| ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS) | |||||||||||||||||||||||||||||||||||||
| END SEMESTER EXAMINATION – SEPT/OCT. 2015 | |||||||||||||||||||||||||||||||||||||
| B.B.M. – V SEMESTER | |||||||||||||||||||||||||||||||||||||
| M1 11 502: ACCOUNTING FOR MANAGEMENT DECISIONS | |||||||||||||||||||||||||||||||||||||
| Duration: 3 Hours Max. Marks: 100 | |||||||||||||||||||||||||||||||||||||
| SECTION – A | |||||||||||||||||||||||||||||||||||||
| I) | Answer ALL the questions. Each carries 2 marks. (10×2=20) | ||||||||||||||||||||||||||||||||||||
| 1. | What is Budgetary Control? | ||||||||||||||||||||||||||||||||||||
| 2. | What do you mean by Target Costing? | ||||||||||||||||||||||||||||||||||||
| 3. | State four assumptions of Break even analysis. | ||||||||||||||||||||||||||||||||||||
| 4. | If Fixed Cost is Rs.10,000 and profit volume ratio is 50%,calculate the break even point. | ||||||||||||||||||||||||||||||||||||
| 5. | What is the difference between relevant and irrelevant cost? | ||||||||||||||||||||||||||||||||||||
| 6. | State the benefits Kaizen Costing. | ||||||||||||||||||||||||||||||||||||
| 7. | State the importance of limiting factor in decision making. | ||||||||||||||||||||||||||||||||||||
| 8. | State any four factors that influence Make or Buy decision. | ||||||||||||||||||||||||||||||||||||
| 9. | What do you mean by Activity Based Costing? | ||||||||||||||||||||||||||||||||||||
| 10. | What is Balance Score Card? | ||||||||||||||||||||||||||||||||||||
| SECTION – B | |||||||||||||||||||||||||||||||||||||
| II) | Answer any FOUR questions. Each carries 5 marks. (4×5=20) | ||||||||||||||||||||||||||||||||||||
| 11. | A company has annual fixed cost of Rs.14,00,000. In the year2014,sales amounted to Rs.60,00,000 as compared with Rs. 45,00,000 in the year 2013.The profit in 2014 was Rs.4,20,000 higher than in 2013. If there is reduction in selling price in 2015 by 10% and company desires to earn the same profit as in 2014 ,what would be the required sales volume? | ||||||||||||||||||||||||||||||||||||
| 12. | A company is manufacturing and selling Electric Motors in the domestic market, at Rs.6,900 each made up as under
A foreign buyer has offered to buy 200 such motors at Rs.5000 each. As a Cost Accountant of the company would you advise acceptance of offer if production capacity is available? |
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| 13. | For production of 10,000 electrical automatic irons, the following are the budgeted expense:
Direct material Rs. 60 Direct labour 30 Variable Overheads 25 Fixed Overheads (Rs. 1,50,000) 15 Variable expenses (direct) 5 Selling expenses (10% fixed) 15 Administrative expenses (Rs. 50,000 rigid for all levels of production) 5 Distribution expenses (20% fixed) 5 Total cost of sale per unit 160 Prepare a budget for production of 6,000 and 8,000 irons, showing distinctly marginal cost and total cost.
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| 14. | What are the benefits of implementing Activity Based Costing System? | ||||||||||||||||||||||||||||||||||||
| 15. | Explain the features of Target Costing. | ||||||||||||||||||||||||||||||||||||
| 16. | A Manufacturing Company finds that while the cost of making a component part is Rs.10,the same is available in the market at Rs.9 with the assurance of continued supply. Give your suggestions whether to make or buy this part.
The cost information is given below; Rs. Materials 3.50 Direct Labour 4.00 Other variable Expenses 1.00 Fixed Expenses 1.50 ———— 10.00 ———– |
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| SECTION – C | |||||||||||||||||||||||||||||||||||||
| III) | Answer any THREE questions. Each carries 15 marks. (3×15=45) | ||||||||||||||||||||||||||||||||||||
| 17. | A department of a company attains sales of Rs.6,00,000 at 80% of its capacity and its expenses are given below:
Administration Cost(Fixed) Office Salaries Rs. 90,000 General Expenses 2 per cent of sales Depreciation 7,500 Rates and Taxes 8,750 Selling Costs: Salaries 8 per cent of sales Travelling Expenses 2 per cent of sales Sales Office 1 per cent of sales General Expenses 1 per cent of sales
Distribution Costs: Wages (Fixed) 15,000 Rent 1 per cent of sales Other Expenses 4 per cent of sales Draw up Flexible Budget at 90% and 100% of normal capacity. |
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| 18. | A company manufactures three products A,B and C. There are no common processes and the sales of one product does not affect prices or volume of sales of any other.
The company’s budgeted Profit/Loss for 2015 has been abstracted as follows:
On the basis of the above, the board had almost decided to eliminate product C, on which a loss was budgeted. Meanwhile, they have sought your opinion. As the Cost Accounting expert, what would be your advice? Give reasons for your answer. |
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| 19. | Prepare a cash budget for three months ending 30th June 2015 from the information given below:
Credit terms are: a. a.Sales /Debtors – 10% sales are on cash, 50%of the credit sales are collected next month and the balance in the following month.
b. Creditors : Materials –2 Months Wages -1/4 Month Overheads -1/2 Month
Cash and Bank balance on 1st April 2015 is expected to be Rs.6000 Other relevant information is: i) Plant and machinery will be installed in February ,2015 at a cost of Rs. 96,000.The monthly instalment of Rs.2,000 is payable from April onwards. ii) Dividend @5% on Preference Share Capital of Rs. 2,00,000 will be paid on 1st June iii) Advance to be received for sale of vehicles Rs. 9,000 in June. iv )Dividends from investments amounting to Rs. 1,000 are expected to be received in June. v) Income Tax (advance) to be paid in June is Rs.2,000.
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| 20. | From the following data calculate the Break even Point and profit if output is 50,000 Units by drawing a Break Even Chart.
Fixed Expenses :Rs.1,50,000 Variable Cost Per Unit :Rs. 10 Selling Price Per Unit : Rs.15
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| 21. | What is Life Cycle Costing? Explain the process of Life Cycle Costing. | ||||||||||||||||||||||||||||||||||||
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SECTION – D |
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| IV) | Case Study (1×15=15) | ||||||||||||||||||||||||||||||||||||
| 22. | The licensed capacity of Goodwill India Company Ltd. is Rs. 80,00,000.At present the sales are Rs. 60,00,000 and the sales demand is a key factor .It is proposed by the management that in order to utilize the existing capacity, the selling price of the product should be reduced by 5%.
The revenue account of the company is summarized below: Rs Sales 60,00,000 Direct Materials 18,00,000 Direct Wages 12,00,000 Variable Overheads 4,80,000 Fixed Overheads 17,20,000 ————– 52,00,000 —————- Profit 8,00,000 —————– The following changes are expected in the costs: a) Sales forecast Rs. 76,00,000 (at reduced price) b) Direct Wages rates and variable overheads are expected to increase by 5% c) Direct Material prices are expected to increase by 2% d) Fixed overheads will increase by Rs.80,000
You are required to forecast the effect of change in selling price and costs on profit.
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