year is ` 59,28,000, and
for the previous year, it was ` 44,72,000.
(iii) No changes are anticipated in the cost structure for the upcoming
years.
Selling price is ` 52 per unit and is expected to remain the same in the
coming years.
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 You are required to CALCULATE Break-Even Point (in units).
(a) 1,20,000 units
(b) 40,000 units
(c) 80,000 units
(d) 1,00,000 units (2 Marks)
14. Parth Ltd. operates in insurance business. Previous Year, the company
launched a new term insurance policy called ‘Max Jivan’ and incurred the
following expenditure throughout the year:
Particulars Amount (`)
Claim management cost 52,82,000
Facilities cost 6,49,82,500
Employees cost 2,25,18,000
Cost of marketing of the policy 19,30,71,000
Policy development cost 4,86,50,000
Policy issuance cost 4,10,05,000
Policy servicing cost 13,40,65,500
Sales support expenses 4,44,80,000
Office administration cost 6,67,20,000
I.T. Cost 30,71,90,000
Postage and logistics 4,50,36,000

You are required to ASCERTAIN the cost of the policy ‘Max Jivan’
segregated into four main activities namely (a) Marketing and Sales support
(b) Operations (c) I.T. Cost and (d) Support functions.
(a) Marketing and Sales support- ` 23,75,51,000, Operations -
` 22,90,02,500, I.T. Cost- ` 30,71,90,000 and Support functions-
` 19,92,56,500
(b) Marketing and Sales support- ` 28,62,01,000, Operations-
` 22,53,88,500, I.T. Cost- ` 30,71,90,000 and Support functions-
` 15,42,20,500
(c) Marketing and Sales support- ` 28,62,01,000, Operations-
` 18,03,52,500, I.T. Cost- ` 30,71,90,000 and Support functions-
` 19,92,56,500
(d) Marketing and Sales support- ` 24,17,21,000, Operations-
` 22,48,32,500, I.T. Cost- ` 30,71,90,000 and Support functions-
` 19,92,56,500 (2 Marks)

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15. RN Ltd. manufactures two primary products, P 1 and P 2, through a joint
process and a by-product, R12, is produced spontaneously. The relationship
between output quantities to the direct material input stays stable.
To allocate joint production costs to the primary products, the company
utilizes the physical volume method.
During the month of March, company incurred joint production costs of
` 1,30,00,000. As the primary products are not freely marketable at the
split-off point, they are processed further.
The net realizable value of the by-product is treated as deductions from the
joint production costs before the joint costs are allocated to the primary
products.
The information regarding company’s production and its cost during the
month of March is provided below:
Particulars P1 P2 R 12
Output (kg.) 1,95,000 3,90,000 81,250
Selling price per kg. ` 200 ` 120 ` 40
Further processing costs ` 26,00,000 ` 39,00,000 -

FIND OUT the amount of joint product cost to be allocated to P 2 by using

the physical volume method.
(a) ` 65,00,000
(b) ` 97,50,000
(c) ` 39,00,000
(d) ` 32,50,000 (2 Marks)

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 PART-II – Descriptive Questions (70 Marks)
Question No. 1 is compulsory.
Attempt any four questions out of the remaining five questions.
1. (a) Petro Ltd. is a petroleum refining company which uses cracking process
for producing gasoline, diesel and Heavy fuel oil (HFO). All three final
products are extracted simultaneously at one common split-off point.
Gasoline and diesel are immediately available for sale upon
separation, requiring no further processing. In contrast, heavy fuel oil
(HFO) undergoes additional processing before it can be sold, as there
is no market for it at the split-off point.
Throughout the year, the selling prices and total quantities sold for
each item were as follows:
Product Quantity sold Selling Price per
(Gallons) gallon (`)
Gasoline 1,674 400
Diesel 4,743 300
Heavy fuel oil (HFO) 6,624 200

