This practice test covers Cost and Management Accounting for CA Intermediate Group 2 students preparing for the January 2027 examination attempt. It carries 30 marks across 15 questions in 6 case scenarios with a time limit of 60 minutes and no negative marking.
15 questions across 6 chapters, 30 marks and 60 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 Paper 4 Cost and Management Accounting (relevant for the January 2027 examination attempt), Cost Accounting Standards (CAS) issued by ICMAI, and Guidance Notes.
Questions
15
Marks
30
Time limit
60 minutes
Attempt
January 2027
Group
Group 2
Law basis
ICAI Study Material for Paper 4 Cost and Management Accounting (relevant for the January 2027 examination attempt), Cost Accounting Standards (CAS) issued by ICMAI, and Guidance Notes
Content as of
2026-11-03
Chapters covered
Material Cost (4 Q)
Cost Sheet (1 Q)
Employee Cost and Direct Expenses (4 Q)
Cost Accounting Systems (1 Q)
Overheads—Absorption Costing Method (4 Q)
Unit & Batch Costing (1 Q)
Questions, answers and explanations
Question 1 · 2 marks · Material Cost · hard
Scenario. Vardhan Precision Components Ltd. manufactures industrial coolant-pump casings and uses alloy rod M-42 as a direct material. Production is steady throughout the year, and the stores team plans replenishment over 240 operating days. The purchasing manager has asked the cost accountant to calculate the economic order quantity and stock-control limits before approving the next annual supply contract. The supplier's normal unit price includes delivery to the factory; each purchase order incurs a separate documentation and inspection cost. No storage-capacity restriction, deterioration loss or shortage penalty applies. For maximum-stock computation, the EOQ is to be used as the re-order quantity. Annual demand remains unchanged under either purchase alternative.\n\nMaterial data:\nAnnual requirement: 48,000 units\nNormal purchase price: ₹250 per unit\nOrdering cost: ₹500 per order\nAnnual carrying charge: 12% of unit purchase price\nDaily consumption: maximum 260 units; average 200 units; minimum 140 units\nSupplier lead time: maximum 5 days; average 4 days; minimum 2 days\nEmergency purchase lead time: 1 day\nBulk offer: 4% reduction in invoice price when each order is at least 4,000 units\n\nThe supplier confirms that the discount is deducted from the invoice price and does not affect quality, freight or delivery reliability. For stock-level calculations, use average daily consumption for minimum stock and danger level, and use maximum or minimum daily consumption with the corresponding lead-time extremes for the re-order and maximum levels. For the annual purchase decision, include purchase cost, ordering cost and carrying cost under both the EOQ order size and the discounted order size.
What are the EOQ, rounded to the nearest unit, and the annual total of ordering plus carrying costs at EOQ, respectively?
Explanation. Annual carrying cost per unit is ₹250 × 12% = ₹30. EOQ is √(2 × 48,000 × ₹500 ÷ ₹30), or 1,264.91 units, rounded to 1,265. At EOQ, annual ordering and carrying costs are each about ₹18,974, giving ₹37,947 together. Option (a) includes only one of these two costs; the EOQ comparison requires their combined annual amount.
Where it goes wrong. Counting only the annual ordering cost or only the annual carrying cost instead of adding both.
Authority. ICAI Study Material, Paper 4: Cost and Management Accounting, Module relevant for Material Cost
Question 2 · 2 marks · Material Cost · hard
Using the EOQ as the re-order quantity, which set gives the re-order level, minimum stock level and maximum stock level, respectively?
Working. Re-order level = Maximum consumption × Maximum lead time = 260 × 5 = 1,300 units. Minimum stock level = Re-order level − (Average consumption × Average lead time) = 1,300 − (200 × 4) = 500 units. Re-order quantity = EOQ ≈ 1,265 units. Maximum stock level = Re-order level + Re-order quantity − (Minimum consumption × Minimum lead time) = 1,300 + 1,265 − (140 × 2) = 2,285 units.
