[Management Accounting Solved Question Papers, Dibrugarh University Solved Question Papers, 2017, B.Com 5th Sem]
Management Accounting Solved Question Papers
2017 (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
(i) Management
Accounting supplies information to the management
so that later may be able to discharge all its functions properly.
(ii) Cash
receipt from issue of shares is a Financing
activity.
(iii)
Contribution is the difference between sales and variable.
(iv) Flexible
budget is a capacity budget.
(b) Write True
or False: 1x4=4
(i) Management
Accounting and Cost Accounting are synonymous. False
(ii) Building
sold on credit is a source of fund. False
(iii) Marginal
Cost = Total Cost – Variable Cost. False,
Fixed Cost
(iv) Budget is
related to a definite future period. True
2.
Write
short notes on (any four): 4x4=16
a) Scope of Management Accounting.
Ans: Scope of
Management Accounting: The field of management accounting is very
wide. The main purpose of management accounting is to provide information to
the management to perform its functions of planning directing and controlling.
Management accounting includes various areas of specialization to render
effective service to the management.
a) Financial
Accounting: Financial Accounting deals with financial aspects by
preparation of Profit and Loss Account and Balance Sheet. Management accounting
rearranges and uses the financial statements. Therefore it is closely related
and connected with financial accounting.
b) Cost
Accounting: Cost accounting is an essential part of management
accounting. Cost accounting, through its various techniques, reveals efficiency
of various divisions, departments and products. Management accounting makes use
of all this data by focusing it towards managerial decisions.
c) Budgeting
and Forecasting: Budgeting is setting targets by estimating expenditure
and revenue for a given period. Forecasting is prediction of what will happen
as a result of a given set of circumstances. Targets are fixed for various
departments and responsibility is pinpointed for achieving the targets. Actual
results are compared with preset targets and performance is evaluated.
d) Inventory
Control: This includes, planning, coordinating and control of inventory
from the time of acquisition to the stage of disposal. This is done through
various techniques of inventory control like stock levels, ABC and VED analysis
physical stock verification, etc.
e) Statistical
Analysis: In order to make the information more useful statistical
tools are applied. These tools include charts, graphs, diagrams index numbers,
etc. For the purpose of forecasting, other tools such as time series regression
analysis and sampling techniques are used.
b) Profit-volume Ratio.
Ans: Profit-Volume
Ratio expresses the relationship between contribution and sales. It indicates
the relative profitability of diff products, processes and departments. Higher
the P/V ratio, more will be the profit and lower the P/V ratio lesser will be
the profit. Hence, it should be the aim of every concern to improve the P/V
ratio which can be done by increasing selling price, reducing variable cost
etc.
It can be calculated as follows:
P/V ratio = (S – VC)/ S X 100
= Cont / Sales X 100
= Change in profit or loss / Change in
sales
Uses
of P/V Ratio:
1. To compute the variable costs for any
volume of sales.
2. To measure the efficiency or to choose a
most profitable line. The overall profitability of the firm can be improved by
increasing the sales/output of a product giving a higher PV ratio.
3. To determine break-even point and the
level of output required to earn a desired profit.
4. To decide more profitable sales-mix.
c) Operating Activities.
Ans: Cash flow from
operating activities: These are cash flows from regular course of operations.
The operations of a firm include manufacturing, trading, rendering of services
etc. Examples of cash flows from operating activities are:
a. Cash sales
b. Cash received from debtors on account of credit sales
c. Cash purchase of goods
d. Cash paid to suppliers on account of credit purchases
e. Wages paid to employees and staff
f. Cash operating expenses
g. Income from investing activities
d) Production Budget.
Ans: 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.
e) Profit-volume Graph.
Ans: It shows the
amount of profit or loss at different levels of output. When the output is
zero, total loss will be equal to fixed costs. The fixed costs are recovered
gradually when the volume of output is increased. When the output reaches the
Break even point, the whole fixed costs are recovered. The firm incurs no loss
or earns no profit. Thereafter, the firm makes a profit and the amount of
profit increases with the increase in sales volume.
CONSTRUCTION OF
P/V CHART
The same data used for drawing a Break even chart may be used for constructing a P/V chart. The
following steps may be followed for constructing a P/V chart.
1. Sales or units of output are plotted along the X axis
2. The Y axis is used for marking fixed costs losses and profits
3. Points of Profits or losses are marked at different levels of
sales and these points are joined to
get the profit or loss line.
4. The point where the profit or loss line intersects the X axis
is marked as the Break even point.
5. The angle at the BEP measures the angle of incidence.
6. The distance between BEP and actual sales on the X axis
measures the margin of safety.
3.
(a)
Define Management Accounting. Discuss its functions and limitations. 3+6+5=14
Ans: Management Accounting: Meaning and Definitions:
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.
