1. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

END SEMESTER EXAMINATION – OCTOBER 2014

 BCOM – V SEMESTER

 COST AND MANAGEMENT ACCOUNTING – III

Duration: 3 Hours                                                                                            Max. Marks: 100

SECTION – A

 

1. Answer ALL the questions. Each carries 2 marks.                                     (10 x 2 =20)

 

1. Define Management Accounting.
2. What do you mean by financial statement analysis?
3. State any four functions of management accounting.
4. What do you mean by common size statement?
5. What are turnover ratios?
6. How do you calculate dividend yield ratio?
7. Give the meaning of Flow of Funds.
8. State any four components of current liabilities.
9. Differentiate between a C.F.S. and a F.F.S.
10. Give the meaning of kaizen costing.

SECTION – B

 

1. Answer any FOUR Each carries 5 marks.                                    (4×5=20)

 

11. State the characteristics or nature of management accounting.

 

12. From the following information, prepare a comparative income statement.

 

Particulars                                                           31-3-2013                    31-3-2014

Sales                                                                     10,00,000                    8,00,000

Cost of goods sold                                               6,00,000                    4,00,000

Administration and selling expenses               2,00,000                    1,40,000

Other incomes                                                         40,000                       20,000

Income tax                                                             1,20,000                    1,40,000

 

 

13. From the following information, calculate:
14. Gross Profit Ratio
15. Net operating profit ratio
16. Net profit ratio

 

Net sales                                            Rs. 5,00,000

Cost of goods sold                           Rs. 3,50,000

Selling expenses                               Rs.    12,000

Administrative expenses               Rs.      8,000

Interest Income                                 Rs.      5,000

Loss on sale of old machine           Rs.    12,000

 

14. What are the principles of target costing?

 

15. State whether the following transactions result in inflow or outflow of funds.
16. Share issued to vendors for the purchase of building.
17. Debentures converted into share capital
18. Machinery purchased for cash
19. Bills receivables realized.
20. Redemption of debentures

 

 

16. From the following information, calculate cash flow from operations.

Particulars                                                                 2014                2013

Profits made during the year                           2,50,000                –

Income received in advance                                     500                600

Prepaid expenses                                                    1,600             1,400

Debtors                                                                   80,000           95,000

Bills receivables                                                    25,000           20,000

Creditors                                                                45,000           40,000

Bills payables                                                        13,000           15,000

Outstanding expenses                                           2,500             2,000

Accrued income                                                      1,500             1,200

 

SECTION – C

 

III)      Answer any THREE questions.    Each carries 15 marks.                       (3×15=45)

 

17. Prepare Common Size Balance sheet of A ltd. And B. ltd. As on 31-3-2014 from the following balance sheets of the two companies.

 

 

Liabilities	A ltd.	B ltd.	Assets	A ltd.	B ltd.
Equity share capital Preference share capital General reserve Profit and loss account Current liabilities : Proposed dividend Sundry creditors Bills payables Outstanding salary Provision for taxation	4,80,000 2,60,000 48,000 –   67,200 70,000 17,200 39,200 67,200	7,20,000 1,20,000 72,000 64,800   93,600 1,00,000 27,200 14,400 76,800	Investments Discount on issue of shares Factory building Machinery Fixed deposits Preliminary expenses Current assets: Sundry debtors Stock Bank Cash	43,200   1,20,000 2,00,000 2,16,000 24,000 24,000   1,80,000 2,04,000 30,600 7,000	–   96,000 1,20,000 4,58,400 84,000 16,800   2,59,200 1,87,200 50,000 17,200
	10,48,800	12,88,800		10,48,800	12,88,800

 

18. From the following information, prepare the Balance Sheet of R.K. Motors Ltd.

 

Current Ratio                                                                        2

Working capital                                                                   Rs.4,00,000

Capital Block to current assets                                          3:2

Fixed assets to turnover                                                      1:3

Sales cash/credit                                                                  1:2

Creditors velocity                                                                2 months

Debtors velocity                                                                   2 months

Share capital                                                                                     Rs.6,00,000

Debenture / Share capital                                                  1:2

Net profit                                                                               10% of sales

Gross profit                                                                           25% of sales

Reserves                                                                                2.5% of sales

 

 

 

19. From the following details relating to the accounts of RP Company ltd., prepare statement of sources and application of funds:

Liabilities	31-3-2013	31-3-2014	Assets	31-3-2013	31-3-2014
Share capital Reserves Profit and loss account Debentures Income tax provisions Trade  creditors Proposed dividend	4,00,000 1,00,000 50,000 1,00,000 40,000 70,000 40,000	3,00,000 80,000 30,000 1,50,000 50,000 90,000 30,000	Good will Plant & Machinery Debenture discount Prepaid expenses Investments Sundry debtors Stock Cash at bank	90,000 4,29,250 5,000 5,750 60,000 1,10,000 80,000 20,000	1,00,000 2,98,000 8,000 4,000 1,00,000 1,60,000 50,000 10,000
	8,00,000	7,30,000		8,00,000	7,30,000

