This chapter-wise practice test covers Chapter 6: Cost Sheet - Test 2 for CA Intermediate Group 2 students preparing for the January 2027 examination attempt. It carries 40 marks across 20 questions in case scenarios and standalone practical MCQs with a time limit of 45 minutes and no negative marking.
20 questions across 1 chapter, 40 marks and 45 minutes in the timed paper. Every answer below is shown with the working behind it and the authority it rests on.
Law and standards used: ICAI Study Material for CA Intermediate Paper 4: Cost and Management Accounting (relevant for 2027 attempt).
Questions
20
Marks
40
Time limit
45 minutes
Attempt
January 2027
Group
Group 2
Law basis
ICAI Study Material for CA Intermediate Paper 4: Cost and Management Accounting (relevant for 2027 attempt)
Content as of
2026-11-10
Chapters covered
Chapter 6: Cost Sheet (20 Q)
Questions, answers and explanations
Question 1 · 2 marks · Chapter 6: Cost Sheet · medium
Scenario. Zenith Polymer Products Ltd. manufactured 50,000 industrial containers during October 2026. Its cost records show: Opening stock of raw materials: ₹3,20,000; Purchases of raw materials: ₹24,80,000; Freight inward: ₹90,000; Purchase returns: ₹50,000; Closing stock of raw materials: ₹2,90,000; Direct wages paid: ₹11,40,000; Direct consultancy fees for container mold design: ₹1,60,000; Factory power and utilities: ₹4,80,000; Factory rent and rates: ₹2,40,000; Plant maintenance: ₹1,80,000; Opening work-in-process: ₹2,10,000; Closing work-in-process: ₹2,60,000; Scrap realised on normal defective materials: ₹40,000.
What is the cost of raw materials consumed by Zenith Polymer Products Ltd. for October 2026?
Question 5 · 2 marks · Chapter 6: Cost Sheet · medium
Scenario. Apex Engineering Ltd. compiles its quarterly cost sheet for the quarter ended 31 December 2026. Raw materials consumed: ₹45,00,000; Direct labor: ₹28,00,000; Direct expenses: ₹4,00,000. Factory overheads are absorbed at 50% of direct wages. Quality control cost: ₹2,50,000; Research and development cost relating to production process: ₹3,00,000; Administrative overheads related to production: ₹3,50,000; Credit for scrap recovered: ₹80,000. Opening WIP: ₹3,00,000; Closing WIP: ₹3,80,000.
What is the Prime Cost of Apex Engineering Ltd. for the quarter ended 31 December 2026?
₹77,00,000 (correct answer)
₹73,00,000
₹76,20,000
₹78,00,000
Answer: A — ₹77,00,000
Explanation. Prime Cost = Raw Materials Consumed (₹45,00,000) + Direct Labor (₹28,00,000) + Direct Expenses (₹4,00,000) = ₹77,00,000.
Where it goes wrong. Using wrong labour hours per unit or adding factory overhead to prime cost.
Question 8 · 2 marks · Chapter 6: Cost Sheet · hard
What is the Cost of Production for Apex Engineering Ltd. for the quarter?
₹99,20,000
₹98,00,000
₹97,60,000
₹98,40,000 (correct answer)
Answer: D — ₹98,40,000
Explanation. Cost of Production = Works Cost (₹90,20,000) + Quality Control (₹2,50,000) + R&D Cost (₹3,00,000) + Administrative Overheads relating to production (₹3,50,000) − Credit for scrap (₹80,000) = ₹98,40,000.
Where it goes wrong. Wrongly adding scrap credit or omitting primary packing from cost of production.
Question 9 · 2 marks · Chapter 6: Cost Sheet · medium
Scenario. Primary packing cost is treated as:
Primary packing cost is treated as:
selling overhead
distribution overhead
part of cost of production (correct answer)
part of cost of sales
Answer: C — part of cost of production
Explanation. Primary packing is essential to hold and preserve the product for its intended use. As per the conventional cost sheet, primary packing cost is added to cost of production. Option a and b treat it as a post-production overhead; option d wrongly includes it only in cost of sales.
Where it goes wrong. Confusing primary packing with secondary packing, which is part of cost of sales.
Question 10 · 2 marks · Chapter 6: Cost Sheet · hard
Scenario. Administrative overheads relating to production are included in:
Administrative overheads relating to production are included in:
prime cost
factory cost
cost of goods sold
cost of production (correct answer)
Answer: D — cost of production
Explanation. Administrative overheads that relate to production activities (e.g., factory administration, production planning) are added after factory cost to arrive at cost of production. General administration overheads are part of cost of sales. Option a is wrong; option b excludes such costs; option c is after cost of production.
Where it goes wrong. Including production-related administration in factory overhead or in general administration.
Question 11 · 2 marks · Chapter 6: Cost Sheet · medium
Scenario. Research and development cost for improvement of production process is:
Research and development cost for improvement of production process is:
excluded from cost sheet
included in cost of sales
included in cost of production (correct answer)
included in selling overhead
Answer: C — included in cost of production
Explanation. R&D cost incurred for improvement of process, system, product or service is included in cost of production. R&D for market research or new product development not related to current production is excluded. Options a, b and d misclassify process-related R&D.
Where it goes wrong. Including all R&D costs in cost of production, or excluding process-related R&D entirely.
Question 12 · 2 marks · Chapter 6: Cost Sheet · hard
Scenario. A company has factory cost ₹8,00,000; QC cost ₹30,000; production administration ₹20,000; scrap credit ₹15,000; primary packing ₹25,000. Cost of production is:
A company has factory cost ₹8,00,000; QC cost ₹30,000; production administration ₹20,000; scrap credit ₹15,000; primary packing ₹25,000. Cost of production is:
₹8,45,000
₹8,55,000
₹8,50,000
₹8,60,000 (correct answer)
Answer: D — ₹8,60,000
Explanation. Cost of production = Factory cost ₹8,00,000 + QC ₹30,000 + production admin ₹20,000 − scrap ₹15,000 + primary packing ₹25,000 = ₹8,60,000. Option a omits primary packing; option b adds scrap instead of deducting; option c omits QC and admin.