Explanation. The re-order level uses maximum daily consumption and maximum lead time: 260 × 5 = 1,300 units. Minimum stock is 1,300 less average consumption during average lead time, giving 500 units. Maximum stock adds the 1,265-unit EOQ and deducts minimum consumption during minimum lead time, giving 2,285 units. Option (a) begins with average, rather than maximum, consumption for the re-order level.
Where it goes wrong. Using average consumption to calculate re-order level, or omitting the minimum-consumption lead-time deduction from maximum stock.
Authority. ICAI Study Material, Paper 4: Cost and Management Accounting, Module relevant for Material Cost
Question 3 · 2 marks · Material Cost · medium
At what stock quantity should ordinary issues stop and only emergency issues be made, using the stated emergency lead time?
200 units, based on average consumption (correct answer)
140 units, based on minimum consumption
260 units, based on maximum consumption
400 units, based on the normal lead time
Answer: A — 200 units, based on average consumption
Working. Danger level = Average daily consumption × Emergency purchase lead time = 200 units × 1 day = 200 units.
Explanation. The danger level is the level at which normal material issues are stopped and only emergency issues are made. The chapter's formula uses average consumption multiplied by the lead time for emergency purchases. Here, that is 200 units per day for one day, or 200 units. Option (b) substitutes minimum consumption even though the scenario specifies average consumption for this calculation.
Where it goes wrong. Using the minimum daily consumption or an ordinary supplier lead time instead of the stated average consumption and emergency lead time.
Authority. ICAI Study Material, Paper 4: Cost and Management Accounting, Module relevant for Material Cost
Question 4 · 2 marks · Material Cost · hard
Should the company accept the 4% discount for an order of 4,000 units, based on annual purchase, ordering and carrying costs?
Reject; the discounted purchase cost is lower, but total annual cost rises by ₹4,54,347
Reject; the purchase rebate of ₹4,80,000 is outweighed by annual ordering cost
Accept; annual cost falls by ₹4,80,000, being only the purchase-price saving
Accept; annual total cost falls by about ₹4,54,347 after ordering and carrying costs (correct answer)
Answer: D — Accept; annual total cost falls by about ₹4,54,347 after ordering and carrying costs
Explanation. At EOQ, total annual cost including purchases is about ₹1,20,37,947. At the discounted 4,000-unit order size, the reduced purchase price lowers annual purchase cost to ₹1,15,20,000; ordering and carrying costs add ₹63,600. The discounted alternative therefore costs ₹1,15,83,600, saving about ₹4,54,347. Option (c) mistakes the gross purchase-price saving for the net saving and ignores inventory costs.
Where it goes wrong. Comparing only the reduction in purchase price, without adding the discount lot's ordering and carrying costs or comparing against EOQ total cost.
Authority. ICAI Study Material, Paper 4: Cost and Management Accounting, Module relevant for Material Cost
Question 5 · 2 marks · Cost Sheet · medium
Scenario. NovaShield Co. prepares a cost sheet for a batch of industrial coatings. During the period, it incurs ₹48,000 on inspection and testing activities and ₹72,000 as salaries of quality-control laboratory staff. It also spends ₹55,000 on development work to improve the coating process. Containers costing ₹90,000 are essential to hold and preserve the coating for use by the customer. Corrugated cartons costing ₹65,000 are used only to store and transport finished containers to distributors. Sale of metal scrap generated during production yields ₹32,000. Management asks for the net adjustment to cost of production from these items, excluding costs that belong to selling and distribution.
What net amount from the listed items should be added to cost of production?
₹2,33,000; quality control, process R&D and primary packing less scrap (correct answer)
₹2,98,000; secondary packing is also included in production cost
₹1,78,000; process R&D is excluded from production cost
₹2,65,000; scrap recovery is not deducted from production cost
Answer: A — ₹2,33,000; quality control, process R&D and primary packing less scrap
Working. Quality-control cost = ₹48,000 + ₹72,000 = ₹1,20,000. Add process R&D = ₹55,000. Add primary packing = ₹90,000. Less scrap recovery = ₹32,000. Net addition to cost of production = ₹1,20,000 + ₹55,000 + ₹90,000 − ₹32,000 = ₹2,33,000. Secondary packing of ₹65,000 is excluded from production cost.
