M.Com Previous Year Question Papers: Cost and Management Accounting (August' 2012)

Cost accounting 2012


2012 (AUGUST)

1.       (a) How is cost analysis done under Activity Based Costing?  /Or

(b) Explain the techniques to control and reduce cost.
2.       (a) The net profit shown by financial accounts of X Ltd. Amounted to Rs.37100. while the profit by cost accounts were Rs. 37320. On reconciliation of the figures, the following differences were noted:
(i)                  Director’s fees note charged in cost accounts Rs. 1140.
(ii)                Provision for bad and doubtful debts not charged in cost accounts Rs.1140.
(iii)               Income Tax paid shown only in financial accounts Rs. 16600.
(iv)              Overheads in cost accounts were estimated at Rs. 17000. The charge shown by financial books was Rs. 16640.
(v)                Work was started during the year on a new factory and expenditure of Rs. 16000 was incurred. Depreciation of 10% was provided in financial accounts.
(vi)              Bank interest received Rs. 60.
Prepare Reconciliation Statement.  /Or
(b) A product passes through three processes:
A, b and C. 1000 units at a cost of Rs. 1.10 were issued to process A. The other direct expenses were as follows:

Process A (Rs.)
Process B (Rs.)
Process C (Rs.)
Sundry materials

Direct labour

Direct expenses

The wastage of process A was 5% and in process B 4%. The wastage of process A was sold at Rs. 0.25 per unit and that of B Rs. 0.50 per unit and that of C of Rs. 1.00 per unit. The overhead charges were 160% of direct labour. The final product was sold at Rs. 10 per unit fetching a profit of 20% on sales.
Prepare process accounts and also find out percentage of wastage in process C.
3.       (a) Explain briefly the techniques of financial statement analysis. /Or
(b) Explain briefly:
(i) Objectives of financial statement analysis.
(ii) Interpretation of financial statements.
4.       (a) From the following Balance Sheet of a company calculate debt equity ratio, proprietory ratio and capital gearing ratio.
Equity capital (Rs. 100 each)
8% Pref. share capital (Rs. 100 each)
9% Debentures (Rs 100 each)
Current liabilities

Land and building
Plant and machinery
Prepaid expenses

(b) Explain briefly:
(i)      Leverage ratios
(ii)    Profitability ratios
(iii)   Activity ratios.
5.       (a) A company produced 5000 units in a year and sells thenat Rs. 100 per unit. The following ratio are available:
(i)      Raw materials 50% of selling price
(ii)    Labour 20% of selling price
(iii)   Overheads 20% of selling price
Additional information:
(i)      Production and sales cycle move regularly
(ii)    Wages are paid on the first of each month.
(iii)   Each unit is expected to be in process for 1.50 months.
(iv)  Raw materials are expected to remain in stores for 1.50 months.
(v)    Finished goods are expected to remain in warehouse for 2 months.
(vi)  Credit allowed to debtors 2 months.
(vii) Provide 20% for safety margin.
(viii)                       Credit allowed by suppliers 2 months.
You are required to prepare a statement showing an estimate of working capital requirements.  /Or
(b) Explain the importance of working capital in business.

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