Functions of Management Accounting
Main objective of management accounting is to
help the management in performing its functions efficiently. The major
functions of management are planning, organizing, directing and controlling.
Management accounting helps the management in performing these functions
effectively. Management accounting helps the management is two ways:
I. Providing necessary accounting information
to management
II. Helps in various activities and tasks
performed by the management.
I.
Providing necessary accounting information to management:
(a)
Measuring: For helping the management in measuring the work efficiency in
different areas it is done on the past and present incidents with context to
the future. In standard costing and budgetary any control, standard and actual
performance is compared to find out efficiency.
(b)
Recording: In management accounting both the quantitative and qualitative
types of data are included and this accounting is done on the basis of
assumptions and even those items which cannot be expressed financially are
included in management accounting.
(c)
Analysis: The work of management accounting is to collect and analyze the
fact related to the managerial problems and then present them in clear and
simple way.
(d)
Reporting: For the use of management various reports are prepared.
Generally two types of reports are prepared:-
a. Regular Reports
b. Special Reports.
II. Helping in Managerial works and Activities:
The main functions of management are
planning, organizing, staffing, directing and controlling. Management
accounting provides information to the various levels of managers to fulfill
the above mentioned responsibilities properly and effectively. It is helpful in
various management functions as under:-
(a)
Planning: Through management accounting forecasts regarding the sales,
purchases, production etc. can be obtained, which helps in making justifiable
plans. The tools of management accounting like standard costing, cost
-volume-profit analysis etc. are of great managerial costing, help in planning.
(b)
Organizing: In management accounting whole organization is divided into
various departments, on the basis of work or production, and then detailed
information is prepared to simplify the thing. The budgetary control and
establishing cost centre techniques of management accounting helps which result
in efficient management.
(c)
Staffing: Merit rating and job evaluation are two important functions to be
performed for staffing. Generally only those employs are useful for the
organization, whose value of work done by them is more than the value paid to
them. Thus by doing cost-benefit analysis management accounting is useful in
staffing functions.
(d)
Directing: For proper directing, the essentials are co-ordination,
leadership, communications and motivation. In all these tasks management
accounting is of great help. By analyzing the financial and non financial
motivational factors, management accounting can be an asset to find out the
best motivational factor.
(e)
Co-ordination: The targets of different departments are communicated to
them and their performance is reported to the management from time to time.
This continual reporting helps the management in coordinating various
activities to improve the overall performance.
Limitations
of Management Accounting
Management accounting, being comparatively
a new discipline, suffers from certain limitations, which limit its
effectiveness. These limitations are as follows:
1. Limitations of basic records: Management
accounting derives its information from financial accounting, cost accounting
and other records. The strength and weakness of the management accounting,
therefore, depends upon the strength and weakness of these basic records. In
other words, their limitations are also the limitations of management
accounting.
2. Persistent efforts. The conclusions
draws by the management accountant are not executed automatically. He has to
convince people at all levels. In other words, he must be an efficient salesman
in selling his ideas.
3. Management accounting is only a tool:
Management accounting cannot replace the management. Management accountant is
only an adviser to the management. The decision regarding implementing his
advice is to be taken by the management. There is always a temptation to take
an easy course of arriving at decision by intuition rather than going by the
advice of the management accountant.
4. Wide scope: Management accounting has a
very wide scope incorporating many disciplines. It considers both monetary as
well as non-monetary factors. This all brings inexactness and subjectivity in
the conclusions obtained through it.
5. Top-heavy structure: The installation of
management accounting system requires heavy costs on account of an elaborate
organization and numerous rules and regulations. It can, therefore, be adopted
only by big concerns.
6. Opposition to change: Management
accounting demands a break away from traditional accounting practices. It calls
for a rearrangement of the personnel and their activities, which is generally
not like by the people involved.
7. Evolutionary stage: Management
accounting is still in its initial stage. It has, therefore, the same
impediments as a new discipline will have, e.g., fluidity of concepts, raw
techniques and imperfect analytical tools.
8. Intuitive Decisions: Management
accounting helps in scientific decision making. Yet, because of simplicity and
personal factors the management has a tendency to arrive at decisions by
intuition.
Or
(b) “Management
Accounting is concerned with those accounting data and information, which are
useful to management.” Elucidate the statement. 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: 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.
4.
(a)
Distinguish between the following: 7+7=14
(i) Funds Flow Statement and Income Statement.