Explanation. Quality-control resources, process-improvement R&D and primary packing are included in cost of production. The realisable value of scrap is credited against production cost. The ₹65,000 cartons are secondary packing for storage and transport, so they belong to distribution rather than production. Option (b) wrongly includes that secondary packing and overstates production cost by ₹65,000.
Where it goes wrong. Including secondary distribution packing in production cost, or failing to deduct scrap recovery.
Authority. ICAI Study Material, Paper 4: Cost and Management Accounting, Module relevant for Cost Sheet
Question 6 · 2 marks · Employee Cost and Direct Expenses · hard
Scenario. Rivermark Gearworks Ltd. manufactures gearbox housings for industrial equipment. Two finishing-cell employees, Nikhil and Tara, perform the same standard job. The standard time allowed for each job is 48 hours and the time rate is ₹180 per hour. Nikhil completes the job in 36 hours, while Tara completes it in 42 hours. The payroll manager wants to compare the total earnings that would arise if each worker were paid under the Halsey Premium Plan with a 50% sharing rate and, separately, under the Rowan Premium Plan.\n\nThe personnel register shows 240 employees on roll at the beginning of the year and 260 at the end. During the year, 20 employees separated and 15 employees were replaced. The replacement figure excludes new employees recruited for expansion, and the company uses the simple average of opening and closing employees as the average workforce.\n\nThe finishing department also records 90 overtime hours during the month. The normal hourly rate for this overtime crew is ₹160, and overtime is paid at twice the normal rate. Of these hours, 40 were worked at a customer's urgent request, for which the customer agreed to bear the overtime charge; 30 were needed to make up a shortfall in the general production programme, and 20 arose because a flood caused abnormal disruption. The cost accountant must allocate only the overtime premium, not the normal-time portion of overtime wages, according to the cause of the work.
What are the combined earnings of Nikhil and Tara under the Halsey Plan and, separately, under the Rowan Plan?
Halsey ₹15,660; Rowan ₹16,050; Rowan exceeds Halsey by ₹390
Explanation. Under Halsey, each worker receives actual-time wages plus half the wages for time saved. Under Rowan, the bonus is the proportion of actual-time wages represented by time saved divided by time allowed. Nikhil earns ₹7,560 under Halsey and ₹8,100 under Rowan; Tara earns ₹8,100 and ₹8,505, respectively. Option (a) understates Rowan earnings by misapplying the saved-time proportion.
Where it goes wrong. Applying the Halsey 50% bonus formula to Rowan, or using time allowed rather than actual-time wages in the Rowan bonus.
Authority. ICAI Study Material, Paper 4: Cost and Management Accounting, Module relevant for Employee Cost and Direct Expenses
Question 7 · 2 marks · Employee Cost and Direct Expenses · medium
What is Tara's effective hourly wage rate under the Rowan Plan?
₹180.00 per hour, using only basic time wages
₹192.86 per hour, using Halsey total earnings
₹202.50 per hour, using Rowan total earnings (correct answer)
₹210.00 per hour, using Nikhil's Halsey hourly rate
Answer: C — ₹202.50 per hour, using Rowan total earnings
Working. Tara's Rowan total earnings = ₹8,505 (from q06 calculation). Effective hourly wage rate = Total earnings ÷ Actual hours = ₹8,505 ÷ 42 hours = ₹202.50 per hour.
Explanation. Tara's Rowan earnings are ₹8,505 for 42 hours worked. Effective hourly earnings are therefore ₹8,505 divided by 42, or ₹202.50. Option (b) uses Tara's Halsey earnings, while option (d) imports Nikhil's Halsey hourly result. The standard time rate is only the starting rate; the effective rate reflects the Rowan bonus earned by Tara.
Where it goes wrong. Dividing Rowan earnings by the 48 hours allowed, rather than the 42 hours actually worked.
