LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
M.Com. DEGREE EXAMINATION – COMMERCE
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SECOND SEMESTER – April 2009
CO 2814 / 2810 – ACCOUNTING FOR DECISION MAKING
Date & Time: 27/04/2009 / 1:00 – 4:00 Dept. No. Max. : 100 Marks
SECTION – A 10 x 2 = 20
Answer ALL questions:
- Discuss the types of standard in variance analysis
- State the objectives of budgeting control.
- What do you mean key factor in Marginal Costing.
- Explain the term ‘Common size Statements’.
- What do you understand by term “ABC”.
- State methods of Transfer Pricing.
- From the following particulars calculate the fixed cost
Capacity 60% 100%
Units produced 600 units 1000 units
Power and fuel Rs.1,600 Rs.2,000
- A factory produces 5 units of commodity in one standard hour. Actual production during a
articulars year is 85,000 units and the budgeted production for the year is fixed at 1,00,000 units.
Actual hours operated are 40,000. Calculate the efficiency and activity ratios.
- Standard Rate per Labour hour in a factory was Rs.20. However during a month payment was
made for 26,000 Labour hours at Rs.22 each.
Calculate Labour rate variance.
- Find out Variable Cost. Sales Rs.4,00,000 & PV Ratio= 25%
SECTION – B 5 x 8 = 40
Answer any FIVE questions:
- “Marginal costing is a valuable Aid for Managerial Decisions” Discuss.
- Enumerate the characteristics of Relevant Costs.
- How cash flow statements differs from fund flow statements.
- Senthil Velvan Corporation made a profit of Rs.3,70,250 after considering the following:
Rs.
(a) Depreciation on fixed assets 7,500
(b) Provision for tax 50,000
(c) Loss on sale of machine 600
(d) Transfer to general reserve 20,000
(e) Provision for doubtful debts 1,200
(f) Profit on sale of fixed assets 2,500
(g) Amortization of development cost 5,000
The following additional information is given to you:
| 31-12-1992
Rs. |
31-12-1993
Rs. |
|
| Creditors
Bills payable Outstanding expenses Debtors Bills receivable Prepaid expenses |
20,000
15,000 7,000 36,000 12,000 1,600 |
25,000
13,000 6,000 39,000 10,500 1,700 |
You are required to determine cash from operating activities.
- Calculate funds from operations of X Ltd. from the following:
Profit & Loss A/c
| Rs. | Rs. | ||
| To Salaries
To Rent To Commission To Discount allowed To Provision for Depreciation To Transfer to General Reserve To Loss on sale of Investments To Provision for tax To Discount on issue of Debentures To Preliminary Expenses To Selling Expenses To Net Profit |
10,000
3,000 2,000 1,000
14,000
20,000
5,000 10,000
2,000 3,000 20,000 1,20,000
|
By Gross Profit
By profit on Sale of Machines By Dividend received By Refund of tax |
2,00,000
5,000 2,000 3,000 |
| 2,10,000 | 2,10,000 |
- Parker Ltd., manufactures two brands of per Hero & Zero. The sales department of the company has three departments in different areas of the country. The sales budget for the year ending 31st December 1999 were: Hero -Department I 3,00,000; Department II5,62,500; Department III 1,80,000 and Zero – Department I 4,00,000; Department II 6,00,000; Department III 20,000. Sales prices are Rs.3 and Rs.1.20 in all departments. It is essential that by forced sales promotion the sale of ‘Zero’ in department I will increase by 1,75,000. It is also expected that by increasing production and extensive advertisement, Department III will be enabled to increase the sale of ‘Zero’ by 50,000.It is recognized that the estimated sales by department II represent an unsatisfactory target. It is agreed to increase both estimates by 20%.Prepare a Sales Budget for the year 2000.
- The following data relate to a manufacturing company:
Plant capacity: 4,00,000 units per annum
Present utilisation : 40%
Actuals for the year 2000 were:
Selling Price : Rs.50 per unit
Material cost : Rs.20 per unit
Variable manufacturing costs : Rs.15 per unit
Fixed costs : Rs.27 lakhs
In order to improve capacity utilisation the following proposals are considered:
- Reduce selling price by 10%.
- Spend additionally Rs.3lakhs on sales promotion.
How many units should be sold t earn a profit of Rs.5 lakhs per year.
- The standard material and standard cost per kg. of material required for the
production of one unit of product A is as follows:
Material – 5 kg.
Standard Price – Rs.5 per kg.
The actual production and related material data are as follows:
400 units of product A
Material used 2,200 kg.
Price of Material Rs.4.50 per kg.
Calculate (1) Material Cost Variance
(2) Material Usage Variance.
(3) Material Price Variance.
Section – C
Answer any TWO questions: 2 x 20 = 40
- From the following particulars, prepare Trading, Profit and Loss Account and Balance
Sheet.
Current ratio – 3; Liquid ratio – 1.8
Bank overdraft – Rs.20,000; Working capital – Rs.2,40,000
Debtors velocity – 1 month; Gross profit ratio – 20%
Proprietory ratio (Fixed assets / Shareholders’ fund) – 0.9
Reserves and surplus – 0.25 of share capital.
Opening stock – Rs.1,20,000; 8%Debnetures – Rs.3,60,000
Long – term investments – Rs.2,00,000
Stock turnover ratio – 10 times; Creditors velocity – ½ month
Net profit Share Capital – 20%.
- A Ltd. is formed to produce Product X, the demand for which is uncertain. Their estimated
costs are:
Materials p.u. Rs.2
Labour cost p.u. Rs.6
Variance overheads Rs.4
Fixed manufacturing expenses Rs.96,000
(a) If the selling price p.u. is Rs.20, how many units they have to sell to:
- i) break even (ii) make a profit of Rs.32,000
iii) make a profit of 20% on sales
(b) If the demand for the product is 10,000 units, what selling price they must
charge in order to:
- i) break even ii) make a profit of Rs.24,000
iii) make a profit of 20% on sales
- The information regarding the composition and hourly wage rates of labour force
engaged on a job schedule to be completed in 30 hours are as follows:
Category of Standard Hourly Actual Hourly
Workers No. of wage rate No. of wage rate
Workers per workers Workers per worker
Skilled 75 Rs.6 70 Rs.7
Semi – skilled 45 4 30 5
Unskilled 60 3 80 2
The work was completed in 32 hour. Calculate labour variances.