LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

           B.B.A. DEGREE EXAMINATION – BUSINESS ADMINISTRATION

AP 13

FIFTH SEMESTER – APRIL 2008

BU 5501 – COST & MANAGEMENT ACCOUNTING

 

 

 

Date : 30-04-08                  Dept. No.                                        Max. : 100 Marks

Time : 1:00 – 4:00

PART  A

Answer ALL questions                                                                    Marks: 10 x 2 = 20

Explain the following:

1. Cost unit
2. Margin of safety
3. Overtime premium
4. Cash from financing activities
5. Bin Card
6. Current Ratio
7. Working Capital is Rs.40,000. Current ratio 2; Stock Rs.30,000. Calculate Current Assets and Liquid Assets.
8. Standard time 10 hours; Actual time taken 8 hours; Time rate Rs.12 per hour. Calculate earnings under Halsey Plan.
9. Annual usage of material 6,000 units; Material cost per unit Rs.20; Ordering cost per order Rs.60; Carrying cost Rs.2 per unit per annum. Calculate Economic Order Quantity.
10. Selling price per unit Rs.40; Variable cost per unit Rs.30; Fixed cost Rs.10,000. Calculate break even sales in rupees.

 

PART  B

 

Answer FIVE questions, choosing at least TWO questions from each section.

Marks: 5 x 8 = 40

SECTION  I

 

11. What is Labour Turnover? Explain the causes of Labour Turnover.

 

12. Prepare Stores Ledger Account assuming materials are priced using ‘weighted average method’.

1/12/07         purchases 800 units at Rs.3 per unit.

6/12/07         issued 500 units

8/12/07         purchases 600 units at Rs.4 per unit.

10/12/07       purchases 700 units at Rs.4 per unit.

15/12/07       issued 800 units

20/12/07       purchases 300 units at Rs.5 per unit.

27/12/07       issued 200 units.

 

13. From the following data, prepare a statement showing the labor cost per day of 8 hours.
14. Monthly salary (basic + DA) 400
15. Leave salary 15% of Basic + DA
16. Employee’s contribution to Provident Fund 8% of salary (a + b)
17. Employer’s contribution to ESI 5% of salary (a + b)
18. Pro-rata expenditure on amenities to labor 25 per head PM
19. of working hours in a month 200

 

14. From the following information, calculate a composite machine rate, for a machine whose scrap value is nil.
15. Cost of machine 3,60,000
16. Installation charges 40,000
17. Working life 20 years
18. Working hours 8000 per year
19. Repair charges 50% of depreciation
20. Power 10 units per hour at 10 p per unit.
21. Lubricating oil 2 per day of 8 hours
22. Consumable stores 10 per day of 8 hours
23. Machine operator’s wages 4 per day

 

SECTION II

 

15. State the merits and limitations of Ratio Analysis.

 

16. A Ltd gives you the following data:

Selling price per unit           Rs.100

Material cost per unit          Rs.30

Labor cost per unit             Rs.20

Variable overhead per unit   Rs.10

Fixed overheads                 Rs.40,000

Calculate:

1. Break even sales in units.
2. Sales in units to earn a profit of Rs.20,000.
3. Profit if sales are 6,000 units
4. New break even sales if selling price is reduced by 10% and Fixed Cost increased by Rs.2000.

 

17. X Ltd. gives you the following data:

Sales                               Rs.2,00,000

Cost of goods sold              Rs.1,50,000

Administration expenses      Rs.20,000

Debtors                            Rs.50,000

Average stock                             Rs.25,000

Calculate:

1. Gross profit ratio
2. Operating profit ratio
3. Debtors collection period
4. Stock turnover

 

18. AB Ltd. gives you the following information:

Profit before tax                Rs.20,000

Depreciation written off       Rs.10,000

Goodwill written off            Rs. 5,000

Loss on sale of investment   Rs.8,000

Profit on sales of machinery Rs.6,000

Income tax paid                 Rs.18,000

Decrease in debtors            Rs.15,000

Increase in stock                Rs.5,000

Decrease in creditors          RS.2,000

Calculate cash from operating activities.

 

PART  C

 

Answer ANY TWO questions                                             Marks 2 x 20 = 40

 

19a. From the following details, prepare the Balance Sheet of a company.

Gross profit ratio 20%; Debtors turnover 6 times; Fixed assets to Net worth 0.8;

Reserves to capital 0.5; Current ratio 2.5; Liquid ratio 1.5; Net working capital Rs.3,00,000; Stock Turnover ratio 6 times.

OR

 

19b. The following are the Balance Sheets of ABC Ltd as on 31^st March 2006 and 31^st March  2007.

	31/3/2006 Rs.	31/3/2007 Rs.		31/3/2006 Rs	31/3/2007 Rs.
Share capital P/L Account Long-term loans Creditors Tax provision Proposed Dividend	3,64,000 4,90,000 5,00,000 6,000 86,000 24,000   14,70,000	3,96,000 6,96,000 2,00,000 12,000 1,02,000 30,000   14,36,000	Fixed Assets Investments Stock Debtors Bank Cash	13,36,000 20,000 20,000 38,000 50,000 6,000   14,70,000	12,78,000 – 24,000 56,000 48,000 30,000   14,36,000

 

1. Depreciation provided on Fixed Assets Rs.1,00,000
2. Fixed Asset whose book value was Rs.50,000 was sold for Rs.40,000
3. Tax paid during the year Rs.80,000
4. The proposed dividend of 2006 was paid in 2007
5. Investments were sold at a profit of Rs.2000

Prepare Fund Flow Statement.

 

20a. RC Ltd manufactured and sold 1000 radios during the year 2007. Details of cost and sales are as follows:

Cost of materials Rs.80,000; Direct wages Rs.1,20,000; Factory overheads Rs.50,000; Administration overheads Rs.1,00,000; Selling overheads Rs.20,000; Sales Rs.4,00,000.

During the year 2008, the company plans to produce and sell 1,500 radios. It is estimated that,

1. Material prices will increase by 20% and wage rates by 5%.
2. Factory overheads are to be charged as a percentage on prime cost.
3. Selling expenses per unit will remain unchanged.
4. Administration expenses will remain constant.

Prepare a statement showing the total cost and cost per unit and also the selling price to be charged per radio, if the company wants a profit of 20% on cost.

 

OR

 

20b. In a factory, there are two Production depts., A and B, two Service depts., X and Y.   the overhead expense of these four depts. Are as follows:

A – Rs.6,500; B – Rs.6,000; X – Rs.1,200 and Y Rs.1,000

The expenses of the Service Dept are to be divided between the other departments on the following percentage basis:

Dept. X                   Dept A 50%             Dept B 30%             Dept Y 20%

Dept. Y                   Dept A 40%             Dept B 50%             Dept X 10%

1. Prepare a statement showing the distribution of the Service dept expenses to the Production dept.
2. Dept A absorbs overheads at a rate per labor hour and Dept B at the rate per machine hour. The estimated labor hours and machine hours in the respective depts. Are 2000 hours and 1000 hours respectively.

Calculate the overhead recovery rates for the two departments.

1. Calculate the price to be quoted for a job that requires Rs.500 in material, Rs.200 in wages and uses 6 Labor hours in Dept A and 4 machine hours in Dept B.

The company wants a profit of 25% on cost.

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