Breaking News

Tuesday, November 17, 2020

Management Accounting Solved Papers: November' 2016 | Dibrugarh University | B.Com 5th Sem

2016 (November)
COMMERCE (General/Speciality)
Course: 503 (Management Accounting)
The figures in the margin indicate full marks for the questions
(NEW COURSE)
Full Marks: 80
Pass Marks: 24
Time: 3 hours
1. (a) Fill in the blanks:                                                  1x5=5

a)      In marginal costing system, fixed cost is considered as Period cost.
b)      Issue of equity shares in a cash flow from Financing activities.
c)       Master budget is a summary of all functional budgets.
d)      Fixed cost per unit Decreases when volume of production increases.
e)      Margin of safety can be improved by reducing the Variable cost.
(b) Write True or False:                                                 1x3=3
a)      Management Accounting is concerned with accounting information that is useful to the management.  True
b)      The difference between actual cost and standard cost is known as differential cost.   Variance
c)       Cash Flow Statement is based upon accrual basis of accounting.                        False, Cash Basis
2. Write short notes on any four of the following:                                           4x4=16
a)      Tools of Management Accounting.
Ans: Tools and Techniques Used in Management Accounting: Management accountant supplies information to the management so that latter may be able to discharge all its functions, i.e., planning organization, staffing, direction and control sincerely and faithfully. For doing this, the management accountant uses the following tools and techniques.
a)      Financial planning: Financial planning is the act of deciding in advance about the financial activities necessary for the concern to achieve its primary objectives. It includes determining both long term and short term financial objectives of the enterprise, formulating financial policies and developing the financial procedure to achieve the objectives. The role of financial policies cannot be emphasized to achieve the maximum return on the capital employed. Financial policies may relate to the determination of the amount of capital required, sources of funds, govern the determination and distribution of income, act as a guide in the use of debt and equity capital and determination of the optimum level of investment in various assets.
b)      Analysis of financial statements: The analysis is an attempt to determine the significance and meaning of the financial statement data so that a forecast may be made of the prospects for future earnings, ability to pay interest and debt maturities and profitability of a sound dividend policy. The techniques of such analysis are comparative financial statements, trend analysis, funds flow statement and ratio analysis. This analysis results in the presentation of information which will help the business executive, investors and creditors.
c)       Historical cost accounting: The historical cost accounting provides past data to the management relating to the cost of each job, process and department so that comparison may be make with the standard costs. Such comparison may be helpful to the management for cost control and for future planning.
d)      Standard costing: Standard costing is the establishment of standard costs under most efficient operating conditions, comparison of actual with the standard, calculation and analysis of variance, in order to know the reasons and to pinpoint the responsibility and to take remedial action so that adverse things may not happen again. This aspect is necessary to have cost control.
b)      Funds from Operation.
Ans:  Funds from operations refers to a fund which is generated in the business due to its regular operations during the period. The funds from operation is determined by adding the non-operating incomes and non-cash expenses from the net surplus.  Non-cash expenses such as depreciation and amortization of intangible assets do not result in actual cash outflow. Non-operating expenses are those which are not treated as regular expenses of the business. Incomes and gains which are not earned from the normal business operations are called non-operating incomes. These incomes are included while ascertaining the business income, but are excluded while determining the funds from operations.
c)       Differential Costing.
Ans: Differential costing is a technique of costing where mainly differential costs are considered relevant. Differential cost is the difference between the cost of two alternative decisions, or of a change in output levels.  The alternative actions may arise due to change in sales volume, price, product mix, or such actions as make or buy or continue or stop production, etc.
d)      Cost-volume-profit Relationship.
Ans: Cost-Volume-Profit analysis is analysis of three variables i.e., cost, volume and profit which  explores the relationship existing amongst costs, revenue, activity levels and the resulting  profit. It aims at measuring variations of profits and costs with volume, which is significant for business profit planning.
CVP analysis makes use of principles of marginal costing. It is an important tool of planning for making short term decisions.  The following are the basic decision making indicators in Marginal Costing:
(a) Profit Volume Ratio (PV Ratio) / Contribution Margin ratio
(b) Break Even Point (BEP)
(c) Margin of Safety (MOS)
(d) Indifference Point or Cost Break Even Point
(e) Shut-down Point
Assumptions in CVP analysis
The assumptions in CVP analysis are the same as that under marginal costing.
a)      Cost can be classified into fixed and variable components.
b)      Total fixed cost remain constant at all levels of output
c)       The variable cost change in direct proportion with the volume of output
d)      The product mix remains constant
e)      The selling price per unit remains the same at all the levels of sales
f)       There is synchronization of output and sales, i.e, what ever output is produced , the same is sold during that period.

