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ST. JOSEPH’S COLLEGEOF COMMERCE (AUTONOMOUS)
END SEMESTER EXMINATION -OCTOBER 2013
B.COM – V SEMESTER
MANAGEMENT ACCOUNTING
TIME : 3 HOURS MAX MARKS:100
SECTION – A
I. Answer ANY TEN of the following question (10X2=20)
1. Give the meaning of the term Management Accounting.
2. Explain the concept of flow of funds.
3. Explain the treatment of extraordinary items in cash flow statement (as per AS 3).
4. Write a note on managerial uses of ratio analysis.
5. A Firm’s current assets and current liabilities are Rs. 24,000 and Rs. 6,000 respectively.
How much can it borrow from a bank without reducing current ratio below 1.5?
6. Give the meaning of the term Budgetary control.
7. Mention any 4 operating budgets.
8. Give the meaning of the term Marginal Cost.
9. X co has an overall PV ratio of 40% the marginal cost of Product A is estimated to be Rs.
30. Determine the selling price for Product A.
10. What do you mean by variance analysis?
11. Write a note on idle time variance.
12. A factory works on the standard costing system
The standard estimate for materials for manufacture of 1,000 units of a commodity is 400
Kgs at 2.50 per kg. When 2,000 units of the community are manufactured, it is found
that 820 kgs of materials are consumed @ Rs. 2.60 per kg. Calculate the material
variances.
SECTION – B
II. Answer ANY FOUR of the following question s. (4X5=20)
13. Write a note on the role of management accounting in the present scenario.
14. Calculate the trend percentages from the following figures of X Ltd., taking 2004 as the
base and interpret the:
Year Sales Stock Profit before tax
(Rs. In lakhs)
2004 1,881 709 321
2005 2,340 781 435
2006 2,655 816 458
2007 3,021 944 527
2008 3,768 1,154 672
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15. Following are the balance sheets of Rachana Ltd., as on 30th June 2010 and 2011:
Liabilities 2010 (Rs.) 2011 (Rs.) Assets 2010 (Rs.) 2011 (Rs.)
Share capital 1,00,000 1,50,000 Fixed Assets 2,00,000 3,00,000
Reserves 1,00,000 1,00,000 Current
Assets
50,000 80,000
Loan 20,000 80,000
Current
liabilities
30,000 50,000
Total 2,50,000 3,80,000 Total 2,50,000 3,80,000
Prepare a comparative balance sheet.
16. The working capital of XYZ Ltd., has deteriorated in recent years and now stands as
under:
Current
assets
Rs. Current
Liabilities
Rs.
Inventory 5,60,000 creditors 4,90,000
Debtors 3,50,000 Bank loan 2,10,000
cash 70,000
total 9,80,000 total 7,00,000
a) Compute current and quick ratio
b) A further bank loan of Rs. 50,000 against debtors is under negotiation, assuming the
loan is received; calculate the revised current and quick ratio.
17. With the following data for a 60% activity, prepare a budget for production at 80%
and 100% capacity:
Production at 60%
capacity
600 units
Materials Rs. 100 per unit
Labour Rs.40 per unit
Direct expenses Rs,10 per unit
Factory overheads Rs. 40,000 (40%
fixed)
Administration expenses Rs. 30,000 (60%
fixed)
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18. From the following data of A and Co., Ltd., relating to budgeted and actual performance for
the month of March 2009, compute the Direct Material and Direct Labour cost Variance.
Budgeted data for March:
Units to be manufactured 1,50,000
Units of Direct Material Required (based on
std rates)
4,95,000
Planned purchase of raw material (units) 5,40,000
Average unit cost of direct material Rs.8
Direct labour hours per unit of finished goods ¾ hr
Direct labour cost (total) Rs. 29,92,500
Actual Data at the end of March:
Units actually manufactured 1,60,000
Direct Material cost (purchased cost based on
units actually issued)
Rs.43,41,900
Direct Material cost (purchased cost based on
units actually purchased)
Rs. 45,10,000
Average unit cost of direct material Rs.8.20
Total direct labour hours for march 1,25,000
Total direct labour cost for march Rs. 33,75,000
SECTION – C
III. Answer any THREE of the following questions. (3X15=45)
19. K Ltd. provided the profit and loss account and balance sheet on 31st March 2006 and
2007 as follows:
Profit and Loss Account
Particulars 2006
Rs.