The selling prices listed above are projected to remain unchanged in

the upcoming year.
The total joint manufacturing costs for the year amounted to
` 15,00,000, with an additional cost of ` 7,44,000 incurred for finishing
Heavy fuel oil (HFO).
There were no opening inventories of gasoline, diesel and Heavy
fuel oil (HFO). Though, at the end of the period, the following
inventories of complete units were available: 1,620 gallons of
gasoline, 540 gallons of diesel, and 225 gallons of Heavy fuel oil
(HFO).
You are required to COMPUTE the following for gasoline, diesel and
Heavy fuel oil (HFO)-
(i) joint cost allocated, and
(ii) cost of goods sold
using Net Realisable Value Method of joint cost allocation.
(5 Marks)
(b) The following information have been extracted from the cost records
of a manufacturing company:
(`)
Stores
* Opening balance 9,000
* Purchases 48,000
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 * Transfer from WIP 24,000
* Issue to work-in-progress 48,000
* Issue for repairs 6,000
* Deficiency found in stock 1,800
Work-in-Progress:
* Opening balance 18,000
* Direct Wages applied 18,000
* Overhead charged 72,000
* Closing balance 12,000
Finished Production :
* Entire production is sold at a profit of 10% on cost
from work-in-progress
* Wages paid. 21,000
* Overhead incurred 75,000
DRAW the Stores Leger Control A/c, Work-in-Progress Control A/c,
Overheads Control A/c and Costing Profit and Loss A/c. (5 Marks)
(c) The management of a company wants to formulate an incentive plan
for the workers with a view to increase productivity. The following
particulars have been extracted from the books of company:
Piece Wage rate ` 10
Weekly working hours 40
Hourly wages rate ` 40 (guaranteed)
Standard/normal time per unit 15 minutes.
Actual output for a week:
Worker A: 176 pieces
Worker B: 140 pieces

Under Halsey scheme, worker gets a bonus equal to 50% of Wages

of time saved.
CALCULATE earning of workers under Halsey’s and Rowan’s
premium scheme. (4 Marks)
2. (a) Baba Ltd. belongs to an automotive industry, manufacturing hybrid
bicycles. The production of bicycles passes through three departments,
viz. X1, Y2, Z3. The bicycles being equipped with gears needs quality
check from time to time. Thus, the company also operates two service
departments, namely quality control (QC) and maintenance (M), for its
bicycle.
Following information is extracted from the accounting books
regarding expenses as incurred/ charged:

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Particulars (`)
Rent and Rates 40,00,000
General Lighting 4,80,000
Indirect Wages 15,51,200
Power 12,00,000
Depreciation on Machines 80,00,000
Sundries 77,56,000
Additional information:
Production Departments Service
Departments
X1 Y2 Z3 QC M
Direct 24,00,000 16,00,000 24,00,000 12,00,000 1,56,000
wages (`)

Working 6,140 8,950 4,838 - -

hours
Value of 4,80,00,000 6,40,00,000 8,00,00,000 40,00,000 40,00,000
machines
(`)
H.P. of 120 60 100 20 -
machines

Light 20 30 40 20 10
points
Floor 4,000 5,000 6,000 4,000 1,000
space
(sq. ft.)

A technical assessment unveiled the following basis for the

apportionment of expenses of service departments:
X1 Y2 Z3 QC M
QC 20% 30% 40% - 10%
M 40% 20% 30% 10% -
You are required to DETERMINE the following:
(i) Overheads distributed to all the departments, viz. X1, Y2, Z3, QC
and M.
(ii) Overheads total and rate per hour under all the Production
Departments after redistribution of Service Department’s
Overhead.
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 (iii) Total cost of a bicycle, considering the Direct Material and
labour Cost of ` 20,000 and ` 12,000 respectively, which is
being processed for manufacturing in Departments X1, Y2 and
Z3 for 4, 5 and 3 hours respectively. (5 + 5 + 2 = 12 Marks)
(b) Luxz Ltd. is into luxury pens business manufacturing 120 pens in a
batch. To process a single batch of 120 pens, company needs to
incur following expenditure:
Particulars (`)
Direct Materials 57,375
Direct wages 6,750
Batch Set-up cost 18,900
For each batch, the company absorbs the Production Overheads at
a rate of 20% of direct wages and 15% of the total production cost
is allocated to cover selling, distribution, and administrative
overheads.
During the month of March, Luxz Ltd. received an order for 2,400
pens and the company aims to achieve a profit margin of 25% on its
sales value.
You are required to DETERMINE the total sales value for 2,400
pens. (2 Marks)
3. (a) Following information is available from the books of YSPP Ltd. for the
current year ending 31st March:
S. Particulars (`) (`)
No.
(i) Raw materials purchased 35,00,00,000
(ii) Freight inwards 39,22,100
(iii) Wages paid to factory workers 1,02,20,000
(iv) Contribution made towards 12,60,000
employees’ PF & ESIS
(v) Hire charges paid for hiring 8,40,000
specific equipment
(vi) Amount paid for power & fuel 16,17,000
(vii) Amount paid for purchase of 31,36,000
moulds and patterns (life is
equivalent to four years
production)
(viii) Job charges paid to job 28,42,000
workers
(ix) Lease rent paid for production 3,92,000
assets
(x) Depreciation on:

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 Factory building 2,94,000
Office building 1,96,000
Plant & Machinery 4,41,000
Delivery vehicles 3,01,000 12,32,000
(xi) Salary paid to supervisors 4,41,000
(xii) Repairs & Maintenance paid 1,68,000
for:
Plant & Machinery
Sales office building 63,000 2,31,000
(xiii) Insurance premium paid for:
Plant & Machinery 1,09,200
Factory building 63,350
Stock of raw materials & WIP 1,26,000 2,98,550
(xiv) Expenses paid for quality 68,600
control check activities
(xv) Salary paid to quality control 3,36,700
staffs
(xvi) Research & development cost 63,700
paid for improvement in
production process
(xvii) Expenses paid for 4,15,100
administration of factory work
(xviii) Salary paid to functional
mangers:
Production control 33,60,000
Finance & Accounts 32,13,000
Sales & Marketing 35,42,000 1,01,15,000
(xix) Salary paid to General 43,96,000
Manager
(xx) Packing cost paid for:
Primary packing necessary to 3,36,000
maintain quality
For re-distribution of finished 3,92,000 7,28,000
goods
(xxi) Fee paid to auditors 6,30,000
(xxii) Fee paid to independent 7,70,000
directors
(xxiii) Value of stock as on 1st April
(beginning):
Raw materials 63,00,000

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 Work-in-process 32,20,000
Finished goods 38,50,000 1,33,70,000
(xxiv) Value of stock as on
31st March (ending):
Raw materials 33,60,000
Work-in-process 30,45,000
Finished goods 63,00,000 1,27,05,000
Due to delay in picking up cargo from the port, YSPP Ltd. had to pay
` 15,000 as demurrage in the month of March.
From the above data you are required to PREPARE Statement of cost
for YSPP Ltd. for the year ended 31st March, showing (i) Prime cost, (ii)
Factory cost, (iii) Cost of Production, (iv) Cost of sales.
(2 + 2 + 2 + 2 = 8 Marks)
(b) Following information is extracted from the purchase department of A Ltd.:
(i) Number of units to be purchased during the year is 10,000
(ii) Cost of placing a purchase order is ` 40
(iii) Purchase price per unit is ` 80
(iv) Insurance charges to be paid for protecting goods during
transit is ` 20 per unit
(v) Cash discount to be received is 2%
(vi) Annual cost of storage per unit is ` 5
(vii) Details of lead time:
Average- 20 days
Maximum- 30 days
Minimum- 10 days
For emergency purchases- 8 days.
(viii) Rate of consumption:
Average- 30 units per day
Maximum- 40 units per day.
From the information given above, you are required to CALCULATE:
(i) Re-ordering level
(ii) Maximum level
(iii) Minimum level
(iv) Danger level. (6 Marks)
4. (a) Xtyle Ltd. is a leading manufacturer in the textile industry, renowned for
its commitment to quality and innovation. With decades of experience,
the company specializes in producing a diverse range of textile products,
including high-quality towels, designed to meet the varying needs of its
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 customers. The company offers mainly three types of towel, viz. Hand
towels, Kitchen towels and Gym towels, catering to both everyday use
and specialized applications. Below are the key production data for a
recent period:
Particulars Hand Kitchen Gym
towels towels towels
Production (units) 9,000 15,000 60,000
Machine hours per unit 10 18 14
Direct Labour hours per unit 4 12 8
Direct Material per unit (`) 450 400 600
Currently, the company utilizes a traditional costing method, which
assigns all production overhead costs based on the number of
machine hours used. The overhead cost is calculated at a rate of
` 30 per machine hour. Additionally, the direct labor cost is charged
at ` 100 per hour.
Now, the company plans to implement an Activity-Based Costing
(ABC) system to enhance cost accuracy and provide a clearer
understanding of the costs associated with each product.
The activity analysis is provided as under:
Particulars Hand Kitchen Gym
towels towels towels
Batch size (units) 450 1,500 3,000
Number of purchase orders per batch 3 10 8
Store delivery 45 80 125
Number of inspections per batch 5 4 3
Further, the total production overheads can be divided into several
key categories. Machine setup costs account for 20% of the total,
while inspection costs make up 35%. Material procurement-related
costs represent 10%, and store delivery costs also constitute 10%.
Finally, machine operation costs contribute 25% to the overall
overheads. This breakdown provides insight into how resources are
allocated across various activities within the production process.
You are required to CALCULATE the cost per unit of each product
using -
(i) traditional method.
(ii) activity based costing principles. (6 Marks)
(b) The following information relates to Anu Limited, a AI enabled toy
manufacturing company:
The selling price of a toy is ` 3,000, and sales are made on credit and
invoiced on the last day of the month.