e)      Budgetary Control.
Ans: Budgetary control is the process of preparation of budgets for various activities and comparing the budgeted figures for arriving at deviations if any, which are to be eliminated in future. Thus budget is a means and budgetary control is the end result. Budgetary control is a continuous process which helps in planning and coordination. It also provides a method of control.
According to Brown and Howard “Budgetary control is a system of coordinating costs which includes the preparation of budgets, coordinating the work of departments and establishing responsibilities, comparing the actual performance with the budgeted and acting upon results to achieve maximum profitability”.
Wheldon characterizes budgetary control as planning in advance of the various functions of a business so that the business as a whole is controlled.
I.C.M.A. define budgetary control as “the establishment of budgets, relating the responsibilities of executives to the requirements of a policy, and the continuous comparison of actual with budgeted results either to secure by individual actions the objectives of that policy or to provide a basis for its revision”.
f)       Performance Budgeting.
Ans: Performance Budgeting had its origin in U.S.A. after the Second World War. It tries to rectify some of the traditional budget. In the traditional budget amount are earmarked for the objects of expenditure such as salaries, travel, office expenses, grant in aid etc. In such system of budgeting the money concept was given more prominence i.e. estimating or projecting rupee value for the various accounting heads or classification of revenue and cost. Such system of budgeting was more popularly used in government departments and many business enterprises. But is such system of budgeting control of performance in terms of physical units or the related costs cannot be achieved.
Performance oriented budgets are established in such a manner that each item of expenditure related to a specific responsibility center is closely linked with the performance of that center. The basic issue involved in the fixation of performance budgets is that of developing work programmes and performance expectation by assigned responsibility, necessary for the attainments of goals and objectives of the enterprise, it involves establishment of well defined centers of responsibilities, establishment for each responsibility  center – a programme of target performance in physical units, forecasting the amount of expenditure required to meet the physical plan laid down and evaluation of performance.
3. (a) “Management Accounting has been evolved to meet the need of management.” Explain this statement.                 14
Ans: Ans: The term management accounting refers to accounting for the management. Management accounting provides necessary information to assist the management in the creation of policy and in the day-to-day operations. It enables the management to discharge all its functions i.e. planning, organization, staffing, direction and control efficiently with the help of accounting information.
In the words of R.N. Anthony “Management accounting is concerned with accounting information that is useful to management”.
Anglo American Council of Productivity defines management accounting as “Management accounting is the presentation of accounting information is such a way as to assist management in the creation of policy and in the day-to-day operations of an undertaking”.
According to T.G. Rose “Management accounting is the adaptation and analysis of accounting information, and its diagnosis and explanation in such a way as to assist management”.
From the above explanations, it is clear that management accounting is that form of accounting which enables a business to be conducted more efficiently.
The primary objective is to enable the management to maximize profits or minimize losses. The fundamental objective of management accounting is to assist management in their functions. The other main objectives are:
1)      Planning and policy formulation: planning is one of the primary functions of management. It involves forecasting on the basis of available information.
2)      Help in the interpretation process: The main object is to present financial information. The financial information must be presented in easily understandable manner.
3)      Helps in decision making: Management accounting makes decision making process more modern and scientific by providing significant information relating to various alternatives.
4)      Controlling: The actual results are compared with pre determined objectives. The management is able to control performance of each and every individual with the help of management accounting devices.
5)      Reporting: This facilitates management to take proper and timely decisions. It presents the different alternative plans before the management in a comparative manner.
6)      Motivating: Delegation increases the job satisfaction of employees and encourages them to look forward. so it serves as a motivational devise.
7)      Helps in organizing: “Return on capital employed” is one of the tools if management accounting. All these aspects are helpful in setting up effective and efficient organization.
8)      Coordinating operations: It provides tools which are helpful in coordinating the activities of different sections.
From the above explanations, it is clear that management accounting is that form of accounting which enables a business to be conducted more efficiently.
Or
(b) “Management Accounting is nothing more than the use of financial information for management purposes.” Explain this statement and clearly distinguish between Financial Accounting and Management Accounting. 6+8=14
Ans: Ans: The accounting system concerned only with the financial state of affairs and financial results of operations is known as Financial Accounting. It is the original form of accounting. It is mainly concerned with the preparation of financial statements for the use of outsiders like creditors, debenture holders, investors and financial institutions. The financial statements i.e., the profit and loss account and the balance sheet, show them the manner in which operations of the business have been conducted during a specified period.
The term management accounting refers to accounting for the management. Management accounting provides necessary information to assist the management in the creation of policy and in the day-to-day operations. It enables the management to discharge all its functions i.e. planning, organization, staffing, direction and control efficiently with the help of accounting information.
In the words of R.N. Anthony “Management accounting is concerned with accounting information that is useful to management”.
Anglo American Council of Productivity defines management accounting as “Management accounting is the presentation of accounting information is such a way as to assist management in the creation of policy and in the day-to-day operations of an undertaking”.
According to T.G. Rose “Management accounting is the adaptation and analysis of accounting information, and its diagnosis and explanation in such a way as to assist management”.
From the above explanations, Management Accounting is nothing more than the use of financial information for management purposes.
Difference between Financial Accounting and Management Accounting
Basis
Financial accounting
Management accounting
a)      Objectives
The main objective of financial accounting is to supply information in the form of profit and loss account and balance sheet to outside parties like shareholders, creditors, government etc.
The main objective of management accounting is to provide information for the internal use of management.

