Question 6 (a) In the following independent situations, identify the type of cost and state whether it is relevant/non-relevant in managerial decision making: (i) A Limited owns a commercial space of 1500 square feet and uses the same for its own office accommodation purposes. Similar office is available nearby on rent of ` 30,000 per month. (ii) MNC Limited has paid ` 1 Lakh as rent for a factory shed which is temporarily closed for the last two months. (iii) Beta Company has paid ` 3 Lakhs to a market research agency to find out the market demand of the innovative product developed by the company. COST AND MANAGEMENT ACCOUNTING (iv) Zen LLP has paid incentive of ` 5 Lakhs @ 1% on sales to the salesmen for achieving sales beyond the expected sales of ` 25 Lakhs per month per salesman. (v) A start-up company has invested ` 50 Lakhs in Project P. The company could have earned interest of ` 3 Lakhs by investing the amount in a bank fixed deposit @ 6% per annum. (5 Marks) (b) Cosmos Limited uses activity based costing and accumulates overhead costs in the following cost pools: (1) Human Resources (2) Maintenance of buildings (3) Parts Management (4) Plant security (5) Purchasing (6) Floor manager's salary (7) Quality control (8) Machine set-up (9) Designing the product (10) Receiving Department Classify each cost pool as per cost hierarchy i.e. unit level, batch level, product level or facility level. (5 Marks) (c) Describe briefly the methods for valuation of work-in-process followed in Process Costing. (4 Marks) OR (c) Contemplate the list of functions given below and identify each one of them with the most relevant scope of Cost Accounting: (i) It involves a detailed examination of each cost. (ii) Helps in planning and control, performance appraisal and managerial decision making. (iii) Cost involved in alternative courses of action. (iv) To find out factors responsible for variance in actual costs from the budgeted costs. (4 Marks)