## Wednesday, August 21, 2019

2015
(August)
COMMERCE
Paper: 103
(Cost and Management Accounting)
Full Marks – 80
Time – Three Hours
The figures in the margin indicate full marks for the questions.

1. (a) Define ‘Costing’ and ‘Cost accounting’. Describe the importance of cost accounting as a managerial tool. 2+4+10=16

Or
(b) Describe the benefits and limitations of Activity-based costing.                     8+8=16
2. (a) (i) Distinguish between Job costing and Process costing                      8
(ii) The following data relate to a manufacturing concern:
 Production Cost of production Normal loss Actual loss Scrap value = 1,000 units = Rs. 1,850 = 10% of production = 150 units = Re. 0.50 per unit

Prepare Process Account and Abnormal Loss Account                          8
(b) Why it is necessary for reconciliation of cost and financial accounts? State the reasons for differences between profits shown by both the sets of accounts.                                       6+10=16
3. (a) Prepare a comparative Balance Sheet of X Co. Ltd. from the following data and show the trend percentages:       16
(Amount in lakhs of Rupees)
 2010 2011 2012 2013 2014 Liabilities and owners’ Equity: Reserves Long term liabilities Current liabilities 100 73 304 213 100 78 316 183 135 125 332 235 135 125 425 264 170 96 478 307 Total Liabilities 690 677 827 949 1,051

 Assets 2010 2011 2012 2013 2014 Fixed Assets Current Assets Investments 154 524 12 182 482 13 221 591 15 270 631 48 309 689 53 Total Assets 690 677 827 949 1,051

Or
(b) What is Common-size Statement? What are its objectives? Describe the utility of such a statement.          4+6+6=16
4. (a) “Ratios are mechanical and incomplete.” Comment on this statement giving justifications in support of your answer.                                                 16
Or
(b) From the following Balance Sheet of a company, you are required to calculate the ratios as given below –
1)      Debt-Equity Ratio.
2)      Equity Ratio.
3)      External Equities to Total Assets Ratio.
4)      Fixed Assets or Net Worth Ratio.
5)      Current Assets to Net Worth Ratio.                                                         4+(3x4)=16
Balance Sheet
As at ………………
 Liabilities Rs. Assets Rs. 3,000 Equity shares @ Rs. 100 each 7% Debentures Reserve & Surplus Sundry Creditors Bills Payable 3,00,000 1,50,000 80,000 30,000 50,000 Buildings Furniture Machinery Stock Debtors Cash balances 2,50,000 40,000 2,10,000 60,000 30,000 20,000 6,10,000 6,10,000

5. (a) Explain the meaning of working capital. Describe the factors that affect the amount of working capital requirement.                                                 6+10=16
Or
(b) Prepare a statement showing the working capital needed to finance a level of activity of 3,00,000 units of output for the year. The cost structure for the company’s product for the above mentioned activity level is detailed below –
 Elements of Cost Cost per unit Raw materials Direct labour Overheads Rs. 20 5 15 Total cost Profit 40 10 Selling price 50

Raw materials are held in stock, on an average for two months. Work-in-progress will approximate to half-a-month’s production. Finished goods remain in warehouse, on an average, for a month. Suppliers of materials extend one month’s credit. Two months credit is normally allowed to debtors. A minimum cash balance of Rs. 25,000 is expected to be maintained. The production pattern is assumed to be uniform during the year.                                  16
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