b)      Performance
Financial accounting is concerned with the overall performance of the business.
Management accounting is concerned with the departments or divisions. It report about the performance and profitability of each of them.

c)       Data
Financial accounting is mainly concerned with the recording of past events.
Management accounting is concerned with future plans and policies.
d)      Nature
Financial accounting is based on measurement.
Management accounting is based on judgment.
e)      Accuracy
Accuracy is an important factor in financial accounting.
Approximations are widely used in management accounting.
f)       Legal Compulsion
Financial accounting is compulsory for all joint stock companies.
Management accounting is optional.

g)      Monetary transactions
Financial accounting records only those transactions which can be expressed in terms of money.
Management accounting records not only monetary transactions but also non- monetary events.
h)      Control
Financial accounting will not reveal whether plans are properly implemented.
Management accounting will reveal the deviations of actual performance from plans. It will also indicate the causes for such deviations.
i)        Stock Valuation
In cost accounts stocks are valued at cost.
In financial accounts, stocks are valued at cost or realisable value, whichever is lesser.

j)        Analysis of Profit and Cost
Cost accounts reveal Profit of Loss of different products, departments separately.
In financial accounts, the Profit or Loss of the entire enterprise is disclosed into.
Or
4. (a) The following are the summaries of the Balance Sheets of EC Ltd. as on 31st December, 2014, and 31st December, 2015:
Liabilities
31.12.2014
31.12.2015
Share Capital
Reserve Fund
Profit & Loss A/c
Bank Loan
Creditors
Provision for Taxation
2,00,000
50,000
30,500
70,000
1,55,000
30,000
2,50,000
60,000
30,600
-
1,40,200
35,000

5,35,500
5,15,800
Assets
31.12.2014
31.12.2015
Land & Buildings
Plant
Stock
Debtors
Cash
Bank
2,00,000
1,50,000
1,00,000
85,000
500
-
1,90,000
1,74,000
74,000
69,200
600
8,000

