LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.Com. DEGREE EXAMINATION – COMMERCE

SIXTH SEMESTER – APRIL 2012

CO 6605 – MANAGEMENT ACCOUNTING

 

 

 

Date : 18-04-2012              Dept. No.                                        Max. : 100 Marks

Time : 1:00 – 4:00

 

PART – A

Answer ALL questions:                                                                                          (10×2=20marks)

 

1. What is a “Master Budget”?
2. What are “Funds”?
3. What is “Marginal Costing”?
4. What are some of the “Liquidity Ratios?”
5. What is “Key Factor”?
6. Calculate Current Ratio from the following information:

Rs.                                                                                  Rs.

Stock                        60,000                       Sundry Creditors              20,000

Sundry debtors         70,000                       Bills Payable                         15,000

Cash Balance           20,000                       Tax Payable                          18,000

Bills Receivable        30,000                      outstanding expenses              7,000

Prepaid expenses     10,000                       Bank Overdraft                      25,000

Land & Building      1,00,000                      Debentures                            75,000

Good will                   50,000

 

7. Specify how the following transactions will appear in the statement showing sources and uses of funds:
8. a) Stock of Raw materials purchased for Rs 3,00,000
9. b) Sundry Creditors paid Rs 2,50,000 by cheque.
10. c) Purchased Goodwill of another company for RS 4,50,000
11. d) Shares issued for Rs 3,00,000 to public.
12. e) Debentures redeemed for Rs 4,00,000
13. f) Purchased machinery worth Rs 3,50,000 and settlement made by issuing shares in

the company.

1. g) Long term loan repaid Rs 3,00,000.
2. Determine the amount of fixed expenses from the following particulars:

Rs.

Sales                              2,50,000

Direct material                   80,000

Direct Labour                    50,000

Variable Overhead            20,000

Profits                                60,000

9. ”Product X” requires 20 kgs of materials at Rs 4 per Kg. The actual consumption of

material for the manufacturing of “Product X” came to 24 kgs at Rs 4.50/ per kg.

Calculate :

1. Material cost Variance
2. Material Price Variance
3. Material Usage Variance

 

10. You are required to calculate :
11. a) P/ V Ratio (b) Sales to earn a profit of Rs 40,000.

The following information is given:

Sales                   Rs 1,00,000

Profit                          10,000

Variable Cost    70% of Sales.

 

PART – B

 

Answer any FIVE questions:                                                                                 (5×8=40marks)

 

11. What is Zero Base Budgeting? What are the steps involved in the process of introducing Zero Base budgeting in an Organization?
12. What are the important advantages of “Ratio Analysis”?
13. What is “Funds Flow Statement”? What purpose does “Funds Flow Statement” serve?

1. From the following information given on 31^st March 2005, calculate “Funds from

Operations

1. a) Profit on Sale of Building 35,000
2. b) Goodwill appearing in the books     1,80,000,out of that 10% has been written off

during the year.

1. c) Rs.1,25,000 has been transferred to general Reserve.
2. d) Old furniture worth Rs 8,000 has been sold for Rs 6,500 during the year.
3. e) Depreciation provided during the year on Machinery at 20%, the cost of machinery in

the books Rs 6,50,000.

1. f) Net profit for the year amounted to Rs 6,50,000.
2. From the following information calculate:
3. a) Mix Variance
4. b) Revised usage Variance
5. c) Usage Variance

STANDARD                                                         ACTUAL

Material A 60units @Rs 5 per unit                          Material A 80units @Rs 4 per unit

Material B 40units @Rs 10per unit                         Material B 40units @Rs 12perunit

—–                                                                           —–

 

100units                                                                    120units

 

16. Calculate Current Assets from the following information:
17. a) Sales (all credit) 2,00,000
18. b) Gross Profit Ratio 20%
19. c) Stock Turnover 5 times.
20. d) Current Liabilities  60,000.
21. e) Quick Ratio – 0.75

Stock at the end is Rs 5,000 more than the stock in the beginning.

17. From the following particulars calculate :
18. a) Number of units to be sold to earn a profit of Rs 1,20,000.
19. b) Sales to earn a profit of Rs 1,20,000.

Selling price per unit                                           Rs. 40

Variable selling cost per unit                              Rs.   3

Variable manufacturing cost per unit                  Rs. 22

Fixed factory overheads                                     Rs. 1,60,000

Fixed selling cost                                                Rs. 20,000

 

18. The Sales manager of a manufacturing Co. reports that he is expecting to sell 40,000

units of a particular product. Production Department gives the following figures:

Two kinds of materials A and B are required for the manufacturing of the product.

The production requires 3units of Material A and 2 units of Material B.

Estimated Opening Balances:

Finished Product                  10,000units

Material A                            12,000units

Material B                            15,000units

Desirable closing stock:

Finished Product                   10,000units

Material A                              14,000units

Material B                              15,000units

Draw up a materials purchase budget.

