LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com. DEGREE EXAMINATION – COMMERCE
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SIXTH SEMESTER – APRIL 2008
CO 6605 – MANAGEMENT ACCOUNTS
Date : 21/04/2008 Dept. No. Max. : 100 Marks
Time : 9:00 – 12:00
SECTION A
- Answer ALL questions (10×2=20 marks)
- What are cash and cash equivalents?
- What are Funds?
- What is margin of safety?
- What is Key Factor?
- What are some of the important liquidity Ratios?
- Current Ratio = 2.8
Acid Test Ratio = 1.5
Working Capital = Rs. 1,62,000
Find out a) Current Assets
- b) Current Liabilities
- c) Liquid Assets
- Sales Rs. 1,20,000
Gross profit ratio Rs.25/-
Opening stock is Rs. 10,000/- more than closing stock.
Calculate purchases.
- From the following information find out the amount of Profit using Marginal Costing Technique.
Fixed Costs Rs. 2,50,000
Variable Costs Rs. 10 per unit
Selling Price Rs.15 per unit
Output Level Rs. 75,000 units
- From the following information calculate:
- Material Cost Variance
- Material Price Variance
- Material Usage Variance
Standard Output 1 unit
Standard Material per unit 3 kg
Standard Price per kg Rs. 2/-
Actual output 80 units
Actual prices Rs.2.50 per kg.
Actual Materials used 250 kgs
- Calcualte the Pay-out ratio and the Retained Earnings ratio
From the following data;
Number of Equity Shares 3000
Dividend for Equity Share Rs. 0.40
Net Profit before tax Rs. 10,000
Provision for tax Rs. 5,000
Preference Dividend Rs. 2,000
SECTION B
- Answer any FIVE questions: (5×8=40 marks)
- State some of the important objectives of Management Accounting.
- Bring out the important differences between Funds Flow Statement and cash flow statement.
- What are the limitations of ratio analysis?
- Ms R&Co supplies the following information for the year ending 31st Dec 2007.
Credit Sales Rs. 1,50,000
Cash Sales Rs. 2,50,000
Returns Inwards Rs. 25,000
Opening Stock Rs. 25,000
Closing Stock Rs. 35,000
Calculate
- Inventory turnover when the Gross Profit Ratio is 20%.
- Stock Velocity
- Draw up a flexible budget for production at 75% and 100% capacity from the following data given for 50% activity.
Particulars Per unit
Rs.
Materials 100
Labour 50
Variable Expenses (Direct) 10
Administrative Expenses (50% fixed) 40,000
Selling and distribution expenses (60% fixed) – 50,000
Present production (50% activity) – 1,000 units
- Sale of a product amounts to 200 units per month at Rs.10 per unit. Fixed overhead cost is Rs.400 per month and the variable cost is Rs.6 per unit.
The company proposes to reduce selling price by 10%. Calculate present and future P/V ratio. How many units must be sold to earn the present total profits?
- From the following information prepare a cash budget for the months of January to April.
Months Expected Sales Months Expected purchases
January 60,000 January 48,000
February 40,000 February 80,000
March 45,000 March` 81,000
April 40,000 April 90,000
Wages to be paid to workers amounted to Rs. 5,000 each month.
Balance at the Bank as on 1st January was Rs. 8,000.
The following decisions were taken to be implemented by the management in the future.
- In case of deficit of funds within the limit of Rs. 10,000, arrangements can be made with the bank.
- In case of deficit of funds exceeding Rs. 10,000 but within a limit of Rs. 42,000 issue of debentures is to be preferred.
- In case of deficit of funds exceeding Rs. 42,000, issue of shares is preferred.
- In a Factory, the Standard Mix consists of 60kgs of X and 40kgs of Y. The standard Loss of production is 30%. The standard price of X is Rs.5 per kg and Y is Rs.10 per kg.
The actual Mix and Yield are as follows:
X-80kgs at Rs. 4.50 per kg
Y-70kgs at Rs.8.00 per kg
Actual yield = 115kgs
Calculate Material Variances.
SECTION C
III. Answer any TWO questions: (2×20=40 marks)
- 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 to outstanding debts
For the year 36 \ days
- The following is the Balance Sheet for the year 2004-2005
| 2004 | 2005 | 2004 | 2005 | ||
| Share Capital | 4,00,000 | 6,00,000 | Building | 5,70,000 | 5,00,000 |
| Share Premium | 1,00,000 | 1,10,000 | Plant & Machinery | 3,60,000 | 3,51,000 |
| General Reserve | 3,00,000 | 3,30,000 | Furniture | 90,000 | 81,000 |
| Debentures | 3,00,000 | 2,90,000 | Cash in Hand | 5,000 | 8,000 |
| Provision for Taxation | 40,000 | 35,000 | Debtors
Stock |
1,80,000
1,55,000 |
1,60,000
1,45,000 |
| Secured Loans | 2,00,000 | 1,00,000 | Bills Receivable | 4,000 | 40,000 |
| Current Liabilities | 24,000 | 30,000 | Long term Investments | 2,10,000 | |
| 13,64,000 | 14,95,000 | 13,64,000 | 14,95,000 |
Adjustments:
- During the year 2005 the Company paid 12% Dividend on Equity Share Capital of Rs. 4,00,000
- The shares of Rs.100 each fully paid
- Tax paid Rs. 30,000
- Building worth Rs. 70,000 was sold for Rs. 60,000, new construction of Building for the year Rs. 25,000.
- Machinery purchased for cash Rs. 40,000
- Machinery having a book value of Rs. 10,000 was sold for Rs. 20,000.
Prepare Funds Flow Statement.
- The following particulars are extracted from the records of a company.
| Particulars | Product A | Product B |
| Sales (per unit) | Rs. 100 | Rs. 120 |
| Consumption of Material | 2 kg | 3kg |
| Material Cost | Rs. 10/- | Rs. 15/- |
| Direct Wages Cost | Rs. 15 | Rs. 10 |
| Direct Expenses | Rs. 5 | Rs. 6 |
| Machine hours used | 3 | 2 |
Overhead Expenses:
Fixed 5 10
Variable 15 20
Direct wage per hour is Rs.5. Comment on the profitability of each product (both use the same raw material) when:
- Total sales potential in units is limited
- Production capacity (in term of machine hours) is the limiting factor.
- Materials is in short supply.
- Sales potential in value is limited
- Assuming the firm has only 3,500kgs of raw material and the maximum sales potential of each of the products A and B is 1,000 units, Calculate the most profitable sales mix and the profit for that sales mix assuming that the total fixed cost is Rs. 40,000.
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