LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.com., DEGREE EXAMINATION –  COMMERCE

SIXTH SEMESTER – NOVEMBER 2012

CO 6605- MANAGEMENT ACCOUNTING

 

 

 

Date : 01/11/2012             Dept. No.                                        Max. : 100 Marks

Time : 1:00 – 4:00

 

PART A

 

Answer ALL questions                                                                                            (10×2=20 marks)

 

1. What is margin of safety?

 

2. What do you mean by Limiting factor?

 

3. State the formula for Earnings per share and Price Earnings ratio.

 

4. Fill in the blanks:
5. a) Labour cost variance is sub-divided into …………….variance and ………..variance.
6. b) …………..minus Fixed cost is profit.

 

5. State whether the following statements are TRUE or FALSE.
6. a) Profit volume ratio  will change if the quantity sold changes.
7. b) Machinery purchased and paid for in shares will affect fund flow statement.

 

6. Budgetted fixed overheads Rs,40,000, budgeted production 20,000 units. Actual fixed overheads Rs.48,000; Actual production Rs.19,000. Calculate overhead volume and expenditure variance.

 

7. Credit sales for January, February and March are Rs.1 lakh, Rs.1.20 lakhs and Rs.1.50 lakhs respectively. 20% of debtors are collected in the month of sales. 30% in the month following the sales and 50% in the second month following the sales. Calculate the amount collected from the debtors in the month of March.

 

8. A Ltd reports the following data relating to debtors:

Net credit sales during 2006                        Rs.31 lakhs

Debtors on 31/12/2006                             Rs.4,16,000

Compute accounts receivable turnover and the collection period.  (No. of days 365)

 

9. Budgetted production and overhead cost for two capacity levels are given below:

Budgetted productions Units                     2000             3000

Indirect material (Rs.)                            10000           15000

Depreciation                                         4000             4000

Maintenance                                         2000             2200

Calculate overhead cost for a production of 5000 units.

 

10. Sales Rs.2,00,000; Cost of goods sold Rs.1,20,000; Operating expenses Rs.40,000. Calculate operating ratio and operating profit ratio

 

PART  B

 

Answer ANY FIVE questions                                                                     Marks:5×8=40

 

11. Discuss the merits and limitations of Ratio Analysis.

 

12. Distinguish between Management Accounting and Financial Accounting.

 

 

13. The following data for the quarter ended 31^st March 2012 is given to you:

Budgetted production 4000 units, Material Rs.20,000, Wages Rs.32,000, Factory overheads Rs.36,000 (4/9 fixed). It is anticipated that production will increase by 25% in the second quarter. Material prices are expected to reduce by 50p per unit. Labour rates are expected to increase by Rs.1.50 per unit. Fixed overheads remains constant, but Variable overheads is expected to increase by Re.1 per unit. Prepare a Production Cost Budget for the second quarter of 2012.

 

14. From the following P/L statement compute fund from operations:

Sales                                                   Rs.60,000

Dividend received                                  Rs.  3,000

Interest on investments                          Rs.  3,000

Total income                                         Rs.66,000

Less: expenses:

Purchases               Rs.50,000

Salaries                  Rs.  7,000

Depreciation            Rs.  2,000

Goodwill w/o            Rs.  1,000

Preliminary expenses Rs.    500

Discount on shares    Rs.  1,500

Total expenses                                      Rs.70,000

Net loss                                               Rs.  4,000

 

15. The following details relate to two products A and B.

A                 B

Selling price per unit(Rs.)              200              500

Material at Rs.20/kg                      40                160

Labour at Rs.10/hour                    50                100

Variable overheads (Rs.)               20                40

The total fixed overheads are Rs.50,000. Comment on the profitability of each product when,

1. a) raw material is in short supply.
2. b) sales in quantity is limited.
3. c) if the company has only 4000 kgs of raw material and the maximum demand of product A is 1000 units and that of B is 1800 units, determine the most profitable sales mix and the profit for that level of sale.

 

16. Prepare a Balance sheet from the following data:

Gross profit ratio                                   20%

Debtors turnover                                   6 times

Fixed assets to Shareholders’ funds           0.80

Reserves to Capital                                0.50

Current ratio                                         2.50

Liquid ratio                                           1.50

Net working capital                                Rs.300000

Stock turnover ratio                               6 times

 

17. The following is budgeted cost per unit for the production of 5000 units at 50% capacity.

Material                                    Rs.20

Labor                                       Rs.10

Factory overheads                      Rs.  5 (20% fixed)

Administration overheads              Rs.  4 (fixed)

Selling overheads                        Rs.  2 (40% variable)

Prepare a budget for a production of 8,000 units and calculate the budgeted profit, if the selling price is Rs.50 per unit.

18. Draw a Material Procurement Budget (in quandities) From the following information:

Estimated Sales of a product 40,000 units.  Each unit of the product requires 3 units of material

‘A’ and 5 units of material ‘B’ .

 

	Opening stock (units)	Closing stock (units)
Finished Stock	5,000	7,000
Material A	12,000	15,000
Material B	20,000	25,000
Materials on order: A: B:	7,000 11,000	5,000 10,000

PART  C

 

Answer ANY TWO questions                                                                     Marks:2×20=40

 

19. The sales and profit of M Ltd for 2 years were as follows:

Year                       Sales(Rs.)                         Profit(Rs.)

2006                      1,50,000                             20,000

2007                      1,70,000                              28,000

Assuming that selling price per unit, variable cost per unit and the total fixed cost for the two years remain the same, calculate:

1. PV ratio
2. Break even sales
3. Sales to earn a profit of Rs.40,000
4. Profit when sales are Rs.2,60,000
5. Margin of safety when profit is Rs.50,000
6. New break even sales when selling price is reduced by 20%.

 

20. The standard cost for manufacturing 100 kgs of product X consist of:

Material  A 80 kgs at Rs.2.50 per kg.

Material B 20 kgs at Rs.4 per kg

Material C 20 kgs at Re.1 per kg

During the month of January, 2000 kgs of Product X were produced.  The actual materials used were as follows:

Material A 1,500 kgs at Rs.2.40 per kg

Material B 400 kgs at Rs.4.20 per kg

Material C 500 kgs at Rs.1.10 per kg

Calculate material variances.

 

21. The following are the Balance Sheets of ABC Ltd.

 

	31/12/2010 Rs.	31/12/2011 Rs.		31/12/2010 Rs	31/12/2011 Rs.
Share capital P/L Account Term Loans Creditors Tax provision Prop. dividend	3,00,000 4,90,000 5,00,000 70,000 86,000 24,000 14,70,000	3,50,000 6,96,000 2,00,000 58,000 1,02,000 30,000 14,36,000	Fixed Assets Investment Stock Debtors Bank Cash	13,36,000 20,000 20,000 33,000 50,000     11,000 14,70,000	12,78,000 – 24,000 57,000 44,000      33,000      14,36,000

 

 

1. a) Depreciation on Fixed assets provided during the year Rs.110,000.
2. b) A fixed asset whose Book Value is Rs.25,000 was sold for Rs.12,000.
3. c) Income tax paid during the year was Rs.75,000.
4. d) Interim dividend paid during the year Rs.25,000.
5. e) Proposed dividend of 2010 was paid in 2011
6. f) Investments were sold for Rs.25,000

Prepare Fund Flow Statement.

 

 

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