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Ca final advanced management accounting solutions may 2017

mohit kumar arora (Chartered Accountant) (101 Points)

19 May 2017

Dear Students,

Posting Suggested Answers for AMA CA - Final, May 2017. I tried my best to make them Accurate, Easy to understand and presentable with exams oriented approach. I hope this will help you to understand the manner of solving and presenting such a lengthy paper like AMA. Best of luck for your results.

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10 Replies

shiv singhal (Director) (22 Points)
Replied 19 May 2017

Great work.

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mohit kumar arora (Chartered Accountant) (101 Points)
Replied 19 May 2017

Thanks Sir

PRADYUMN MOHATA (Ca Final Candidate) (44 Points)
Replied 20 May 2017

Sir there i mistake in answers to 3(aii) 4(aii). In 3(aii) will it not be (5270-6000)*96 ? And in case of 4(aii) in case of grade a will the purchase not be 160 tonnes ?

mohit kumar arora (Chartered Accountant) (101 Points)
Replied 20 May 2017

Thanks Pradyumn for noticing such small tying errors. I had rectified both of these errors. I am attaching updated pdf file with this reply. Please also tell me whether these solution are helpful to you.

Attached File : 566889 20170520110420 17 may.pdf downloaded: 540 times

PRADYUMN MOHATA (Ca Final Candidate) (44 Points)
Replied 20 May 2017

yes sir it was helpful

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joseph varghese (article assistant) (22 Points)
Replied 22 May 2017

Sir could you check your answer for 7 (e) where the r& d costs are planned and hence would it not be a relevant cost and profit of telephone instruments division would also be opportunity cost

mohit kumar arora (Chartered Accountant) (101 Points)
Replied 22 May 2017

Hello Joseph,

Thanks for downlloading the solutions. As far as question 7 (e) is concerned the answer provided is correct in my opinion.

(i) R & D cost: although the company is planning to incurr, but still such R & D is being done only for the purpose of testing compatibility (Technical Feasibility). The product can be produced only after that and the company can expect revenue. so it is nessesary to perform such test. In other words it can not be avoided. so it can be termed as Comitted Cost. But we have to classify the same, only among the categories mentioned in the question. That's why I had classified the same as Sunk Cost.

(ii) Profit of Telephone Instrument Division: Yes it is Opportunity Cost and the Term Notional Cost is just only an another name of Opportunity Cost.

Thank You Again,

Please rate the usfulness of these Solutions.

GOPALKRISHNA (Practice) (84 Points)
Replied 22 May 2017

Sir the answer for 5(b) i think it is 2.6/unit 100-25=75 target cost actual cost(8.5+7+24+13.5+9.6+15)=77.6 is it correct .?

mohit kumar arora (Chartered Accountant) (101 Points)
Replied 23 May 2017

Hello Gopal,

Sorry, but Your answer is Not Correct. It is specifically mentioned in the question itself that other material will have a normal loss of 4% and normal loss is always be a part of Total Cost. Hence Other Materials Cost is required to be adjusted with such normal loss.

Although you may take royalty payable as a part of Target Cost.