5,35,500
5,15,800
Additional Information:
a)      Depreciation on plant was Rs. 14,000 in 2015.
b)      Dividend of Rs. 20,000 was paid in 2015.
c)       Income tax provision for the year was Rs. 25,000.
d)      A piece of land was sold in 2015 at cost.
Prepare a statement showing sources and application of fund and a schedule of changes in working capital for 2015. 14
Or
(b) (i) What do you mean by Cash Flow Statement? Explain the objects of Cash Flow Statement.                             7
Ans: Cash Flow Statement:
A Cash Flow Statement is similar to the Funds Flow Statement, but while preparing funds flow statement all the current assets and current liabilities are taken into consideration. But in a cash flow statement only sources and applications of cash are taken into consideration, even liquid asset like Debtors and Bills Receivables are ignored.
A Cash Flow Statement is a statement, which summarises the resources of cash available to finance the activities of a business enterprise and the uses for which such resources have been used during a particular period of time. Any transaction, which increases the amount of cash, is a source of cash and any transaction, which decreases the amount of cash, is an application of cash.
Simply, Cash Flow is a statement which analyses the reasons for changes in balance of cash in hand and at bank between two accounting period. It shows the inflows and outflows of cash.
Objectives of Cash Flow Statement
The Cash Flow Statement is prepared because of number of merits, which are offered by it. Such merits are also termed as its objectives. The important objectives are as follows:
1.       To Help the Management in Making Future Financial Policies: Cash Flow statement is very helpful to the management. The management can make its future financial policies and is in a position to know about surplus or deficit of cash.
2.       Helpful in Declaring Dividends etc.: Cash Flow Statement is very helpful in declaring dividends etc. This statement can supply necessary information to understand the liquidity.
3.       Cash Flow Statement is Different than Cash Budget: Cash budget is prepared with the help of inflow and outflow of cash. If there is any variation, the same can be corrected.
4.       Helpful in devising the cash requirement:  Cash flow statement is helpful in devising the cash requirement for repayment of liabilities and replacement of fixed assets.
5.       Helpful in finding reasons for the difference:  Cash Flow Statement is also helpful in finding reasons for the difference between profits/losses earned during the period and the availability of cash whether cash is in surplus or deficit.
6.       Helpful in predicting sickness of the business:  Cash flow is helpful in predicting sickness of the business. A sound cash position is a true indicator of sound financial position.
7.       Supply Necessary Information to the Users: A Cash Flow Statement supplies various information relating to inflows and outflows of cash to the users of accounting information in the following ways:
a.       To assess the ability of a firm to pay its obligations as soon as it becomes due;
b.      To analyze and interpret the various transactions for future courses of action;
c.       To see the cash generation ability of a firm;
d.      To ascertain the cash and cash equivalent at the end of the period.
8.       Helps the Management to Ascertain Cash Planning: No doubt a cash flow statement helps the management to prepare its cash planning for the future and thereby avoid any unnecessary trouble.
(ii) Distinguish between Cash Flow Statement and Funds Flow Statement.                                         7
Ans: Difference between Funds Flow Statement and Cash Flow Statement
Basis of Difference
Funds Flow Statement
Cash Flow Statement
Basis of Analysis
Funds flow statement is based on broader concept i.e. working capital.
Cash flow statement is based on narrow concept i.e. cash, which is only one of the elements of working capital.
Objective
The object funds flow statement is to disclose the magnitude, direction and causes of changes in working capital.
The object of cash flow is to disclose the magnitude, direction and causes of changes in cash and cash equivalents.
Source
Funds flow statement tells about the various sources from where the funds generated with various uses to which they are put.
Cash flow statement starts with the opening balance of cash and reaches to the closing balance of cash by proceeding through sources and uses.
Usefulness
Funds flow statement is more useful in assessing the long-term financial position.
Cash flow statement is more useful in assessing the short-term financial position of the business.
Schedule of Changes in Working Capital
In funds flow statement changes in current assets and current liabilities are shown through the schedule of changes in working capital.
In cash flow statement changes in current assets and current liabilities are shown in the cash flow statement.
Causes
Funds flow statement shows the causes of changes in net working capital.
Cash flow statement shows the causes of changes in cash.
Principal of Accounting
Funds flow statement is based on the accrual basis of accounting.
In cash flow statement, data are obtained on accrual basis which are converted into cash basis.
Compulsion
There is no prescribed form for preparation of Funds flow statement.
Cash flow statement is compulsory to be prepared in prescribed proforma as given in AS – 3.
Relationship
Funds flow statement can be prepared from the cash flow statement under indirect method.
But a cash flow statement cannot be prepared from funds flow statement.
Financial Health
Sound fund position does not necessarily mean sound cash position.
But sound cash position is always followed by sound fund position.