Authority. ICAI Study Material, Paper 4: Cost and Management Accounting, Module relevant for Employee Cost and Direct Expenses
Question 8 · 2 marks · Employee Cost and Direct Expenses · medium
What are the employee turnover rates by the separation method and replacement method, respectively?
Explanation. Average employees on roll are the average of opening and closing headcounts: 250. The separation method uses employees separated, while the replacement method uses employees replaced. The resulting rates are 8% and 6%, respectively. Option (b) reverses the two numerators, a common error when both methods use the same average workforce denominator.
Where it goes wrong. Interchanging separations and replacements, or using opening or closing headcount instead of average employees on roll.
Authority. ICAI Study Material, Paper 4: Cost and Management Accounting, Module relevant for Employee Cost and Direct Expenses
Question 9 · 2 marks · Employee Cost and Direct Expenses · hard
How should the overtime premium of ₹14,400 be allocated among the customer job, the finishing department and Costing Profit and Loss Account, respectively?
Working. Overtime rate = 2 × ₹160 = ₹320 per hour. Overtime premium per hour = ₹320 − ₹160 = ₹160. Customer request: 40 × ₹160 = ₹6,400 charged to the customer job. General production shortfall: 30 × ₹160 = ₹4,800 charged to finishing-department overhead. Abnormal flood: 20 × ₹160 = ₹3,200 charged to Costing Profit and Loss Account. Total premium = ₹6,400 + ₹4,800 + ₹3,200 = ₹14,400.
Explanation. At double time, the overtime premium is the extra amount above the normal rate: ₹160 per overtime hour. The premium for customer-requested urgency is charged directly to that job; premium for a general production shortfall is departmental overhead; and premium caused by abnormal flood conditions is transferred to Costing Profit and Loss Account. Option (c) wrongly treats the abnormal premium as a normal factory cost.
Where it goes wrong. Allocating the full double-time wage instead of only the premium, or ignoring the cause-specific treatment of overtime.
Authority. ICAI Study Material, Paper 4: Cost and Management Accounting, Module relevant for Employee Cost and Direct Expenses
Question 10 · 2 marks · Cost Accounting Systems · medium
Scenario. Suryanet Appliances Ltd. maintains non-integrated cost and financial ledgers. The cost ledger reports profit of ₹8,40,000 before items recorded solely in the financial accounts. During the year, the financial ledger records dividend income of ₹36,000, a loss of ₹21,000 on the sale of long-term investments and a provision for income tax of ₹1,25,000. Assume there are no other reconciliation differences and no difference in stock valuation. The finance controller asks for the profit to be reported by the financial accounts after accounting for these three items.
What is the profit as per financial accounts after incorporating the listed items?
₹7,51,000
₹8,55,000
₹7,30,000 (correct answer)
₹9,31,000
Answer: C — ₹7,30,000
Working. Profit as per cost records = ₹8,40,000. Add dividend received = ₹36,000. Less loss on sale of investments = ₹21,000. Less provision for income tax = ₹1,25,000. Financial profit = ₹8,40,000 + ₹36,000 − ₹21,000 − ₹1,25,000 = ₹7,30,000.
Explanation. Dividend received is purely financial income and is added to costing profit. Loss on sale of investments and provision for income tax are purely financial expenses and are deducted. Financial profit is therefore ₹7,30,000. Option (b) is a tempting intermediate figure because it adds the dividend and deducts the investment loss but omits the tax provision.
Where it goes wrong. Omitting the provision for income tax or adding the loss on sale of investments as if it were income.