Ans: Difference
between Income Statement and Funds Flow Statement
Basis
|
Income
Statement
|
Funds Flow
Statement
|
Meaning
|
Income
statement is a summary of total income and total expenses and losses of a
particular period.
|
Funds
flow statement is the statement of changes in financial position.
|
Objectives
|
Income
statement is prepared to ascertain the profit earn or loss suffered by a
firm.
|
Funds
Flow Statement is prepared to identify how the profit has been utilized.
|
Preparation
|
Income
statement is prepared on the basis of nominal accounts.
|
Funds
flow statement is prepared on the basis of balance sheet.
|
Measurement
|
Income
statement is helpful in measuring the profitability of a firm.
|
Funds
flow statement is helpful in determining the net changes in working capital.
|
Period
|
It is usually prepared after six months or a year.
|
It is usually prepared every month.
|
Matching
|
This matches the cost of goods sold with the
revenue in order to know the profit or loss.
|
This statement matches the funds raised with funds
applied without making any distinction between capital and revenue items.
|
Scope
|
It presents the result of all financial
transactions of the business during a specified period.
|
It presents information only relating to working
capital and thus its scope is limited.
|
Reliability
|
It is not very reliable as items shown in profit
or loss account can be easily manipulated by the management.
|
It is more reliable as items shown in this
statement cannot be easily manipulated by the management.
|
(ii) Funds Flow Statement and Balance Sheet.
Ans: Difference between
Funds flow statement and Balance sheet:
(i) Balance
sheet is a statement showing the financial position of the concern on a
particular date. It shows all assets and liabilities whether current or fixed,
tangible or intangible etc., while Funds Flow Statement shows the changes in
current assets an current liabilities during a particular period of time.
(ii) Balance
Sheet shows the total financial position on a particular date and its utility
is very limited for the management. On the other hand, Funds Flow Statement is
a comparative statement of assets and liabilities and depicts the changes in
working capital during the period of two Balance sheets.
(iii)
Funds Flow Statement is an analysis and control device for the
management. It is a modern technique of knowing the inflows and outflows of
funds during a particular period. Balance Sheet represents the balance of
various assets and liabilities and does not present analysis of any kind.
(iv) There
are two views of the financial position of the firm-long term and short-term.
Short-term financial position means the solvency of the firm in the near future
while on the other hand, long-term financial position means future financial
structure of the firm. Both are inter-relate but there is a differences in
their analysis. The short-term view of the financial position of the firm
cannot be had from the Balance Sheet.
Or
(b) The following are the Ledger Balances taken from the books of a
limited company as on 31st March:
Credit Balances
|
2016 Rs.
|
2017 Rs.
|
Debit Balances
|
2016 Rs.
|
2017 Rs.
|
Share Capital
Sundry Creditors
Bills Payable
Bank Overdraft
Provision for Tax
Reserves
Surplus A/c
|
2,00,000
39,500
33,780
59,510
40,000
50,000
39,690
|
2,60,000
41,135
11,525
-
50,000
50,000
41,220
|
Cash at Bank
Debtors
Advances
Stock
Land & Building
Machinery & Plant
Goodwill
|
2,500
85,175
2,315
1,11,040
1,48,500
1,12,950
-
|
2,700
72,625
735
97,370
1,44,250
1,16,200
20,000
|
4,62,480
|
4,53,880
|
4,62,480
|
4,53,880
|
Additional Information:
a)
During the year ended 31st March, 2017, an
additional dividend of Rs. 26,000 was paid.
b)
The assets of an another company was purchased for Rs. 60,000
payable in fully paid shares of the company. The assets consisted of stock Rs.
21,640, machinery Rs. 18,360 and goodwill Rs. 20,000. In addition, sundry
purchase of plant were made totalling Rs. 5,650.
c)
Income tax paid during 2016-17 was Rs. 25,000.
d)
The net profit for the year before tax was Rs. 62,530.
Prepare a Cash Flow Statement by indirect method. 14
5.
(a) From the following data, calculate:
(i)
Profit-volume ratio:
(ii)
Fixed cost;
(iii)
Sales at break-even
point;
(iv)
Sales required to earn a profit of Rs. 20,000: 3+3+4+4=14
Sales (Rs. )
|
Profit (Rs.)
|
|
Period – I
Period – II
|
1,00,000
1,20,000
|
15,000
23,000
|
Or
(b) What do you mean by
Marginal Costing? Discuss its usefulness and limitations. 2+7+5=14
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’.
Advantages of Marginal Costing
a) Simple
and Easy: It is very simple to understand and easy to operate.
b) Helpful
in Cost control: Marginal costing divides total cost into fixed and variable
cost. Marginal costing by concentrating all efforts on the variable costs can
control total cost.
c) 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.
d) Evaluation
of Performance: The different products and divisions have different profit
earning potentialities. Marginal cost analysis is very useful for evaluating
the performance of each sector.
e) Helpful
in Decision Making: It is a technique of analysis and presentation of costs
which help management in taking many managerial decisions such as make or buy
decision, selling price decisions, Key or limiting factor, Selection of
suitable Product mix etc.
f) Production
Planning: It helps the management in Production planning. The effect of
alternative production policy can be readily available and decision can be
taken that would yield the maximum return to Business.
g) It
removes the complexities of under-absorption of overheads.
h) The
distinction between product cost and period cost helps easy understanding of
marginal cost statements.