 

PART – C

 

Answer any TWO  questions:                                                                             (2X20-40marks)

 

19. The following is the summarized Balance Sheet of Good Luck Ltd for the year 2003 &

2004.

Liabilities                   2003              2004               Assets                   2003                2004

Equity share           2,00,000         2,40,000         Land &Building     1,05,000           1,50,000

Capital

8%Debentures           50,000             –                Plant %Machinery   2,90,000          3,20,000

(at cost)

Share Premium             —                10,000         Furniture @ cost        9,000               10,000

Gen Reserve               30,000          50,000       Inventories               1,30,000          1,05,000

P%L a/c                      48,000         68,000        Sundry Debtors            75,000            85,000

Sundry

Creditors                 1,30,000        1,50,000

Proposed                                                           Cash                         15,000               26,000

Dividend                      20,000          24,000

Provision for

Depreciation:

Plant&Machinery   1,40,000        1,50,000

Furniture                     6,000             4,000

6,24,000          6,96,000                                       6,24,000            6,96,000

 

Additional Information:

1. Furniture which cost Rs 5,000, written down value Rs 1,000. was sold during the year 2004 for Rs 2,000.
2. Plant and Machinery which costs Rs 20,000 and in respect of which Rs 13,000 had been written off as depreciation was sold during the year 2004 for Rs 3,000.
3. The Dividend of 2003 was paid during 2004.
4. Prepare Funds Flow Statement.

 

20. From the following information, you are required to construct a Balance Sheet. You are

required to show detailed workings.

Working Capital                                             Rs.    75,000

Reserves and surplus                                     Rs. 1,00,000

Bank overdraft                                                Rs.    60,000

Current Ratio                                                               1.75

Liquid Ratio                                                                  1.15

Fixed Assets to

Proprietors Fund                                                            0.75

Long term Liabilities                                                      Nil

21. The information regarding the composition and hourly wage rates of labour force

engaged in a job scheduled to be completed in 30 hours are as follows:

 

Category  of workers                  Standard                                            Actual

No. Of workers     Hourly wage rate          No.of workers           Hourly wage rate

Per worker                                                     per worker

Skilled                  75                             6                              70                                7

Semi-skilled          45                            4                              30                                5

Un-skilled              60                            3                              80                                2

 

The work was completed in 32 hours .

Calculate labour Variances.

 

 

 

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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

B.com., DEGREE EXAMINATION –  COMMERCE

SIXTH SEMESTER – NOVEMBER 2012

CO 6605- MANAGEMENT ACCOUNTING

 

 

 

Date : 01/11/2012             Dept. No.                                        Max. : 100 Marks

Time : 1:00 – 4:00

 

PART A

 

Answer ALL questions                                                                                            (10×2=20 marks)

 

1. What is margin of safety?

 

2. What do you mean by Limiting factor?

 

3. State the formula for Earnings per share and Price Earnings ratio.

 

4. Fill in the blanks:
5. a) Labour cost variance is sub-divided into …………….variance and ………..variance.
6. b) …………..minus Fixed cost is profit.

 

5. State whether the following statements are TRUE or FALSE.
6. a) Profit volume ratio  will change if the quantity sold changes.
7. b) Machinery purchased and paid for in shares will affect fund flow statement.

 

6. Budgetted fixed overheads Rs,40,000, budgeted production 20,000 units. Actual fixed overheads Rs.48,000; Actual production Rs.19,000. Calculate overhead volume and expenditure variance.

 

7. Credit sales for January, February and March are Rs.1 lakh, Rs.1.20 lakhs and Rs.1.50 lakhs respectively. 20% of debtors are collected in the month of sales. 30% in the month following the sales and 50% in the second month following the sales. Calculate the amount collected from the debtors in the month of March.

 

8. A Ltd reports the following data relating to debtors:

Net credit sales during 2006                        Rs.31 lakhs

Debtors on 31/12/2006                             Rs.4,16,000

Compute accounts receivable turnover and the collection period.  (No. of days 365)

 

9. Budgetted production and overhead cost for two capacity levels are given below:

Budgetted productions Units                     2000             3000

Indirect material (Rs.)                            10000           15000

Depreciation                                         4000             4000

Maintenance                                         2000             2200

Calculate overhead cost for a production of 5000 units.

 

10. Sales Rs.2,00,000; Cost of goods sold Rs.1,20,000; Operating expenses Rs.40,000. Calculate operating ratio and operating profit ratio

 

PART  B

 

Answer ANY FIVE questions                                                                     Marks:5×8=40

 

11. Discuss the merits and limitations of Ratio Analysis.

 

12. Distinguish between Management Accounting and Financial Accounting.

 

 

13. The following data for the quarter ended 31^st March 2012 is given to you:

Budgetted production 4000 units, Material Rs.20,000, Wages Rs.32,000, Factory overheads Rs.36,000 (4/9 fixed). It is anticipated that production will increase by 25% in the second quarter. Material prices are expected to reduce by 50p per unit. Labour rates are expected to increase by Rs.1.50 per unit. Fixed overheads remains constant, but Variable overheads is expected to increase by Re.1 per unit. Prepare a Production Cost Budget for the second quarter of 2012.