2007
Rs.
Particulars 2006
Rs.
2007
Rs.
To Cost of goods sold 6,90,000 8,10,000 By sales 12,00,000 14,00,000
To Administrative
expenses
1,50,000 1,20,000
To selling expenses 1,80,000 2,30,000
To net profit 1,80,000 2,40,000
12,00,000 14,00,000 12,00,000 14,00,000
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Balance sheets
Particulars 2006
Rs.
2007
Rs.
Particulars 2006
Rs.
2007
Rs.
Equity share
capital
4,00,000 4,00,000 Land 4,00,000 3,00,000
Preference
share capital
1,00,000 2,00,000 Building 3,00,000 3,50,000
Reserves and
surplus
1,25,000 1,90,000 Plant 3,20,000 2,70,000
Debentures 2,50,000 50,000 Stock 31,000 20,000
Loan 2,00,000 1,30,000 Debtors 42,000 53,000
Sundry
creditors
40,000 50,000 Cash 35,000 22,000
Bills payable 25,000 10,000 Outstanding
interest
12,000 15,000
Total 11,40,000 10,30,000 Total 11,40,000 10,30,000
Prepare a comparative profit and loss account and a comparative balance sheet.
20. With the following ratios and further information given below, complete the trading
account, profit and loss account and balance sheet of Mr. X:
Gross profit ratio 25%
net profit ratio 20%
Sales/inventory ratio 8
Fixed assets/total current
assets
¾
Fixed assets/total capital 3/2
Capital /total outside
liabilities
2/5
Fixed assets Rs. 15,00,000
Closing stock Rs. 2,00,000
Performa trading and profit and loss account
To cost of sales ……………. By sales …………….
To gross profit (25% on
sales)
…………….
……………. …………….
To expenses ……………. By gross
profit
…………….
To net profit (20% on sales) …………….
……………. …………….
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Performa Balance sheet
Capital balances
…………….
Add: net profit
…………….
……………. fixed assets …………….
Total liabilities ……………. Stock …………….
Other current
assets
…………….
……………. …………….
21. From the following contained in the income statement and the balance sheet of A Ltd.,
prepare Cash Flow Statement using i) direct method OR ii) indirect method
Income statement for the year ended March 31, 2011
Net sales (A) 2,52,00,000
Less: cash cost of sales 1,98,00,000
Depreciation 6,00,000
Salaries and wages 24,00,000
Operating expenses 8,00,000
Provision for taxation 8,80,000
(B) 2,4,80,000
Net operating profit (A-B) 7,20,000
Non-recurring income- profit on sale of
equipment
1,20,000
8,40,000
Retained earnings and profits brought forward 15,18,000
23,58,000
Dividends declared and paid during the year 7,20,000
Profit and loss account balance as on March 31,
2011
16,38,000
BALANCE SHEET
Assets as on March 31, 2010 March 31, 2011
Land 4,80,000 9,60,000
Building and equipments 36,00,000 57,60,000
Cash 6,00,000 7,20,000
Debtors 16,80,000 18,60,000
Stock 26,40,000 9,60,000
Advances 78,000 90,000
90,78,000 1,03,50,000
Liabilities as on March 31, 2010 March 31, 2011
Share capital 36,00,000 44,40,000
Surplus in profit and loss account 15,18,000 16,38,000
Sundry creditors 24,00,000 23,40,000
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Outstanding expenses 2,40,000 4,80,000
Income tax payable 1,20,000 1,32000
Accumulated depreciation on building and
equipment
12,00,000 13,20,000
90,78,000 1,03,50,000
The original cost of equipment sold during the year 2007-08 was Rs. 7,20,000
22. The following are the balance sheets of Beta Ltd., for the year ending March 31, 2010 and
March 31, 2011:
Balance sheets
(as on March 31st)
Capital and liabilities 2010 (Rs.) 2011 (Rs.)