 

Additional information:

1. 15% depreciation  has been charged on plant and machinery.
2. Old machine costing Rs. 50,000 (WDV Rs. 20,000) have been sold for Rs. 35,000
3. A machine costing Rs. 10,000 (WDV Rs. 3.000) has been discarded.
4. A plant costing Rs. 2,30,000 was purchased during the year
5. 10,000 profit has been earned by sale of investments
6. Debentures have been redeemed at 5% premium.
7. 45,000 income tax has been paid and adjusted against income tax provision account.

 

20. From the following condensed comparative balance sheets of Bangalore Mills ltd. And additional information, prepare a cash flow statement for the year 2014

Liabilities	2013	2014	Assets	2013	2014
Share capital Share premium Retained earnings 7% mortgage loan Creditors o/s salaries provision for taxation	70,000 9,000 23,820 – 6,900 2,000 1,000	80,000 11,000 30,820 20,000 6,000 1,400 1,400	Plant & machinery Accumulation of Dep. on P & M Building Accumulation of Dep. On Building Land Stock Debtors Prepaid expenses Cash	62,000 (37,000)   95,000   (43,000) 10,000 10,220 8,600 720 6,180	66,000 (26,200)   1,16,000   (45,000) 12,000 9,620 7,600 800 9,800
	1,12,720	1,50,620		1,12,720	1,50,620

 

Additional information:

1. Plant costing Rs. 16,000 (accumulated depreciation Rs. 14,800) was sold during the year for Rs. 1,200
2. Building was acquired during the year at a cost of Rs. 21,000. In addition to cash payment of Rs. 1,000, a 7% mortgage loan was raised for the balance.
3. Dividend of Rs. 8,000 was paid during the year.
4. A sum of Rs. 13,900 was transferred to provision for taxation account in 2014.

Prepare cash flow statement.

 

21. Reliance company manufacturing two products A and B, using the same equipment and similar processes, an extract of the production data for these products in one period is shown below:

Particulars	A	B	Total
Units produced Direct material cost per unit Direct labour cost per unit Direct labout hours per unit Machine hours per unit Set ups in a period Orders handled in the period	2500 40 20 1 3 5 12	3500 50 30 2 1 20 48	6000 – – – – 25 60

 

The overheads relating to the activities are given below:

Particulars	Amount
Relating to the machine activity Relating to production run set ups Relating to handling of orders Total	2,20,000 20,000 45,000 2,85,000

 

You are required to calculate production overheads to be absorbed by one unit of the products using the following costing   methods, also prepare cost sheet under both approach and comment.

1. Traditional costing approach using direct labour hour rate to absorb overheads
2. An activity based costing approach using suitable cost drivers to trace the overheads to products.

 

SECTION – D

1. Case study- Compulsory questions.                    (15 marks)
2. The Balance Sheets of Deeps Ltd., is as follows:

Liabilities	2013	2014	Assets	2013	2014
Equity Share Capital	4,00,000	5,00,000	Plant and Machinery	6,00,000	6,80,000
Bank Loan	1,00,000	60,000	Non-current Investments	50,000	40,000
Reserves & Surplus	80,000	50,000	Sundry Debtors	30,000	14,000
Public Deposits	1,00,000	75,000	Stock	65,000	60,000
Provision for tax	20,000	22,000	Prepaid Expenses	5,000	0
Proposed Dividend	20,000	25,000	Cash at Bank	30,000	13,000
Sundry Creditors	60,000	75,000
Total	7,80,000	8,07,000	Total	7,80,000	8,07,000

You are required to calculate the following:

2014. The Working Capital of the Company for the year 2013 and 2014. (2 Marks)
2015. Cash Flows from Investing Activities for the year ending 2014. (2 Marks)
2016. Funds from Operations for the year ending 2014. (2 Marks)
2017. Current Ratio and Quick Ratio for the year 2013 and 2014. (2 Marks)
2018. Ratio of Long-term Debt to Equity for the year 2013 and 2014. (2 Marks)
2019. State with reasons, whether the following transactions involve flow of funds.

1.      Issue of shares against purchase of stock.

2.      Conversion of debentures into equity Shares capital.

(2 Marks)

1. What will be the impact ( Increase/ Decrease / No Change) on Long-term Debt to Equity Ratio of the company, if the Company: (3 Marks)

1.      Purchases Furniture for Rs. 50,000 on long-term deferred payment basis.

2.      Declares of a Final Dividend amounting to Rs. 20,000.

3.      Pays a Final Dividend which was already declared.

 

 

 

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