Authority. ICAI Study Material, Paper 4: Cost and Management Accounting, Module relevant for Cost Accounting Systems
Question 11 · 2 marks · Overheads—Absorption Costing Method · hard
Scenario. Helios Flowtech Ltd. manufactures industrial pumps through two production departments, P1 (machining) and P2 (assembly), supported by service departments S1 (power house) and S2 (maintenance). The annual factory overhead budget contains four items. Building rent of ₹2,40,000 is apportioned by floor-area ratio P1:P2:S1:S2 of 4:3:1:2. Plant depreciation of ₹1,50,000 is apportioned by equipment-value ratio 5:3:1:1. Indirect wages are specifically identifiable as P1 ₹90,000, P2 ₹60,000, S1 ₹40,000 and S2 ₹50,000. Electric power cost of ₹1,20,000 is apportioned by metered consumption ratio 60:25:5:10.\n\nAfter primary distribution, S1 renders services to P1, P2 and S2 in the proportions 30%, 50% and 20%, respectively. S2 renders services to P1, P2 and S1 in the proportions 40%, 40% and 20%, respectively. The company uses the repeated distribution method until the remaining service-department balances become negligible. Budgeted machine hours are 1,500 for P1 and 2,000 for P2, and comprehensive departmental machine-hour rates are required.\n\nFor the year, actual factory overhead incurred is ₹8,00,000, while actual machine hours equal the respective budgeted hours. Of the resulting under-absorption, 40% is attributable to abnormal production interruption following a flood; the remaining 60% is due to a substantial but unavoidable increase in indirect consumables prices. The 25,000 equivalent production units comprise 4,000 WIP equivalent units, 6,000 finished units in stock and 15,000 units sold. The normal portion is to be adjusted through a supplementary rate.
What is the total overhead charged to production department P1 after primary distribution but before re-apportionment of service-department costs?
₹3,21,000 after area, asset, wage and power charging
₹3,30,000 after area, asset, wage and power charging
₹3,36,000 after area, asset, wage and power charging
₹3,33,000 after area, asset, wage and power charging (correct answer)
Answer: D — ₹3,33,000 after area, asset, wage and power charging
Working. Rent to P1 = ₹2,40,000 × 4/10 = ₹96,000. Depreciation to P1 = ₹1,50,000 × 5/10 = ₹75,000. Indirect wages specifically allocated to P1 = ₹90,000. Power to P1 = ₹1,20,000 × 60/100 = ₹72,000. Primary-distribution total for P1 = ₹96,000 + ₹75,000 + ₹90,000 + ₹72,000 = ₹3,33,000.
Explanation. P1 receives its directly identifiable indirect wages and its apportioned shares of rent, depreciation and power. Rent is apportioned by floor area, depreciation by equipment value and power by metered consumption. Their combined amount is ₹3,33,000. Option (a) is a plausible undercharge when one of the apportioned items, particularly power, is not assigned using its stated consumption ratio.
Where it goes wrong. Applying one common apportionment base to every overhead item instead of selecting the stated benefit or usage base.
Authority. ICAI Study Material, Paper 4: Cost and Management Accounting, Module relevant for Overheads—Absorption Costing Method
Question 12 · 2 marks · Overheads—Absorption Costing Method · hard
After completing repeated distribution of S1 and S2 overheads, what is the total overhead of production department P1?
₹4,23,459
₹4,27,542
₹4,26,542 (correct answer)
₹4,31,542
Answer: C — ₹4,26,542
Working. Primary totals: P1 ₹3,33,000; P2 ₹2,07,000; S1 ₹85,000; S2 ₹1,25,000. Repeated rounds: S1 ₹85,000 distributes ₹25,500 to P1, ₹42,500 to P2 and ₹17,000 to S2. S2 then has ₹1,42,000 and distributes ₹56,800 to P1, ₹56,800 to P2 and ₹28,400 to S1. S1's next ₹28,400 distributes ₹8,520 to P1, ₹14,200 to P2 and ₹5,680 to S2; S2's next ₹5,680 distributes ₹2,272 to P1, ₹2,272 to P2 and ₹1,136 to S1. Continuing the repeated cycle, S1 total = ₹85,000 + ₹28,400 ÷ (1 − 0.04) = ₹1,14,583.33; S2 total = ₹1,25,000 + ₹17,000 + ₹5,680 ÷ (1 − 0.04) = ₹1,47,916.67. Cumulative service cost allocated to P1 = 30% × ₹1,14,583.33 + 40% × ₹1,47,916.67 = ₹34,375 + ₹59,166.67 = ₹93,541.67. P1 final overhead = ₹3,33,000 + ₹93,541.67 = ₹4,26,541.67 ≈ ₹4,26,542.
