LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.Com. DEGREE EXAMINATION – CORPORATE SECRETARYSHIP

IR 16

SIXTH SEMESTER – April 2009

BC 6600 – MANAGEMENT ACCOUNTS

 

 

 

Date & Time: 18/04/2009 / 9:00 – 12:00 Dept. No.                                                     Max. : 100 Marks

                     PART  A

Answer ALL questions:                                                                                  Marks: 10 x 2=20

 

Explain the following:

1. Margin of safety
2. Fund from operation
3. Gang composition variance
4. Earnings per share
5. Limiting factor
6. Zero base budget
7. Budgeted overheads Rs.50000

Budgeted  production  10000 units

Actual overheads Rs.54000

Actual production 11000 units

Calculate overhead volume and expenditure variance

8. Sales Rs.1,00,000; margin of safety is 40% and PV ratio is 20%. Calculate Fixed cost.
9. Opening stock Rs.5000; closing stock Rs.9000; Purchases Rs.81,000.

Calculate Stock turnover ratio.

10. Current ratio is 2. State whether the current ratio will increase, decrease or remain unchanged in each of the following cases:
11. Creditors are paid out
12. Stock is purchased on credit
13. Cash collected from debtors
14. Stock purchased by issue of shares

PART B

Answer ANY FIVE questions                                                                                 Marks: 5×8=40

 

11. The following details relate to product ‘X’ for the month of March. You are required to compute the material and labour cost variances.

Standard cost per unit:

Material  50 kgs              at Rs.40 per kg

Labour                            400 hours        at Re.1 per hour

Actual cost for the month:

Material                          4,900 kgs         at Rs.42 per kg

Labour                            39,600 hours   at Rs.1.10 per hour

Actual production :       100 units.

 

12. A factory is currently working at 50% capacity and produced 10,000 units at a cost of Rs.180 per unit as per details below:

Material                                      Rs.100

Labour                                        Rs.30

Factory overheads                      Rs.30 (Rs.12 fixed)

Administrative overheads          Rs.20 (Rs.10 fixed)

Total                                           Rs.180

The current selling price is Rs.200 per unit. At 80% working,  material cost per unit increases by 5% and selling price per unit falls by 5%.

Estimate profit per unit and in total if it operates at 80% capacity.

 

13. A Ltd gives you the following data for the year 2006.

Units sold                           2400

Selling Price per unit          Rs.100

Direct material per unit    Rs.40

Direct labour per unit        Rs.20

Variable overheads           100% of labour

Fixed expenses                   Rs.20000

Calculate:

1. Break even sales in units
2. Profit of sales are 3000 units
3. Margin of safety in units

In the year 2007 the company expects the material price to reduce to Rs.35 per unit, but fixed expenses are expected to increase to Rs.30000. How many units should the company sell in 2007, if it expects the same profit it had earned in 2006.

 

14. A confectioner markets three products, all of which require sugar. His average monthly sales, cost of sales and sugar consumption are as follows:

Product X       Product Y       Product Z        Total

Sales revenue (Rs.)                     10,000             12,000             8,000              30,000

Cost of sales (Rs.)                      6,000               8,000               5,000               19,000

Sugar requirement                      500 kg             800 kg             200 kg             1,500 kgs

Due to government restrictions, his sugar quota has been reduced to 1405 kg. per month. Suggest  a suitable sales mix which would give the company maximum profit under the given circumstances.

 

15. X Ltd earned a net profit of Rs.2,30,000 for the year 2008 after considering the following:
16. Tax provided during the year Rs.25,000
17. ii) 25,000 have been transferred to the general reserve fund

iii)   Depreciation has been provided during the year on machinery and furniture at 20% whose

total cost is Rs.1,30,000.

1. iv) Old machinery worth Rs.16,000 has been sold for Rs.13,000 during the year.
2. v) Goodwill appears in the books at Rs.3,60,000 out of that 10% has been written off during the

year.

1. vi) Gain on sale of building Rs.71,000.

vii) Transfer fees Rs.12,000.

viii) Refund of income tax Rs.8,000.

Calculate fund from operations.

16. From the following information, calculate:
17. Operating ratio
18. Operating profit ratio

• Interest coverage ratio

1. Earnings per share.

Sales Rs.6,00,000; Cost of goods sold Rs.4,00,000; Operating expenses Rs.1,20,000; Non-operating income Rs.12,000, Interest on debentures Rs.8,000, Provision for tax RS.20,000 and Non-operating expenses Rs.4,000.

Equity capital 10,000 shares of Rs.10 each.

 

17. State the merits and limitations of Ratio Analysis.

 

18. Define Budgetary control. State the steps involved in Budgetary control.

PART C

Answer ANY TWO questions                                                                                 Marks: 2×20=40       

19. From the following particulars, prepare a Balance Sheet as on 31st December 2008:
20. Current ratio 5
21. Acid test ratio 5

iii) Fixed assets to capital employed       0.375

1. iv) Working capital 90,000
2. v) Bank overdraft 15,000
3. vi) Shareholders fund to long term debt 2:1

vii) Reserves to share capital                   1:3

(Capital employed = shareholders’ funds + long term debt).

 

20. The Balance Sheet of ABC Ltd on 31/12/2004 and 31/12/2005 are as follows:

2004                2005                                        2004                 2005

Equity Capital (Rs.10)   100,000           200,000           Machinery       120,000           260,000

P/L A/c                              30,000            50,000               Furniture       30,000              40,000

12% Debenture                 50,000          150,000           Stock                50,000              40,000

10% ICICI bank loan       50,000                                  Debtors             30,000              60,000

Creditors                                       20,000             25,000          Cash                  10,000                 5,000

Tax provision                   40,000            60,000          Bank                  50,000               80,000

290,000          485,000                                  290,000             485,000

(a) Machinery worth Rs.50,000 were purchased and paid for by the issue of equity shares.

(b) Depreciation provided on machinery Rs.30000 and on furniture Rs.5000.

(c) During the year 2005, Income tax Rs.50,000 and interim dividend Rs.8,000 were paid.

(d) Machine whose Book value is Rs.8,000 is sold for Rs.5,000

Prepare Fund Flow statement.

 

21. X Ltd., gives you the following budgeted data from which you are required to prepare a cash     budget for the three months ending June 2008.

Month                        Sales(Rs)         Purchases(Rs)  Wages(Rs)       Production Overheads(Rs)

February               1, 60,000         80,000           20,000             10,000

March                   1, 70,000         60,000           25,000             12,000

April                     1, 90,000       1,00,000          30,000             15,000

May                       2,00,000       1,50,000          30,000             14,000

June                       1,60,000          80,000          20,000             10,000

1. 50% of the sales are for cash. Credit sales are collected as follows: 50% in the month following the sale, 40% in the next month following and 10% are bad debts.
2. Suppliers allow 1 month credit.
3. c) Lag in payment of wages 1 month.
4. d) Production overheads are payable in the same month and include Rs.1,000 p.m. as

depreciation.

e)Fixed deposit of Rs.20,000 along with interest Rs.2000 will mature for payment in the month of

April.

1. f) Advance income tax Rs.30,000 is payable in the month of March and September.
2. g) A computer costing Rs.40,000 is to be purchased in June, on a down payment of Rs.10,000 and

four equal monthly instalments of Rs.10,000 each, payable at the end of each month.

1. h) Sales commission of 5% on sales is payable in the month following the sales.
2. i) Budgeted cash balance on 1^st April 2008 Rs.10,000/-

 

 

 

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