LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.Com. DEGREE EXAMINATION – COMMERCE

SIXTH SEMESTER – APRIL 2011

CO 6605 – MANAGEMENT ACCOUNTING

Date : 07-04-2011 Dept. No. Max. : 100 Marks

Time : 9:00 – 12:00

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SECTION A (2×10= 20 marks)

Answer all the questions.

What is “Flow of Funds”?
State any FOUR objectives of Financial Statement Analysis.
What are the important features of Marginal Costing.
What is “Key Factor”?
What are the components of “Material Cost Variance”?
Land & Buildings –Rs 6,00,000, Equity Share Capital –Rs 5,00,000,Debentures –Rs4,00,000, Sundry Creditors –Rs 1,50,000,Bank Over-draft –Rs 50,000, Stock –Rs 2,40,000. Debtors –Rs 2,00,000, Cash & Bank –Rs 55,000, Prepaid Expenses –Rs 5,000. From the above particulars Calculate ; (a) Current Ratio (b) Liquid Ratio.
From the following figures Calculate: Funds from Operations:

Expenses Paid Rs 3,00,000 Net Profit for the year Rs 1,15,800

Depreciation Rs 70,000

Loss on sale of Machinery Rs 4,000

Goodwill written off Rs 20,000

Loss on sale of old furniture Rs 200

Profit on sale of Land &

Building Rs 60,000

Calculate Break-even point from the following Particulars:

Fixed Expenses Rs 1,50,000

Variable Cost per unit Rs 10

Selling Price per unit Rs 15

Product X requires 20 kgs of material at Rs 4 per Kg. The actual consumption of

Material for the manufacturing of product X came to 24kgs of material at Rs 4.50

Per kg. Calculate (a) Material Cost Variance

(b) Material Price Variance

The Standard Time and Rate unit Component are given below:

Standard Hours 20

Standard Rate Rs 5 per Hour

Actual Production 1,000 units Actual hours – 20,500 hrs

Actual Rate per hour Rs 4.80

Calculate: (a) Labor Cost Variance

Labor Efficiency Variance
Labor Rate Variance

SECTION B (5x 8 =40 marks)

Answer any FIVE questions.

What are the Functions of a “Management Accountant”?
What is” Break-Even Analysis”? What are its merits?
Define Zero Based Budgeting? Explain the steps involved in this process.
From the extracts of the Balance Sheet and the additional information provided, you are required to identify how the transactions affect statement showing sources and uses of funds.

————————————————————————————————————- Particulars 2009 2010

————————————————————————————————————- Equity Share Capital Rs 2,00,000 Rs 3,00,000

Share Premium Rs 20,000 Rs 30,000

9% debentures Rs 1,00,000 Rs 1,50,000

Additional Information:

9% debentures worth Rs 30,000 were redeemed during the year.

The following are the ratios of a trading concern:

Debtors Velocity – 3 months

Stock Velocity – 8 months

Creditors Velocity – 2 months

Gross Profit Ratio 25%

Gross Profit for the year amounted to Rs 4,00,000.

Closing stock of the year is Rs 10,000 more that the opening stock.

Bills receivable Rs 25,000. Bills Payable Rs 10,000.

Find out (a) Sales Tax (b) Sundry Debtors (c) Closing Stock (d) Sundry creditors.

Calculate Pay – out Ratio and Retained Earnings Ratio from the following

Information:

Net Profit Rs 10,000

Provision for Tax Rs 5,000

Preference Dividend Rs 2,000

Number of Equity Shares 3000 shares

Dividend for Equity Share Re. 0.40

The Statement of Cost of an article is as follows:

Material Rs 200

Labor Rs 100

Variable Expenses Rs 25

Fixed Expenses Rs 75

Profit Rs 125

Selling Price Rs 525

The number of articles made and sold are 10,000 units.

Find out: (a) Break – even Point

(b) How many articles must be produced and sold if the selling price is reduced by Rs 25 and the same profit is maintained.

Prepare a Production Budget for each month and a summarized Cost Budget for the six months period ending 31^st Dec 2009 from the following information of

“ Product ‘X””.

There will be no work -in -progress at the end of any month.
Finished Units equal to half the sales for the next month will be in Stock at the end of each month ( including June 2009)
The Units to be sold for different months are as follows:

MONTH UNITS

July 2009 1,100

August 2009 1,100

September 2009 1,700

October 2009 1,900

November 2009 2,500

December 2009 2,300

January 2010 2,000

Budget Production and Production Costs for the year ending 31^st Dec 2009 are as follows:

Production (Units) 22,000

Direct Material per Unit Rs 10

Direct Wages per Unit Rs 4

Total Factory overhead apportioned to Product Rs 88,000.

SECTION C (2x 20= 40marks)

Answer any TWO questions.

19 .——————————————————————————————————————LIABILITIES 2009 2010 ASSETS 2009 2010

Rs Rs Rs Rs

Share Capital 2,00,000 3,00,000 Buildings at cost 1,50,000 2,30,000

Share Premium Plant& Machinery

Capital Reserve — 10,000 at Cost 2,60,000 3,20,000

Profit on Redemption Less: Depreciation 85,000 95,000

Of Debentures —– 1000 —————————– 1,75,000 2,25,000

Profit &Loss a/c Shares in Subsidiary

Bal b/f 40,000 40,000 Company 20,000 20,000

Profit for the year 45,000 Current Assets ;

5% Debentures 1,00,000 75,000 Stock 45,000 49,000

Current Liabilities; Sundry Debtors 15,000 18,000

Sundry creditors 60,000 1,04,000 Bank 25,000 48,000

Taxation 20,000 5,000

Proposed Dividend 10,000 10,000

4,30,000 5,90,000 4,30,000 5,90,000

Additional Information:

During the year 2010, Plant Costing Rs 15,000 (Accumulated depreciation there on Rs 8,000) was sold for Rs 5,000.

Prepare Funds Flow Statement.

From the following information, you are required to prepare a Balance Sheet.

(a) Current Ratio 1.75

(b) Liquid Ratio 1.25

(d) Gross Profit Ratio 25%

(e) Debt Collection Period 1 1/2 Months

(f) Reserves and Surplus to Capital 0.2

(g) Turn Over to Fixed Assets – ( based on Cost of Sales) – 1.2.

(h) Capital Gearing Ratio – 0.6

(i) Fixed Assets to Net Worth 1.25

(j) Sales for the year – Rs 12,00 000

The Cost of an Article at a Capacity level of 5,000units is given below. The Degree of variability of the individual expenses are also given:

PARTICULARS RS (VARIABILITY)

Material Cost 25,000 ( 100% Varying)

Labor Cost 15,000 ( 100% varying)

Power 1,250 ( 80% varying)

Repairs and Maintenance 2,000 ( 75% varying)

Stores 1,000 ( 100% varying)

Inspection 500 ( 20% varying)

Depreciation 10,000 ( 100% varying)

Administrative Overheads 5,000 ( 25% varying)

Selling Overheads 3,000 (25% varying)

————————-

62,750

————————-

Cost Per Unit = Rs 12.55

Find out the Unit Cost of the Product at the Production Levels of 4,000 units and 6,000 units.

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