LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
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M.Com. DEGREE EXAMINATION – COMMERCE
THIRD SEMESTER – APRIL 2007
CO 3806 / 3801 – MANAGEMENT ACCOUNTING
Date & Time: 28/04/2007 / 9:00 – 12:00 Dept. No. Max. : 100 Marks
PART – A
Answer ALL questions (10 x 2 = 20 marks)
- Explain the scope of Management Accounting?
- Distinguish between Management Accounting and Cost Accounting.
- Illustrate the uses of Cash flow statement.
- State the need for working capital.
- Discuss the advantages of Zero – base Budgeting.
- How do standard cost differ from estimated cost?
- Your are required to calculate BEP when Profit Rs.5,000 (20% sales) PV ratio is 50%.
- CR. 2.5, working capital Rs.63,000. Calculate current assets and current Liabilities.
- Calculate Sales value variance and sales price variance from the following particulars.
Product Budget qty Budget price p/u Actual qty Actual price p/u
A 400 30 500 31
- Calculate cash from operations: Net profit for 2005 Rs.25,000 Depreciation Rs.1,000, Prepaid
expenses on 1.1.05 Rs.2,000, Prepaid expenses on 31.12.05 Rs.1,000. Outstanding salary on
31.12.05 Rs.500.
PART – B
Answer any FIVE questions (5 x 8 = 40 marks)
- Discuss the Managerial use of Fund Flow statement.
- “Ratio Analysis is a tool of management for measuring efficiency and guiding business
policies” Discuss.
- From the following details, calculate funds from operations.
| Particulars | Rs. | Particulars | Rs. |
| Salaries | 5,000 | Closing balance of P&L a/c | 60,000 |
| Discount on issue of debentures | 2,000 | Opening balance of P&L a/c | 25,000 |
| Provision for bad debts | 1,000 | Transfer to GR | 1,000 |
| Rent | 3,000 | Preliminary expenses written off | 3,000 |
| Refund of Tax | 3,000 | Goodwill written off | 2,000 |
| Profit on sale of building | 5,000 | Proposed dividend | 6,000 |
| Depreciation on plant | 5,000 | Dividend received | 5,000 |
| Provision for Tax | 4,000 | ||
| Loss on sale of plant | 2,000 |
- The capital of Everest co ltd is as follows:
Rs.
9% Preference shares of Rs.10 each 3,00,000
Equity shares of Rs.10 each 8,00,000
————
11,00,000
————
The accountant has ascertained the following information’s:
- a) Profit after Tax @ 60% Rs.2,70,000 b) Depreciation Rs.60,000 c) Equity dividend paid 20% d) Reserves Rs.77,000 e) Market price per equity shares Rs.40. Calculate a) Dividend yield on equity shares b) Cover for preference and equity dividends. c) Earning per share
- d) The price earning ratio e) Dividend pay out ratio f) Book value per share.
- Assuming the cost structure and selling prices remain the same in periods I and II, Find
out a) PV ratio b) BEP sales (c) Profit when sales are Rs.10,000 d) Sales required to
earn a profit of Rs.20,000.
Period Sales Cost
I 1,20,000 1,11,000
II 1,40,000 1,27,000
- Draw a Material Procurement Budget from the following details 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.
| Estimate opening balance | Material on order | ||
| Finished product | 5,000 uts | — | |
| Material A | 12,000 uts | Material A | 7,000 uts |
| Material B | 20,000 uts | Material B | 11,000 uts |
| Estimate closing balance | Materials of order | ||
| Finished product | 7,000 uts | ——— | |
| Material A | 15,000 uts | Material A | 8,000 uts |
| Material B | 25,000 uts | Material B | 10,000 uts |
- 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 kgs standard price Rs. 5 per kg. The actual production and related material data
are as follows 400 units of product A, Materials used 22000 kgs Price of Material Rs.4.50 per kg. Calculate (a) Material cost Variance b) Material usage variance c) Material price variance.
- From the following data calculate labour variance standard time p.u 2.5 hrs. Actual hours
2,000 standard wages rate Rs. 2 per hour, Actual out put 1,000 uts. Actual wages
Rs.4,500. 20% of actual time has been lost due to machinery break down.
PART – C
Answer any TWO questions (2 x 20 = 40 marks)
- With the help of the following ratios of Edward Ltd draw balance sheet.
Current Ratio 2.5, Liquid Ratio 1.5, Networking capital Rs.3,00,000, stock turnover ratio: 6
times, Gross profit Ratio 20% Debit collection period 2 months. Fixed asset Turnover
Ratio: 2 times fixed asset to share holders noteworthy : 0.80
Reserve and surplus to capital 0.50.
Hint: Turn over refers to cost of sales
- The summaries Balance sheet of kumar Ltd as on 31.3.05 and 31.3.06 are as follows
| Liabilities | 31.03.05 | 31.03.06 | Assets | 31.03.05 | 31.03.06 |
| Share capital | 4,50,000 | 4,50,000 | Fixed Assets | 4,00,000 | 3,20,000 |
| General Reserve | 3,00,000 | 3,10,000 | Investments | 50,000 | 60,000 |
| P&L a/c | 56,000 | 68,000 | Stock | 2,40,000 | 2,10,000 |
| Creditors | 1,68,000 | 1,34,000 | Debtors | 2,10,000 | 4,55,000 |
| Tax provision | 75,000 | 10,000 | Bank | 1,49,000 | 1,97,000 |
| Mortgage Loan | 2,70,000 | ||||
| 10,49,000 | 12,42,000 | 10,49,000 | 12,42,000 |
Additional information a) Investments castings Rs. 8,000 were sold for Rs.8,500 b) Tax provision made during the year was Rs.9,000. c) During the year part of the fixed assets costing Rs.10,000 was sold for Rs.12,000 and the profit was including in P&L a/c. You are required to prepare cash flow statement for the year ended 31.03.2006.
- The following particulars are taken form the record of a company engaged in manufacturing two products X and Y for a certain raw material
| Particulars | Product X | Product Y |
| Sales | 125.00 | 250.00 |
| Material cost (Rs.2.50 per kg) | 25.00 | 62.50 |
| Wages m(Rs. 15 per hour) | 37.50 | 75.00 |
| Variable over head | 12.50 | 25.00 |
Total fixed over head Rs.50,000. Comment oh the profitability of each product when
- Total availability of raw material is 20,000 kgs and maximum sales potential of each product is 1,000 units Find out the product mix to yield maximum profit.
- Total sales value of limited
- Labour Time is limited
Production capacity in units is a key factor.