5. (a) The following are the details of profit and loss data relating to a manufacturing business:

Rs.
Sales
Cost of Goods Sold:
Variable                                                                      40,000
Fixed                                                                           10,000
1,00,000


50,000
Gross Profit

Selling and Administrative Cost:
Variable                                                                     10,000
Fixed                                                                            5,000
50,000



15,000
Net Profit
35,000
                    i.            From the above data, calculate –
1)      Profit-volume ratio;
2)      Break-even point;
3)      Profit for the sales volume of Rs. 1,60,000 and Rs. 70,000.
                  ii.            Would it be profitable to reduce the selling price by 10% if it leads to an increase in sales by 30%? (2+3+4)+5=14
Or
(b) Define marginal costing and discuss its contributions to the management in decision-making.          5+9=14
Ans: Ans: Marginal Costing: It is the technique of costing in which only marginal costs or variable are charged to output or production. The cost of the output includes only variable costs .Fixed costs are not charged to output. These are regarded as ‘Period Costs’. These are incurred for a period. Therefore, these fixed costs are directly transferred to Costing Profit and Loss Account.
According to CIMA, marginal costing is “the ascertainment, by differentiating between fixed and variable costs, of marginal costs and of the effect on profit of changes in volume or type of output. Under marginal costing, it is assumed that all costs can be classified into fixed and variable costs. Fixed costs remain constant irrespective of the volume of output. Variable costs change in direct proportion with the volume of output. The variable or marginal cost per unit remains constant at all levels of output.”
Thus, Marginal costing is defined as the ascertainment of marginal cost and of the ‘effect on profit of changes in volume or type of output by differentiating between fixed costs and variable costs. Marginal costing is mainly concerned with providing information to management to assist in decision making and to exercise control. Marginal costing is also known as ‘variable costing’ or ‘out of pocket costing’.
“Marginal Costing” is a valuable aid to Management
Marginal costing and Beak even analysis are very useful to management. The important uses of marginal costing and Break Even analysis are the following:
1.       Cost control: Marginal costing divides total cost into fixed and variable cost. Fixed Cost can be controlled by the Top management to a limited extent and Variable costs can be controlled by the lower level of management. Marginal costing by concentrating all efforts on the variable costs can control total cost.
2.       Profit Planning: It helps in short-term profit planning by making a study of relationship between cost, volume and Profits, both in terms of quantity and graphs. An analysis of contribution made by each product provides a basis for profit-planning in an organisation with wide range of products.
3.       Fixation of selling price: Generally prices are determined by demand and supply of products and services. But under special market conditions marginal costing is helpful in deciding the prices at which management should sell. When marginal cost is applied to fixation of selling price, it should be remembered that the price cannot be less than marginal cost. But under the following situation, a company shall sell its products below the marginal cost:
a)      To maintain production and to keep employees occupied during a trade depression.
b)      To prevent loss of future orders.
c)       To dispose of perishable goods.
d)      To eliminate competition of weaker rivals.
e)      To introduce a new product.
f)       To help in selling a co-joined product which is making substantial profit?
g)      To explore foreign market
4.       Make or Buy: Marginal costing helps the management in deciding whether to make a component part within the factory or to buy it from an outside supplier. Here, the decision is taken by comparing the marginal cost of producing the component part with the price quoted by the supplier. If the marginal cost is below the supplier’s price, it is profitable to produce the component within the factory. Whereas if the supplier’s price is less than the marginal cost of producing the component, then it is profitable to buy the component from outside.
5.       Closing down of a department or discontinuing a product: The firm that has several departments or products may be faced with this situation, where one department or product shows a net loss. Should this product or department be eliminated? In marginal costing, so far as a department or product is giving a positive contribution then that department or product shall not be discontinued. If that department or product is discontinued the overall profit is decreased.
6.       Selection of a Product/ sales mix: The marginal costing technique is useful for deciding the optimum product/sales mix. The product which shows higher P/V ratio is more profitable. Therefore, the company should produce maximum units of that product which shows the highest P/V ratio so as to maximize profits.
7.       Evaluation of Performance: The different products and divisions have different profit earning potentialities. The Performance of each product and division can be brought out by means of Marginal cost analysis, and improvement can be made where necessary.
