LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.B.A. DEGREE EXAMINATION – BUSINESS ADMINISTRATION
|
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:
- Cost unit
- Margin of safety
- Overtime premium
- Cash from financing activities
- Bin Card
- Current Ratio
- Working Capital is Rs.40,000. Current ratio 2; Stock Rs.30,000. Calculate Current Assets and Liquid Assets.
- Standard time 10 hours; Actual time taken 8 hours; Time rate Rs.12 per hour. Calculate earnings under Halsey Plan.
- 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.
- 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
- What is Labour Turnover? Explain the causes of Labour Turnover.
- 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.
- From the following data, prepare a statement showing the labor cost per day of 8 hours.
- Monthly salary (basic + DA) 400
- Leave salary 15% of Basic + DA
- Employee’s contribution to Provident Fund 8% of salary (a + b)
- Employer’s contribution to ESI 5% of salary (a + b)
- Pro-rata expenditure on amenities to labor 25 per head PM
- of working hours in a month 200
- From the following information, calculate a composite machine rate, for a machine whose scrap value is nil.
- Cost of machine 3,60,000
- Installation charges 40,000
- Working life 20 years
- Working hours 8000 per year
- Repair charges 50% of depreciation
- Power 10 units per hour at 10 p per unit.
- Lubricating oil 2 per day of 8 hours
- Consumable stores 10 per day of 8 hours
- Machine operator’s wages 4 per day
SECTION II
- State the merits and limitations of Ratio Analysis.
- 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:
- Break even sales in units.
- Sales in units to earn a profit of Rs.20,000.
- Profit if sales are 6,000 units
- New break even sales if selling price is reduced by 10% and Fixed Cost increased by Rs.2000.
- 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:
- Gross profit ratio
- Operating profit ratio
- Debtors collection period
- Stock turnover
- 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 31st March 2006 and 31st 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 |
- Depreciation provided on Fixed Assets Rs.1,00,000
- Fixed Asset whose book value was Rs.50,000 was sold for Rs.40,000
- Tax paid during the year Rs.80,000
- The proposed dividend of 2006 was paid in 2007
- 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,
- Material prices will increase by 20% and wage rates by 5%.
- Factory overheads are to be charged as a percentage on prime cost.
- Selling expenses per unit will remain unchanged.
- 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%
- Prepare a statement showing the distribution of the Service dept expenses to the Production dept.
- 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.
- 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.