# Loyola College B.Com April 2007 Management Accounts Question Paper PDF Download

LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.Com. DEGREE EXAMINATION – COMMERCE

 TH 24

SIXTH SEMESTER – APRIL 2007

# CO 6605 – MANAGEMENT ACCOUNTS

Date & Time: 18/04/2007 / 9:00 – 12:00      Dept. No.                                                       Max. : 100 Marks

SECTION – A

1. Answer all the questions: 10 x 2 = 20 Marks
1. What are Financial Statements?
2. Bring out the significance of Turnover ratios.
3. Mention any four limitations of funds flow statement.
4. Define Marginal cost.
5. What is a Master Budget?
6. Find out the semi variable cost for 40,000 units.  Semi variable cost for 30,000 units: Rs.15,000, which is 40% fixed and 60% variable?
7. Calculate funds from operation from the following particulars:
• Net profit for the year ended 31.3.2007: Rs.6,50,000
• Profit on sale of building: Rs.40,000
• Goodwill written off during the year Rs.10,000
• Old machinery worth Rs.8,000 has been sold for Rs.6,500
• Depreciation has been provided on plant at 20% per year. The value of plant is Rs.5,00,000
1. The fixed cost per month in a factory is Rs.50,000.  The contribution per unit is Rs.50 for product A and Rs.25 for B.  Which of the following product mixes is most yielding?

(a)  800 A and 1000 B                         (b) 1,500 A only

(c) 3,000 B only                                 (d) 1,200 A and 400 B

1. Find out fixed assets and gross profit from the following information:

Sales Rs.10,00,000

Gross profit ratio – 25%

Fixed assets turnover ratio (on cost of sales) 5 times

1. From the following data, calculate labour cost and rate variances for the two departments:

Actual direct wages                                          Rs.80,000        Rs.72,000

Standard hours produced                                      10,000               8,000

Standard rate per hour                                     Rs.8                 Rs.10

Actual hours worked                                            12,000               7,000

## SECTION – B

1. Answer any FIVE questions only: 5 x 8 = 40 Marks

1. “Marginal costing is a valuable aid for managerial decisions” – Discuss.
2. Highlight the advantages and limitations of Management accounting.
3. Distinguish between standard costing and budgetary control.
4. Following are the ratios relating to the trading activities of Neela Traders Ltd., Chennai.

Receivables turnover  –  90 days (360 days year)

Inventory turnover  – 3 times

Payables turnover  –  3 months

Gross profit ratio  –  25%

Gross profit for the year amounted to Rs.18,000.  Closing inventory of the year is Rs.2,000 above the opening inventory.  Bills receivable amount to Rs.2,500 and bills payable Rs.1,000.  Ascertain the following:

• Sales (b) Debtors (c) Closing inventory (d) Sundry creditors

15.Following are the comparative balance sheets of Cheran Company Limited

Liabilities                    31.12.2005  31.12.2006         Assets                 31.12.2005  31.12.06

Share capital                70,000             74,000             Bank                         9,000         —

Debentures                  12,000               6,000             A/cs. Receivable     14,900     17,700

A/cs. Payable              10,360             11,840             Stock in trade          49,200     42,700

Pro. Fr. Doubtful debts     700               800               Buildings                 20,000     40,600

P & L A/c                       10,040          10,560             Goodwill                 10,000       5,000

Bank overdraft                  —                2,800

————————-                                              ———————

1,03,100      1,06,000                                          1,03,100  1,06,000

• Buildings were acquired for Rs.20,600
• Amount provided for amortization of goodwill totaled Rs.5,000
• Dividend paid totaled Rs.3,500
• Debenture loan repaid was Rs.6,000

Explain how the overdraft of Rs.2,800 as on 31st Dec. 2006 has arisen.

16.The following are the operating details of two plants operating under the same management:

Particulars                                                                   Plant A                        Plant B

Sales                                                                                        10,00,000                 8,00,000

Variable cost                                                                             6,00,000                 5.00,000

Fixed cost                                                                                 2,00,000                 1,00,000

Capacity of operation                                                                   100%                       50%

You are required to ascertain:

• Break even sales and break even capacity of the merged plant
• Profit and Profitability of operating the merged plant at 90% of the capacity
• Capacity level of operation, if profit of Rs.4,00,000 (the profit made by both plants before merger) has to be made by  the merged plant.