Explanation. Repeated distribution recognises the reciprocal services between S1 and S2. The repeated rounds converge to total service costs of about ₹1,14,583 for S1 and ₹1,47,917 for S2. P1 receives 30% of S1 and 40% of S2, adding about ₹93,542 to its primary overhead of ₹3,33,000. Option (a) understates P1 by failing to carry the reciprocal service allocations through the repeated rounds.
Where it goes wrong. Redistributing each service department only once to production departments, thereby ignoring services exchanged between S1 and S2.
Authority. ICAI Study Material, Paper 4: Cost and Management Accounting, Module relevant for Overheads—Absorption Costing Method
Question 13 · 2 marks · Overheads—Absorption Costing Method · hard
What is the comprehensive machine-hour rate for production department P2 after service-department redistribution?
Explanation. The comprehensive rate includes P2's primary overhead and the service-department costs transferred to it after repeated distribution. P2's final overhead is approximately ₹3,23,458. Dividing by its 2,000 budgeted machine hours gives ₹161.73 per hour. Option (a) is based on an incomplete overhead pool and omits part of the secondary distribution.
Where it goes wrong. Dividing P2's primary overhead alone by its machine hours, without adding redistributed service-department overhead.
Authority. ICAI Study Material, Paper 4: Cost and Management Accounting, Module relevant for Overheads—Absorption Costing Method
Question 14 · 2 marks · Overheads—Absorption Costing Method · hard
Which treatment correctly disposes of the year's under-absorbed overhead, including the abnormal portion and the normal portion allocated by supplementary rate?
₹20,000 to Costing P&L; ₹1.20 per unit to WIP ₹4,800, finished goods ₹7,200 and cost of sales ₹18,000 (correct answer)
₹30,000 to Costing P&L; ₹0.80 per unit to WIP ₹3,200, finished goods ₹4,800 and cost of sales ₹12,000
₹50,000 to Costing P&L; no supplementary adjustment to WIP, finished goods or cost of sales
₹20,000 to factory overhead; ₹1.20 per unit credited to WIP, finished goods and cost of sales
Answer: A — ₹20,000 to Costing P&L; ₹1.20 per unit to WIP ₹4,800, finished goods ₹7,200 and cost of sales ₹18,000
Working. Absorbed overhead = P1 final overhead ₹4,26,541.67 + P2 final overhead ₹3,23,458.33 = ₹7,50,000. Under-absorption = Actual overhead ₹8,00,000 − ₹7,50,000 = ₹50,000. Abnormal share = ₹50,000 × 40% = ₹20,000, transferred to Costing P&L. Normal share = ₹50,000 × 60% = ₹30,000. Supplementary rate = ₹30,000 ÷ 25,000 equivalent units = ₹1.20 per unit. WIP = 4,000 × ₹1.20 = ₹4,800; finished goods = 6,000 × ₹1.20 = ₹7,200; cost of sales = 15,000 × ₹1.20 = ₹18,000.
Explanation. Actual overhead exceeds absorbed overhead by ₹50,000. The abnormal 40% share, ₹20,000, is transferred to Costing Profit and Loss Account. The normal ₹30,000 balance is spread at ₹1.20 over 25,000 equivalent units and charged to WIP, finished goods and cost of sales according to their units. Option (c) wrongly transfers the normal portion to Costing Profit and Loss instead of adjusting the affected cost balances.
Where it goes wrong. Transferring the whole under-absorbed amount to Costing Profit and Loss, or applying the supplementary rate to the abnormal portion.