Where it goes wrong. Adding scrap credit or omitting primary packing in cost of production.
Question 14 · 2 marks · Chapter 6: Cost Sheet · hard
Scenario. Which of the following is not included in cost of production?
Which of the following is not included in cost of production?
Quality control cost
Primary packing
R&D for process improvement
Secondary packing (correct answer)
Answer: D — Secondary packing
Explanation. Secondary packing enables storage, transport and promotion and is part of cost of sales. Quality control cost, primary packing and process-related R&D are included in cost of production. Option d is the correct answer because it is not part of cost of production.
Where it goes wrong. Confusing primary packing with secondary packing and including secondary packing in cost of production.
Question 15 · 2 marks · Chapter 6: Cost Sheet · medium
Scenario. A company incurred ₹50,000 on quality control, ₹30,000 on R&D for new product development (not process related), ₹20,000 on production administration. Amount to be included in cost of production from these is:
A company incurred ₹50,000 on quality control, ₹30,000 on R&D for new product development (not process related), ₹20,000 on production administration. Amount to be included in cost of production from these is:
₹1,00,000
₹80,000
₹70,000 (correct answer)
₹50,000
Answer: C — ₹70,000
Explanation. Included = QC ₹50,000 + production administration ₹20,000 = ₹70,000. R&D for new product development not related to current process is excluded from cost of production. Option a includes all costs; option b includes new product R&D; option d omits production administration.
Where it goes wrong. Including all R&D costs in cost of production, including new product development.
Question 16 · 2 marks · Chapter 6: Cost Sheet · hard
Scenario. Cost of production is ₹9,00,000. Opening FG is 500 units valued at ₹60 each. Closing FG is 800 units. Cost per unit of production is ₹50. COGS is:
Cost of production is ₹9,00,000. Opening FG is 500 units valued at ₹60 each. Closing FG is 800 units. Cost per unit of production is ₹50. COGS is:
₹8,80,000
₹9,00,000
₹9,20,000
₹8,90,000 (correct answer)
Answer: D — ₹8,90,000
Explanation. Opening FG value = 500 × ₹60 = ₹30,000. Closing FG value = 800 × ₹50 = ₹40,000. COGS = ₹9,00,000 + ₹30,000 − ₹40,000 = ₹8,90,000. Option a uses ₹20,000 opening value; option b ignores FG; option c adds closing FG.
Where it goes wrong. Using wrong cost per unit for opening or closing finished goods.
Question 17 · 2 marks · Chapter 6: Cost Sheet · medium
Scenario. Abnormal idle wages due to a sudden government-imposed lockdown are:
Abnormal idle wages due to a sudden government-imposed lockdown are:
included in factory cost
included in cost of production
excluded from cost of production (correct answer)
included in cost of sales
Answer: C — excluded from cost of production
Explanation. Abnormal costs, such as wages paid to idle workers during a sudden lockdown, are material and quantifiable abnormal costs. They are excluded from cost of production and charged separately. Options a, b and d wrongly include abnormal idle wages in normal cost.
Where it goes wrong. Treating abnormal lockdown idle wages as normal factory overhead.
Question 18 · 2 marks · Chapter 6: Cost Sheet · hard
Scenario. A subsidy received from the government for using eco-friendly raw materials should be:
A subsidy received from the government for using eco-friendly raw materials should be:
added to cost of production
ignored in cost sheet
treated as income
reduced from the cost of the product to which it relates (correct answer)
Answer: D — reduced from the cost of the product to which it relates
Explanation. As per cost accounting principles, any subsidy/grant/incentive received or receivable is reduced from the cost object to which it pertains. It is not added to cost, ignored, or treated as general income. Option d correctly reduces the related product cost.
Where it goes wrong. Adding subsidy to cost instead of reducing the related cost.
Question 20 · 2 marks · Chapter 6: Cost Sheet · hard
Scenario. R&D cost of ₹40,000 incurred for process improvement and ₹25,000 for market research. How much is included in cost of production?
R&D cost of ₹40,000 incurred for process improvement and ₹25,000 for market research. How much is included in cost of production?
₹65,000
₹40,000 (correct answer)
₹25,000
Nil
Answer: B — ₹40,000
Explanation. Only R&D cost incurred for improvement of process, system, product or service is included in cost of production. Market research R&D is not included. Therefore, ₹40,000 is included. Option a includes both; option c includes only market research; option d excludes all R&D.
Where it goes wrong. Including all R&D costs in cost of production, or excluding process-related R&D.
ICAI SM: Cost and Management Accounting, Chapter 6 (Cost Sheet)
Questions people ask
What does this Chapter 6: Cost Sheet - Test 2 practice test cover?
This practice test carries 40 marks across 20 questions covering core costing principles, cost accounting standards, formulas, mathematical models, and practical ICAI case scenarios.
How many questions are there and what is the time limit?
There are 20 questions carrying 2 marks each, giving a maximum score of 40 marks in 45 minutes with no negative marking.
Which study material and syllabus apply to these questions?
Questions strictly reflect the official ICAI Study Material for CA Intermediate Paper 4 Cost and Management Accounting for the 2027 examination sessions.
Can I sit this test in both exam and practice modes?
Yes. Practice mode gives immediate answers with mathematical step-by-step workings and trap explanations after each question. Exam mode simulates actual exam conditions with a live timer and issues a downloadable performance certificate.
