Loyola College B.Com April 2008 Management Accounts Question Paper PDF Download



RO 32







Date : 21/04/2008                Dept. No.                                        Max. : 100 Marks

Time : 9:00 – 12:00


  1. Answer ALL questions (10×2=20 marks)
  1. What are cash and cash equivalents?
  2. What are Funds?
  3. What is margin of safety?
  4. What is Key Factor?
  5. What are some of the important liquidity Ratios?
  6. Current Ratio = 2.8

Acid Test Ratio = 1.5

Working Capital = Rs. 1,62,000

Find out          a) Current Assets

  1. b) Current Liabilities
  2. c) Liquid Assets
  1. Sales Rs. 1,20,000

Gross profit ratio Rs.25/-

Opening stock is Rs. 10,000/- more than closing stock.

Calculate purchases.

  1. 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

  1. From the following information calculate:
  1. Material Cost Variance
  2. Material Price Variance
  3. 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

  1.  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


  1. Answer any FIVE questions: (5×8=40 marks)
  1. State some of the important objectives of Management Accounting.
  2. Bring out the important differences between Funds Flow Statement and cash flow statement.
  3. What are the limitations of ratio analysis?
  4. 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


  1. Inventory turnover when the Gross Profit Ratio is 20%.
  2. Stock Velocity
  1. Draw up a flexible budget for production at 75% and 100% capacity from the following data given for 50% activity.

Particulars                                           Per unit


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

  1. 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?

  1.  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.

  1. In case of deficit of funds within the limit of Rs. 10,000, arrangements can be made with the bank.
  2. 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.
  3. In case of deficit of funds exceeding Rs. 42,000, issue of shares is preferred.
  1.  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.


III. Answer any TWO questions:                                                    (2×20=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 to outstanding debts

For the year                                    36 \ days

  1. 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






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


  1. During the year 2005 the Company paid 12% Dividend on Equity Share Capital of Rs. 4,00,000
  2. The shares of Rs.100 each fully paid
  3. Tax paid Rs. 30,000
  4. Building worth Rs. 70,000 was sold for Rs. 60,000, new construction of Building for the year Rs. 25,000.
  5. Machinery purchased for cash Rs. 40,000
  6. Machinery having a book value of Rs. 10,000 was sold for Rs. 20,000.

Prepare Funds Flow Statement.

  1. 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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