1. Fixed Expenses                                           Rs. (lakhs)            Rs. (lakhs)

Wages                                                                         16.8

Rent, taxes, etc.                                                          11.2

Depreciation                                                                14.0

——-                           59.8

Semi Variable expenses (50% capacity)

Repair and maintenance                                                5.0

Indirect labour                                                                        19.8

Sales Dept. salaries                                                       5.8

——-                           35.8

Variable expenses (at 50% capacity)

Material                                                                       48.0

Labour                                                                         51.2

Other expenses                                                              7.6

——-                           106.8

Assume that fixed expenses remain constant at all levels, semi variable expenses remain constant between 40% and 65%, 10% increase between 65% and 85% and 20% increase between 85% and 100%.  Sales at various levels are as under:

Rs. (lakhs)

60% capacity                          200

75% capacity                          240

90% capacity                          300

100% capacity                         340

Prepare a flexible budget for the half-year and forecast profits at 60%, 75%, 90% and 100% capacity.

1. A company manufactures a particular product the standard material cost of which is Rs.10 per unit. The following information is obtained from the cost records.
• Standard Mix

Material           Quantity          Rate     Amount

Units             Rs.         Rs.

A                            70                10         700

B                            30                  5         150

——-                          ——-

• 850

Loss 15%                15                                           —

——–                          ——-

• 850

———                        ——–

(ii) Actual results for January 2007:

Material           Quantity          Rate     Amount

Units             Rs.         Rs.

A                           400               11        4,400

B                           200                 6        1,200

——-                          ——-

• 5,600

Loss 10%                60                               —

——–                        ——–

• 5,600

——-                        ——–

Calculate: (1) Material price variance (2) Material mix variance (3) Material usage variance (4) Material yield variance (5) Material cost variance

### III. Answer any TWO questions only:                                                2 x 20 = 40 Marks

1. You are given the following information pertaining to the financial statements of Premsai Ltd., as on 31.12.2006. On the basis of the information supplied, you are required to prepare the Trading and Profit and Loss Account for the year and a Balance Sheet as on that date:

Net current assets                                            Rs.2,00,000

Issued share capital                                         Rs.6,00,000

Current ratio                                                    1.8

Quick ratio                                                      1.35

Fixed assets to shareholders equity                80%

Rate of gross profit                                         25%

Net profit to issued share capital                    20%

Stock turnover ratio (cost of goods

Goods sold to closing stock)                          5 times

Average age of outstanding debts

For the year                                                   36 ½ days

1. Prepare a funds flow statement from the following Balance Sheets of PRR as at 31st March 2006 and 2007

Liabilities             2006         2007                        Asset                  2006         2007

Share capital                4,50,000  4,50,000                  Fixed Assets        4,00,000   3,20,000

General Reserve          3,00,000  3,10,000                  Investments             50,000     60,000

P & L Account               56,000     68,000                  Stock                    2,40,000   2,10,000

Creditors                     1,68,000  1,34,000                  Sundry Debtors    2,10,000  4,55,000

Mortgage Loan                —       2,70,000                  Bank                     1,49,000  1,97,000

Pro. For Taxation          75,000      10,000

———————–                                               ————————

10,49,000 12,42,000                                            10,49,000 12,42,000

• Investments costing Rs.8,000 were sold during the year for Rs.8,500 and further investments were purchased during the year for Rs.18,000
• The net profit for the year was Rs.62,000 after charging depreciation on fixed assets Rs.70,000 for the year and provision for taxation Rs.10,000
• During the year part of fixed assets costing Rs.10,000 was disposed for Rs.12,000 and the profit was included in the P&L A/c.
• Dividend paid during the year amounted to Rs.40,000

1. A newly started Pushpak Company wishes to prepare cash budget from January. Prepare a cash budget for the 6 months from the following estimated revenue and expenses:
 Month Total Sales Materials Wages Production Overhead Selling & Distribution Overhead January February March April May June 20,000 22,000 24,000 26,000 28,000 30,000 20,000 14,000 14,000 12,000 12,000 16,000 4,000 4,400 4,600 4,600 4,800 4,800 3,200 3,300 3,300 3,400 3,500 3,600 800 900 800 900 900 1,000

Cash balance on 1st January was Rs.10,000.  A new machine is to be installed at Rs.30,000 on credit, to be repaid by two equal installments in March and April.

Sales commission at 5% on total sales is to be paid within the month following actual sales.

Rs.10,000 being the amount of 2nd call may be received in March.  Share premium amounting to Rs.2,000 is also obtained with 2nd call.

Period of credit allowed by suppliers – 2 months

Period of credit allowed to customers – 1 month

Delay in payment of overheads – 1 month

Delay in payment of wages – ½ month

Assume cash sales to be 50% of the total sales

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