Loyola College M.Com April 2009 Accounting For Decision Making Question Paper PDF Download

         LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

M.Com. DEGREE EXAMINATION – COMMERCE

KP 44

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:

  1. Discuss the types of standard in variance analysis
  2. State the objectives of budgeting control.
  3. What do you mean key factor in Marginal Costing.
  4. Explain the term ‘Common size Statements’.
  5. What do you understand by term “ABC”.
  6. State methods of Transfer Pricing.
  7. 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

  1. 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.

  1. 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.

  1. Find out Variable Cost. Sales Rs.4,00,000 & PV Ratio= 25%

 

                                                            SECTION – B                                               5 x 8 = 40

Answer any FIVE questions:

 

  1. “Marginal costing is a valuable Aid for Managerial Decisions” Discuss.
  2. Enumerate the characteristics of Relevant Costs.
  3. How cash flow statements differs from fund flow statements.
  4. 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.

 

  1. 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

 

  1. 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.

 

  1. 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:

  1. Reduce selling price by 10%.
  2. Spend additionally Rs.3lakhs on sales promotion.

How many units should be sold t earn a profit of Rs.5 lakhs per year.

  1. 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

 

  1. 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%.

 

  1. 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:

  1. 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:

  1. i) break even ii) make a profit of Rs.24,000

iii) make a profit of 20% on sales

  1. 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.

 

 

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