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 Variable costs of production per toy are materials (` 1,000), labour
(` 800), and overhead (` 400)
The sales manager has forecasted the following volumes:
Month No. of Toys
November 1,000
December 1,000
January 1,000
February 1,250
March 1,500
April 2,000
May 1,900
June 2,200
July 2,200
August 2,300
Customers are expected to pay 50% One month after the sale and
50% Two months after the sale.
The company produces the toys two months before they are sold and
the creditors for materials are paid two months after production.
Variable overheads are paid in the month following production and are
expected to increase by 25 % in April; 75% of wages are paid in the
month of production and 25% in the following month. A wage increase
of 25% will take place on 1st March.
The company needs funds for the running the business and purchase
of new machine so it will sell one of its freehold properties in June for
` 20,00,000, and buy a new machine in June for ` 5,00,000.
Depreciation is currently ` 10,000 per month, and will rise to ` 15,000
after the purchase of the new machine.
The company’s corporation tax of ` 1,00,000 is due for payment in
March.
The company presently has a cash balance at bank on 31 December
2023, of ` 50,000.
You are required to PREPARE a cash budget for the six months from
January to June, 2024. (8 Marks)
5. (a) Hawtt Veel is a renowned brand of HV Ltd. which manufactures toy car.
The manufacturing process of the toy cars at first involve designing the
parts, creating the mold and then simultaneously melting the plastic. As
the mold created last year is being used as it is for the current year, the
first process involves only melting the plastic (Process I). The next
process is about injecting the plastic into the mold and assembling the
parts formed (Process II).

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 During the month of April, the materials for 1,20,000 toy cars were put
through Process I of which melting process were completed for 90,000
toy cars only before transferring to Process II.
The costs incurred in Process I are as follows:
Direct material ` 22,50,000
Direct wages ` 27,00,000
Factory overheads ` 18,00,000
Degree of completion for those not transferred to Process II is as
follows:
Materials 100%
Labour and overheads 50%
Out of those transferred to Process II for injecting and assembling,
84,000 units of toy car were completed and transferred to finished
goods store for protective packing. The process of protective packing
is done at the end of the Process II and the costs incurred are as
follows:
Packing materials ` 6,00,000
Direct wages ` 5,25,000
Factory overheads ` 6,75,000
There was a normal loss of 600 units in Process II with no salvage
value.
Some units were still in progress under Process II and thus, shifted
for the next month process. The degree of completion for those not
transferred to finished goods store is as follows:
Materials 100%
Labour and overheads 25%
You are required to PREPARE-
(i) Statement of Equivalent Production, Cost per unit and
Process I A/c.
(ii) Statement of Equivalent Production, Cost per unit and
Process II A/c. (10 Marks)
(b) EXPLAIN the Usefulness/Suitability of ABC. (4 Marks)
6. (a) Cost and Management Accounting information is used by different
stakeholders. The users of the information can be broadly categorised
into internal and external to the entity.
GIVE two examples of internal users and three examples of external
users and EXPLAIN how they are concerned with the Cost and
Management Accounting information. (5 Marks)
(b) EXPLAIN the Methods for ascertaining Service Cost Unit. (5 Marks)
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(c) Despite the many benefits of Budgetary Control System, it does have
its own limitations. DISCUSS those limitations. (4 Marks)
OR
(d) IDENTIFY the method of costing in the following cases and give one
example of industry where this method is followed:
(i) Cost of each job is ascertained separately. It is suitable in all
cases where work is undertaken on receiving a customer’s order.
(ii) Cost of completing each stage of work is ascertained.
(iii) Each group is treated as a unit of cost and thus separately
costed. Here cost per unit is determined by dividing the cost of
the group by the number of units produced.
(iv) A combination of two or more methods of costing. (4 Marks)

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