 

14. From the following P/L statement compute fund from operations:

Sales                                                   Rs.60,000

Dividend received                                  Rs.  3,000

Interest on investments                          Rs.  3,000

Total income                                         Rs.66,000

Less: expenses:

Purchases               Rs.50,000

Salaries                  Rs.  7,000

Depreciation            Rs.  2,000

Goodwill w/o            Rs.  1,000

Preliminary expenses Rs.    500

Discount on shares    Rs.  1,500

Total expenses                                      Rs.70,000

Net loss                                               Rs.  4,000

 

15. The following details relate to two products A and B.

A                 B

Selling price per unit(Rs.)              200              500

Material at Rs.20/kg                      40                160

Labour at Rs.10/hour                    50                100

Variable overheads (Rs.)               20                40

The total fixed overheads are Rs.50,000. Comment on the profitability of each product when,

1. a) raw material is in short supply.
2. b) sales in quantity is limited.
3. c) if the company has only 4000 kgs of raw material and the maximum demand of product A is 1000 units and that of B is 1800 units, determine the most profitable sales mix and the profit for that level of sale.

 

16. Prepare a Balance sheet from the following data:

Gross profit ratio                                   20%

Debtors turnover                                   6 times

Fixed assets to Shareholders’ funds           0.80

Reserves to Capital                                0.50

Current ratio                                         2.50

Liquid ratio                                           1.50

Net working capital                                Rs.300000

Stock turnover ratio                               6 times

 

17. The following is budgeted cost per unit for the production of 5000 units at 50% capacity.

Material                                    Rs.20

Labor                                       Rs.10

Factory overheads                      Rs.  5 (20% fixed)

Administration overheads              Rs.  4 (fixed)

Selling overheads                        Rs.  2 (40% variable)

Prepare a budget for a production of 8,000 units and calculate the budgeted profit, if the selling price is Rs.50 per unit.

18. Draw a Material Procurement Budget (in quandities) From the following information:

Estimated Sales of a product 40,000 units.  Each unit of the product requires 3 units of material

‘A’ and 5 units of material ‘B’ .

 

	Opening stock (units)	Closing stock (units)
Finished Stock	5,000	7,000
Material A	12,000	15,000
Material B	20,000	25,000
Materials on order: A: B:	7,000 11,000	5,000 10,000

PART  C

 

Answer ANY TWO questions                                                                     Marks:2×20=40

 

19. The sales and profit of M Ltd for 2 years were as follows:

Year                       Sales(Rs.)                         Profit(Rs.)

2006                      1,50,000                             20,000

2007                      1,70,000                              28,000

Assuming that selling price per unit, variable cost per unit and the total fixed cost for the two years remain the same, calculate:

1. PV ratio
2. Break even sales
3. Sales to earn a profit of Rs.40,000
4. Profit when sales are Rs.2,60,000
5. Margin of safety when profit is Rs.50,000
6. New break even sales when selling price is reduced by 20%.

 

20. The standard cost for manufacturing 100 kgs of product X consist of:

Material  A 80 kgs at Rs.2.50 per kg.

Material B 20 kgs at Rs.4 per kg

Material C 20 kgs at Re.1 per kg

During the month of January, 2000 kgs of Product X were produced.  The actual materials used were as follows:

Material A 1,500 kgs at Rs.2.40 per kg

Material B 400 kgs at Rs.4.20 per kg

Material C 500 kgs at Rs.1.10 per kg

Calculate material variances.

 

21. The following are the Balance Sheets of ABC Ltd.

 

	31/12/2010 Rs.	31/12/2011 Rs.		31/12/2010 Rs	31/12/2011 Rs.
Share capital P/L Account Term Loans Creditors Tax provision Prop. dividend	3,00,000 4,90,000 5,00,000 70,000 86,000 24,000 14,70,000	3,50,000 6,96,000 2,00,000 58,000 1,02,000 30,000 14,36,000	Fixed Assets Investment Stock Debtors Bank Cash	13,36,000 20,000 20,000 33,000 50,000     11,000 14,70,000	12,78,000 – 24,000 57,000 44,000      33,000      14,36,000

 

 

1. a) Depreciation on Fixed assets provided during the year Rs.110,000.
2. b) A fixed asset whose Book Value is Rs.25,000 was sold for Rs.12,000.
3. c) Income tax paid during the year was Rs.75,000.
4. d) Interim dividend paid during the year Rs.25,000.
5. e) Proposed dividend of 2010 was paid in 2011
6. f) Investments were sold for Rs.25,000

Prepare Fund Flow Statement.

 

 

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