LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
M.Com DEGREE EXAMINATION – COMMERCE
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THIRD SEMESTER – NOV 2006
CO 3806 – MANAGEMENT ACCOUNTING
Date & Time : 30-10-2006/9.00-12.00 Dept. No. Max. : 100 Marks
PART – A
Answer ALL questions (10 x 2 = 20 marks)
- State the objectives of Management Accounting.
- Differentiate Management Accounting from Financial Accounting.
- Discuss the uses of cash flow statement.
- Bring the differences between Fund flow and Cash flow statement.
- What is the significance of “Break Even Point”.
- Analyze the limitations of “Ratio Analysis”
- Calculate the EPS from the following data Net Profit before Tax Rs.50,000; Tax rate 50%, 10% Preference share capital (Rs.10 each) Rs.50,000. Equity share capital (Rs.10 each) Rs.50,000.
- Calculate PV ratio from the following details
Year Sales (Rs) Profit of Loss
2005 2,40,000 20,000 (Loss)
2006 3,20,000 40,000 (Profit)
- From the following data, calculate overhead cost and budgeted variances.
Budgeted Actual
Fixed OH Rs.3,00,000 3,20,000
Output in units 30,000 26,000
Working hours 75,000 60,000
- A Factory produces 2 units of a commodity in one standard hour. Actual production during a particular year is 17,000 units and the budgeted production for the year is fixed at 20,000 units. Actual hours operated are 8,000 hrs. Calculate efficiency and activity ratios.
PART – B
Answer any FIVE questions (5 x 8 = 40 marks)
- “Marginal Costing is a valuable aid for managerial Decisions”. Discuss.
- Define Budgetary control and state its advantages.
- Calculate cash from operations from the following
(i) Profit made during the year Rs.3,00,000 after considering the following items.
- Depreciation of fixed assets Rs.20,000 b) Transfer to General Revenue Rs.10,
- c) Amortization of good will Rs.10,000 d) Profit on sale of land Rs.7,000
(ii) The following is the position of current assets and current liabilities.
Particulars I year II year
Debtors 15,000 18,000
Creditors 20,000 10,000
Bills Receivable 7,000 5,000
Prepaid Expenses 10,000 7,000
- From the following prepare a Balance sheet.
- Working Capital Rs.75,000 b) Reserves and Surplus Rs.1,00,000 c) Bank overdraft Rs.60,000 d) Current Ratio: 1.75 e) Liquid Ratio: 1.15 f) Fixed Assets to Proprietor’s Fund 0.75 g) Long – term Liabilities – NIL.
- From the following data which product would you recommend to be manufactured in a
factory, time being the key factor.
| Particulars | Per unit of product A
Rs. |
Per unit of Product B
Rs. |
| Direct material | 24 | 14 |
| Direct Labour @ Re 1 per hour | 2 | 3 |
| Variable overhead @ 2 p/h | 4 | 6 |
| Selling Price | 100 | 110 |
| Standard time to produce one units | 2 hrs | 3 hrs |
- You are required to prepare a selling overheads Budget from the estimates given below:
Advertisement Rs.1,000, Expenses of the Sales Department Fixed Rs.750 Salaries Rs.1,000;
Salaries and Dearness Allowance Rs.3,000 Commission at 1% on sales effected, Carriage
outwards; estimated at 5% sales, Agent commission 6.5% on sales.
The sales during the period were estimated as follows:
Rs.80,000 including Agent’s sales Rs.8,000
Rs.90,000 including Agent’s sales Rs.10,000
Rs.1,00,000 including Agent’s sales Rs.10,500.
- The cost, volume and profit relationship of a company is described by equation
Y = Rs.3,00,000 + 0.7 X in which X represents sales and Y represents total cost. Find out
- a) PV ratio b) B.E. sales c) Sales volume required to earn a profit of Rs.60,000
- d) Sales volume when there is a loss of Rs.30,000.
- The standard time and rate for one unit component are given below:
- Stand hours 20 b) Standard rate Rs.5 per hour c) Actual data and related information are as under Actual production 1,000 units. Actual hours 20,500 hrs, Actual rate per hour Rs.4.80. Calculate labour variances.
PART – C
Answer any TWO questions (2 x 20 = 40 marks)
- Following are the summarized balance sheets of Fire stone Ltd as on 31-03-05 and 31.03.06.
| Liabilities | 31.03.05 | 31.03.06 | Assets | 31.03.05 | 31.03.06 |
| Share Capital | 2,00,000 | 2,50,000 | Land and Building | 2,00,000 | 1,90,000 |
| General Reserve | 50,000 | 60,000 | Machinery | 1,50,000 | 1,69,000 |
| P&L A/c | 30,500 | 30,600 | Stock | 1,00,000 | 4,000 |
| Bank Loan (Long Term) | 70,000 | – | Sundry debtors | 80,000 | 64,200 |
| Sundry creditors | 1,50,000 | 1,35,200 | Cash | 500 | 600 |
| Provision for Taxation | 30,000 | 35,000 | Bank | – | 8,000 |
| Good will | – | 5,000 | |||
| 5,30,500 | 5,10,800 | 5,30,500 | 5,10,800 |
- Dividend of Rs.23,000 was paid
- Assets of another company were purchased for a consideration of Rs.50,000 payable in shares. The following assets were purchased.
Machinery Rs.25,000 and Stock Rs.20,000.
- Machinery further purchased for Rs.8,000
- Depreciation written off against machinery Rs12,000
- Income Tax Paid during the year Rs.33,000
- Loss on sale of machinery Rs.200 was written off to general Reserve.
You are required to prepare fund flow statement of the year ended 31st march 2006.
- Summarized below are the income and expenditure of Gemini Ltd for three months of March to August 2006.
| Month | Sales (all credit)
Rs. |
Purchases (all credit)
Rs |
Wages
Rs. |
Manufacturing expenses
Rs. |
Office expenses
Rs. |
Selling expenses
Rs. |
| March | 60,000 | 36,000 | 9,000 | 4,000 | 2,000 | 4,000 |
| April | 62,000 | 38,000 | 8,000 | 3,000 | 1,500 | 5,000 |
| May | 64,000 | 33,000 | 10,000 | 4,500 | 2,500 | 4,500 |
| June | 58,000 | 35,000 | 8,500 | 3,500 | 2,000 | 3,500 |
| July | 56,000 | 39,000 | 9,500 | 4,000 | 1,000 | 4,500 |
| August | 60,000 | 34,000 | 8,000 | 3,000 | 1,500 | 4,500 |
You are given the following further information
- Plant costing Rs.16,000 is due for delivery in July payable 10% on delivery and the balance after three months.
- Advance Tax of Rs.8,000 is payable in March and June each.
- Period of credit allowed (i) by suppliers 2 months and (ii) to customers 1 month.
- Lag in payment of manufacturing expenses 1 month.
- Lag in payment of all other expenses 1 month
You are required to prepare a cash budget for three months ending July 2006 and the opening cash balance as on 1st May 2006 was Rs.8,000.
- Calculate all Material Variances from the following information:
| Material | Standard | Total | Actual | Total | ||
| Qty | Price | Qty | Price | |||
| A | 500 | 6.00 | 3,000 | 400 | 6.00 | 2,400 |
| B | 400 | 3.75 | 1,500 | 500 | 3.60 | 1,800 |
| C | 300 | 3.80 | 900 | 400 | 2.80 | 1,120 |
| 1,200 | 1,300 | |||||
| (-) Less Normal Loss 10% |
120 |
220 |
||||
| 1,080 | 5,400 | 1,080 | 5,320 | |||
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