8.       Limiting Factor: When a limiting factor restricts the output, a contribution analysis based on the limiting factor can help maximizing profit. For example, if machine availability is the limiting factor, then machine hour utilisation by each product shall be ascertained and contribution shall be expressed as so many rupees per machine hour utilized. Then, emphasis is given on the product which gives highest contribution.
9.       Helpful in taking Key Managerial Decisions: In addition to above, the following are the important areas where managerial problems are simplified by the use of marginal costing :
a)      Analysis of Effect of change in Price.
b)      Maintaining a desired level of profit.
c)       Alternative methods of production.
d)      Diversification of products.
e)      Alternative course of action etc.
6. (a) From the following estimates of KJ Ltd. prepare a Sales Overhead Budget:
Advertisement
Salaries of the sales department
Expenses of the sales department
Counter salesmen’s salaries and dearness allowance
Counter salesmen are allowed commission @ 2% on their sales.
Travelling salesmen are allowed commission and expenses @ 10% and 5% on their sales respectively.
5,000
10,000
3,000
12,000
The estimated sales during the period were as under:
Area
Counter sales
Sales by travelling salesmen
I
II
III
1,60,000
2,40,000
2,80,000
20,000
30,000
40,000
Or
(b) Explain the meaning of sales budget. Distinguish between sales budget and production budget.     7+7
Ans: Sales Budget: Sales budget is one of the important functional budgets. Sales estimate is the commencement of budgeting may be both made in quantitative or in value terms. Sales budget is primarily concerned with forecasting of what products will be sold in what quantities and at what prices during the budget period. Sales budget is prepared by the sales executives taking into account number of relevant and influencing factors such as: Analysis of past sales, key factors, market conditions, production capacity, government restrictions, competitor’s strength and weakness, advertisement, publicity and sales promotion, pricing policy, consumer behaviour, nature of business, types of product, company objectives, salesmen’s report, marketing research’s reports, and product life cycle.
Production Budget
Production budget is usually prepared on the basis of sales budget. But it also takes into account the stock levels desired to be maintained. The estimated output of business firm during a budget period will be forecast in production budget. The production budget determines the level of activity of the produce business and facilities planning of production so as to maximum efficiency. The production budget is prepared by the chief executives of the production department. While preparing the production budget, the factors like estimated sales, availability of raw materials, plant capacity, availability of labour, budgeted stock requirements etc. are carefully considered.
Difference between Sales Budget and Production Budget
a) A sales Budget is a schedule, which shows expected sales in both units and sales rupees for the coming period. Whereas a production budget determines only the quantity to be produced in coming period.
b) A sales Budget is not prepared on the basis of production budget. But a production budget is prepared on the basis of sales budget.
c) Stock levels are not shown in sales budget. But, a production budget takes into account the stock levels desired to be maintained.
d) Sales budget is prepared by the sales executives. Whereas, production budget is prepared by the chief executives of the production department.
e) Estimated selling price is shown in sales budget. Whereas, production budget helps in calculating production cost for estimated level of production.
(Old Course)
Full Marks: 80
Pass Marks: 32
Time: 3 hours
1. (a) Fill in the blanks:                                                   1x5=5
a)      Standard cost is a Predetermined cost.
b)      P/V ratio exhibits the percentage of contribution included in Sales
c)       Repayment of borrowing causes cash Outflow.
d)      Master budget is a summary of all functional budgets.
e)      Fixed cost per unit Decreases when volume of production increases.
(b) Choose the correct answer:                                 1x3=3
a)      Variable cost per unit remains same/increases/decreases due to increase in production.
b)      The practice of charging all costs to product is marginal costing/absorption costing/standard costing.
c)       Standard costing is a method/process/technique of Cost Accounting.
2. Write short notes on any four of the following:                                             4x4=16
a)      Break-even Analysis.
b)      Zero-base Budgeting.
c)       Absorption Costing.
d)      Cash Budget.
e)      Advantages of Standard Costing.
f)       Overheads Variances.
3. (a) Discuss, in detail, the functions of Management Accounting.                                           11
Or
(b) Explain the role of a management accountant in a business enterprise.                           11
4. (a) The following are the Summarized Balance Sheets of Dibru Trading Ltd. as on 31st March, 2015 and 31st March, 2016:
Liabilities
31.03.2015
31.03.2016
Equity Share Capital
14% Debentures
Securities Premium
General Reserve
Profit & Loss A/c
Sundry Creditors
Proposed Dividend
Provision for Depreciation:
Plant & Machinery
Furniture
2,00,000
50,000
-
30,000
48,000
1,35,000
20,000