Authority. ICAI Study Material, Paper 4: Cost and Management Accounting, Module relevant for Overheads—Absorption Costing Method
Question 15 · 2 marks · Unit & Batch Costing · medium
Scenario. Aster Polymer Components Ltd. makes identical valve sleeves in production batches. Annual demand is 72,000 units, and each machine reset before a batch costs ₹1,600. The manufacturing cost of a sleeve is ₹80; the company applies an annual inventory carrying charge of 8% on that unit cost. Assume inventory rises evenly from zero to the batch size and that setup cost and inventory carrying cost are the only costs affected by batch size. Determine the economic batch quantity using the batch-size formula in the study material.
What is the economic batch quantity for valve sleeves?
5,000 units per batch
6,000 units per batch (correct answer)
6,500 units per batch
7,500 units per batch
Answer: B — 6,000 units per batch
Working. Annual demand D = 72,000 units. Setup cost per batch S = ₹1,600. Carrying cost per unit per annum C = ₹80 × 8/100 = ₹6.40. EBQ = √(2 × D × S ÷ C) = √((2 × 72,000 × ₹1,600) ÷ ₹6.40) = √36,000,000 = 6,000 units.
Explanation. The EBQ formula balances annual setup cost against inventory carrying cost. The annual carrying cost per sleeve is ₹80 × 8% = ₹6.40. Substituting annual demand of 72,000 units and setup cost of ₹1,600 gives an EBQ of 6,000 units. A common mistake is to use the ₹80 manufacturing cost itself as the carrying-cost input rather than applying the stated annual carrying percentage.
Where it goes wrong. Using the full unit manufacturing cost as annual carrying cost instead of 8% of that cost.
Authority. ICAI Study Material, Paper 4: Cost and Management Accounting, Module relevant for Unit & Batch Costing
Authorities cited in this paper
ICAI Study Material, Paper 4: Cost and Management Accounting, Module relevant for Material Cost · ICAI Study Material, Paper 4: Cost and Management Accounting, Module relevant for Cost Sheet · ICAI Study Material, Paper 4: Cost and Management Accounting, Module relevant for Employee Cost and Direct Expenses · ICAI Study Material, Paper 4: Cost and Management Accounting, Module relevant for Cost Accounting Systems · ICAI Study Material, Paper 4: Cost and Management Accounting, Module relevant for Overheads—Absorption Costing Method · ICAI Study Material, Paper 4: Cost and Management Accounting, Module relevant for Unit & Batch Costing
Questions people ask
What does this Cost and Management Accounting test cover?
This practice paper carries 30 marks across 15 questions arranged in 6 case scenarios covering Chapter 2: Material Cost, Chapter 6: Cost Sheet, Chapter 3: Employee Cost and Direct Expenses, Chapter 7: Cost Accounting Systems, Chapter 4: Overheads—Absorption Costing Method, Chapter 8: Unit & Batch Costing. Each scenario presents realistic manufacturing and commercial operational data requiring practical cost computations, variance analysis, and managerial decision criteria.
How many questions are there and what is the time limit?
There are 15 questions carrying 2 marks each, giving a maximum score of 30 marks. The time limit is 60 minutes. There is no negative marking, so an incorrect answer costs nothing.
Which study material applies to these questions?
The questions follow the ICAI Study Material for Paper 4 Cost and Management Accounting (relevant for the January 2027 examination attempt) and Cost Accounting Standards (CAS) issued by ICMAI.
Which specific chapters are included in this paper?
The questions are drawn from Chapter 2: Material Cost, Chapter 6: Cost Sheet, Chapter 3: Employee Cost and Direct Expenses, Chapter 7: Cost Accounting Systems, Chapter 4: Overheads—Absorption Costing Method, Chapter 8: Unit & Batch Costing. They evaluate cost accumulation, overhead apportionment, unit/batch costing, variance analysis, and relevant costing principles.
Is this test affiliated with ICAI?
No. This is an independent practice paper prepared for CA Intermediate students. It is not issued by or affiliated with ICAI. Questions are prepared with AI tools and cross-checked by independent solvers; they are not reviewed by a Chartered Accountant.
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In exam mode the test is timed and marked upon final submission, providing your score, tier, and a performance certificate. In practice mode you can review answers, working steps, and citations as you work through the questions.
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