ManagementAccounting_s13.pdf - THE INSTITUTE OF CHARTERED...

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Page 1 of 4 THE INSTITUTE OF CHARTERED ACCOUNTANTS OF PAKISTAN EXAMINERS’ COMMENTS SUBJECT Management Accounting SESSION Final Examination - Summer 2013 General: This time the paper was attempted in a far better manner as compared to many previous attempts. The unsuccessful candidates either lacked conceptual knowledge of the subject or suffered because of ignoring or misinterpreting the requirements of the question. Question-wise comments are as under: Question 1 Although this question pertaining to debtors/creditors related policies was quite straightforward, yet the performance was just about average. The common errors were as follows: The students mainly concentrated on impact of change in cash flows on financing costs. Loss of contribution margin due to decrease in sale was generally ignored. Many students could not compute the conversion costs correctly, as they were unable to comprehend that 50% of cost of raw material means 1/3 rd of cost of sales. Most of the students computed the additional bad debts at 1% of the revised debtors. The correct way to make the calculation was to take the difference between 4% of existing debtors and 3% of the revised debtors. Most of the students failed to realize that they had to evaluate both the changes (i.e. change in credit policy and change in payment policy) separately. Instead, they gave a single conclusion based on the combined effect of both the changes. Question 2 This question pertained to job order costing. A situation was given where the candidates were required to compute the selling price that would result in a 20% margin on sales price. Though most of the calculations were quite simple yet, an average response was witnessed as almost every student made some mistakes. The most common errors were as follows: Very few students realized that wastage would occur at each of the two stages i.e.
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