1,40,000
6,000
2,40,000
-
10,000
50,000
68,000
1,55,000
24,000

1,50,000
4,000

6,29,000
7,01,000
Assets
31.03.2015
31.03.2016
Land & Buildings
Plant & Machinery (at cost)
Furniture (at cost)
Inventories
Sundry Debtors
Cash 
1,05,000
2,90,000
9,000
1,30,000
80,000
15,000
1,50,000
3,20,000
10,000
1,05,000
90,000
26,000

6,29,000
7,01,000
Additional Information:
a)      Furniture which cost Rs. 5,000, written down value being Rs. 1,000, was sold in 2015 – 16 for Rs. 2,000.
b)      Plant & Machinery, which cost Rs. 20,000 and in respect of which Rs. 13,000 had been written off as depreciation, was sold in 2015 – 16 for Rs. 3,000.
c)       The dividend declared in 2014 – 15 was paid during 2015 – 16.
From the above particulars, you are required to prepare:
a)      A Statement of changes in working capital during 2015 – 16.
b)      Funds Flow Statement for 2015 – 16.
Or
(b) State whether each of the following transactions would increase; decrease or have no effect on working capital: 2x6=12
a)      Purchase of goods on credit.
b)      Payment of previous year’s dividend.
c)       Sale of furniture on credit.
d)      Issue of preference share.
e)      Sale of old assets.
f)       Payment of bills payable.
5. (a) From the data given below, calculate:                                                         2+3+3+3=11
a)      Contribution;
b)      Profit-volume ratio;
c)       Break-even point;
d)      Sales to earn a profit of Rs. 3,00,000;
Fixed Cost – Rs. 1,80,000
Variable cost per unit:
Direct Material – Rs. 6
Direct Labour – Rs. 3
Direct Overheads – 100% of direct labour
Selling price per unit – Rs. 15
Or
(b) (i) State any three similarities between marginal costing and differential costing.                                        3
(ii) Describe the major areas of application of marginal costing system. What is the necessity of analysis of marginal cost?                                                8
6. (a) What do you understand by the terms ‘budget’ and ‘budgetary control’? Discuss the benefits derived from an efficient system of budgetary control.                                   (2+3)+6=11
Or
(b) A company is currently working at 50% capacity and produces 10000 units. Estimate the profit of the company when it works at 60% and 70% capacity.
At 60% capacity, the raw material cost increases by 2% and selling price falls by 3%.
At 70% capacity, the raw material cost increases by 4% and selling price falls by 5%.
At 50% capacity working, the product cost is Rs. 180 per unit and the selling price is Rs. 200 per unit.
The unit cost of Rs. 180 is made up as follows:

Rs.
Raw Material
Wages
Factory overhead (40% fixed)
Administrative overhead (50% fixed)
100
30
20
30

180
7. (a) From the particulars given below, calculate –         Out of Syllabus
(a)    Material price variance;
(b)   Material usage variance;
(c)    Material mix variance;

Standard
Actual
Materials
Quantity
(kg)
Unit Price
Rs.
Total
Rs.
Quantity
(kg)
Unit Price
Rs.
Total
Rs.
A
B
C
40
20
20
10
20
40
400
400
800
20
10
30
35
20
30
700
200
900
Or
(b) What do you understand by the terms ‘variance’ and ‘variance analyses’? Discuss the importance of variance analysis.                                                 (2+3)+6=11

Popular Posts for the Day