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
Answer ALL questions (10×2=20 marks)
- What is margin of safety?
- What do you mean by Limiting factor?
- State the formula for Earnings per share and Price Earnings ratio.
- Fill in the blanks:
- a) Labour cost variance is sub-divided into …………….variance and ………..variance.
- b) …………..minus Fixed cost is profit.
- State whether the following statements are TRUE or FALSE.
- a) Profit volume ratio will change if the quantity sold changes.
- b) Machinery purchased and paid for in shares will affect fund flow statement.
- 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.
- 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.
- 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)
- 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.
- 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
Answer ANY FIVE questions Marks:5×8=40
- Discuss the merits and limitations of Ratio Analysis.
- Distinguish between Management Accounting and Financial Accounting.
- The following data for the quarter ended 31st 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.
- From the following P/L statement compute fund from operations:
Dividend received Rs. 3,000
Interest on investments Rs. 3,000
Total income Rs.66,000
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
- The following details relate to two products A and 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,
- a) raw material is in short supply.
- b) sales in quantity is limited.
- 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.
- 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
- The following is budgeted cost per unit for the production of 5000 units at 50% capacity.
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.
- 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)|
|Materials on order:
Answer ANY TWO questions Marks:2×20=40
- 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:
- PV ratio
- Break even sales
- Sales to earn a profit of Rs.40,000
- Profit when sales are Rs.2,60,000
- Margin of safety when profit is Rs.50,000
- New break even sales when selling price is reduced by 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.
- The following are the Balance Sheets of ABC Ltd.
- a) Depreciation on Fixed assets provided during the year Rs.110,000.
- b) A fixed asset whose Book Value is Rs.25,000 was sold for Rs.12,000.
- c) Income tax paid during the year was Rs.75,000.
- d) Interim dividend paid during the year Rs.25,000.
- e) Proposed dividend of 2010 was paid in 2011
- f) Investments were sold for Rs.25,000
Prepare Fund Flow Statement.
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