Mistakes in suggested answers for May’10 examination on Cost Management (i.e. Old Course).

• In Question 4(a) (ii) on Transfer Pricing, Although BOS of ICAI has luckily chosen correct strategy but they have taken this decision on the basis of wrong calculations. Profit of Co. has been calculated as per 2011 instead of 2010.

         Their solution has shown

                Profit as per Strategy I as Rs. 1,95,000

                Profit as per Strategy II as Rs. 2,45,000.

         Correct answer should be:

                As per 1^st Strategy èProfit of Division A will be Rs. 1,45,000 & Savings in Division B will be Rs. 25,000. Total = Rs. 1,70,000.

                As per 2^nd Strategy èProfit of Division A will be Rs. 95,000 & Savings in Division B will be Rs. 75,000. Total = Rs. 1,70,000.

         Both Strategies are equally profitable, but as per Strategy I we will transfer internally 15000 units as against 5000 units in Strategy 2, it is advisable to follow 2^nd Strategy.

Mistakes in suggested answers for May’10 examination on Advance Management Accounting (i.e. New Course).

• In question 5(a)(ii) on Simulation, Average monthly shortfall should be 399 ÷ 12= 33.25 instead of 399 ÷ 10=39.9. If there is nil shortfall, still that period shall be taken into consideration while calculating Average. This view is also substantiated with Illustration on Pg. 16.10, Question 6(b) of May'03, Question 5(c) of May'10[Old Course], Question 3(a) of Nov.'09[Old Course]

Mistakes in suggested answers for Nov.’09 examination on Cost Management (i.e. Old Course).

• In Question 1(b) on PERT. PERT Network is grossly wrong because precedence relationship is not correctly established in it. For e.g. In answer suggested by ICAI, A has also become predecessor of D (via dummy 2-3), similarly E has become predecessor of H (via dummy 6-7 then dummy 7-5).

                Correct PERT Network can be downloaded from: https://tinyurl.com/2f4nyub

          This question is copied from Question 4 (b) of May'1993 CA Final Examination, although its network was correctly drawn in Suggested answers of that year.

• In above question itself, variance calculation is wrong, variance should be 2.646 [i.e. square root of (0.111+2.777+4+0.111+0)] & not 2.71 [i.e. square root of (0.44+2.78+4+0.11+0])

• In Question 3(a), quest has specifically asked about “total time spent by a customer in system” but suggested answer has given “Average time spent by a customer in system” & have wrongly written it as “total time spent by a customer in system” Correct answer should be: 3,6,8,6,8,5,5,5,5,4,4,6,6,7,8,6,6,6,3,3

Suggested answers are uploaded by ICAI on their website (Direct link: https://icai.org/post.html?post_id=5720&c_id=314)

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