[Management Accounting Solved Question Papers, Dibrugarh University Solved Question Papers, 2016, B.Com 5th Sem]
Management Accounting Solved Question Papers
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) write true or false: 1x4=4
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
Management Accounting | |
Chapter Wise Notes | Chapter Wise MCQs |
1. Introduction to Management Accounting 5. Budget and Budgetary Control Also Read: | |
Management Accounting Important Questions for Upcoming Exams (Dibrugarh University) | |
Management Accounting Solved Papers: 2013 2014 2015 2016 2017 2018 2019 | |
Management Accounting Question Papers: 2013 2014 2015 2016 2017 2018 2019 | |
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
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