Share capital 13,50,000 15,75,000
General reserves 4,50,000 5,62,500
Capital reserves( profit on sale of investment) – 22,500
Profit and loss account 2,25,000 4,50,000
12% debentures 6,75,000 4,50,000
Accrued expenses 22,500 27,000
Creditors 3,60,000 5,62,500
Provision for dividends 67,500 76,500
Provision for taxation 1,57,500 1,71,000
33,07,500 38,97,000
Assets 2010 (Rs.) 2011 (Rs.)
Fixed assets 22,50,000 27,00,000
Less: accumulated depreciation 4,50,000 5,62,500
Net fixed assets 18,00,000 21,37,500
Long term investments (at cost) 4,05,000 4,05,000
Stock (at cost) 4,50,000 6,07,500
Debtors (net of provision for doubtful debts of Rs. 90,000 and Rs.
1,12,500 for 2010 and 2011 respectively
5,06,250 5,51,250
Bills receivable 90,000 1,46,250
Prepaid expenses 22,500 27,000
Miscellaneous expenditure 33,750 22,500
33,07,500 38,97,000
Additional information:
(i) During the year 2010-11, fixed assets with a net book value of Rs.22,500
(accumulated depreciation, Rs. 67,500) were sold for Rs. 18,000
(ii) During the year 2010-11, investments costing Rs. 1,80,000 were sold, and also
investments costing Rs. 1,80,000 were purchased
(iii) Debentures were retired at a premium of 10%
(iv) Tax of Rs. 1,23,750 was paid for 2009-2010
(v) During the year 2010-11, bad debts of Rs. 31,500 were written off against the
provision for doubtful debt account
(vi) The proposed dividend for 2009-10 was paid in 2010-11
Required: Prepare a funds flow statement for the year ended March 31, 2011.
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23. A company is producing an identical product in two factories. The following are the details
in respect of both the factories:
Factory X Factory Y
Selling price per unit 50 50
Variable cost per unit 40 35
Fixed cost 2,00,000 3,00,000
Depreciation included in
above
40,000 30,000
Sales (units) 30,000 20,000
Production capacity (units) 40,000 30,000
You are required to determine:
a) Break even point for each factory individually
b) Which factory is more profitable
c) Cash BEP for each factory individually
d) BEP for company as a whole; assuming the present product mix
e) BEP for company as a whole; assuming that product mix can be altered as desired
f) Consequences on profits and BEP if product mix is changed to 2:3 and total demand
remains constant.
Note: BEP may be indicated in number of units.
SECTION-D
IV) Case Study-one compulsory question. (15 marks)
24. The following details of estimates are obtained in respect of the retail business of fancy
Ltd., for the months of January to March 2011:
A. Working Capital as on 1st January 2011 has been estimated as under:
Cash and bank
balances
10,900
Debtors 51,400
Creditors 42,200
Outstanding expenses 4,000
Dividend due 9,700
Tax due 6,400
Stock 26,000
B. Budgeted profit statements for the three months are:
January February March
2011
Sales 42,000 36,000 34,000
(-)Cost of sales 32,700 28,100 26,600
Gross profit 9,300 7,900 7,400
(-)Administrative, selling and distribution
expenses
6,300 5,400 5,100
Net profit before tax 3,000 2,500 2,300
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C. Budgeted balances at the end of each month
January February March
2011
Stock 24,000 22,000 20,000
Debtors 52,000 50,000 47,000
Creditors 40,000 39,000 38,000
Outstanding expenses 4,000 4,000 4,000
Dividend due 9,700 – –
Tax due 6,400 6,400 6,000
Depreciation amounting to Rs. 1,700 has been included in the budgeted expenditure of
each month.
You are required to prepare a month-wise cash budget for the three months on receipt
and payment basis.
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