Disadvantages of
Marginal Costing
a)
It is based on an unrealistic assumption that
all costs can be segregated into fixed and variable costs. In the long term
sales price, fixed cost and variable cost per unit may vary.
b)
All costs are not divisible into fixed and
variable. There are certain costs which are semi-variable in nature. The
separation of costs into fixed and variable is difficult and sometimes gives
misleading results.
c)
Under marginal costing, stocks and work in
progress are understated. The exclusion of fixed costs from Stock Valuation
affects profit, and true and fair view of financial affairs of an organization.
d)
Marginal cost data becomes unrealistic in case
of highly fluctuating levels of production, e.g., in case of seasonal factories.
e)
It can correctly assess the profitability on a
short-term basis only, but for long term it is not effective.
f)
It does not provide any effective yardstick
for evaluation of performance.
g)
Contribution of marginal costing is not a
foolproof indicator of profitability.
h) Marginal
cost, if confused with total cost while fixing selling price may lead to a
disaster.
6.
(a)
Define the terms ‘budget’ and budgetary control’. Explain in detail the
classification of budgets according to (i) time, (ii) function and (iii)
flexibility. 2
½ +2 ½+9=14
Ans: Budget: A budget is the monetary and / or
quantitative expression of business plans and policies to be pursued in the
future period of time. Budgeting is preparing budgets and other procedures for
planning, coordination and control or business enterprises.
I.C.M.A. defines a budget as “A financial
and / or quantitative statement, prepared prior to a defined period of time, of
the policy to be pursued during that period for the purpose of attaining a
given objective”.
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”.
Types of Budgets
As budgets serve different purposes, different types of budgets
have been developed. The following are the different classification of budgets
developed on the basis of time, functions, and flexibility or capacity.
(A) Classification on the basis of
Time:
1. Long-term budgets
2. Short-term budgets
3. Current budgets
(B) Classification according to
functions:
1. Functional or subsidiary budgets
2. Master budgets
(C) Classification on the basis of
capacity:
1. Fixed budgets.
2. Flexible budgets
(A) Classification on the basis of time
1. Long-term budgets: Long-term budgets
are prepared for a longer period varies between five to ten years. It is
usually developed by the top level management. These budgets summarise the
general plan of operations and its expected consequences. Long-term budgets are
prepared for important activities like composition of its capital expenditure,
new product development and research, long-term finance etc.
2. Short-term budgets: These budgets are
usually prepared for a period of one year. Sometimes they may be prepared for
shorter period as for quarterly or half yearly. The scope of budgeting activity
may vary considerably among different organization.
3. Current budgets: Current budgets
are prepared for the current operations of the business. The planning period of
a budget generally in months or weeks. As per ICMA London, “Current budget is a
budget which is established for use over a short period of time and related to
current conditions.”
(b) Classification on the basis of function
1. Functional budget: The functional
budget is one which relates to any of the functions of an organization. The
number of functional budgets depends upon the size and nature of business. The
following are the commonly used:
(i) Sales budget
(ii) Purchase budget
(iii) Production budget
(iv) Selling and distribution cost budget
(v) Labour cost budget
(vi) Cash budget
(vii) Capital expenditure budget
2. Master budget: The master budget
is a summary budget. This budget encompasses all the functional activities into
one harmonious unit. The ICMA England defines a Master Budget as the summary
budget incorporating its functional budgets, which is finally approved, adopted
and employed.
(C) Classification on the basis of capacity
1. Fixed budget: A fixed
budget, on the other hand is a budget which is designed to remain unchanged
irrespective of the level of activity actually attained. In a fixed budgetary
control, budgets are prepared for one level of activity whereas in a
flexibility budgetary control system, a series of budgets are prepared one for
each level of alternative production levels or volumes. According to ICWA
London ‘Fixed budget is a budget which is designed to remain unchanged
irrespective of the level of activity actually attained.”
Fixed budget is usually prepared before the beginning of the
financial year. This type of budget is not going to highlight the cost variance
due to the difference in the levels of activity. Fixed budgets are suitable
under static conditions.
2. Flexible budget: Flexible
Budget: A flexible budget is defined as “a budget which, by recognizing the
difference between fixed, semi-variable and variable cost is designed to change
in relation to the level of activity attained”. Flexible budgets represent the
amount of expense that is reasonably necessary to achieve each level of output
specified. In other words, the allowances given under flexibility budgetary
control system serve as standards of what costs should be at each level of
output.
According to ICMA, England defined Flexible Budget is a budget
which is designed to change in accordance with the level of activity actually
attained.”
According to the principles that guide the preparation of the
flexible budget a series of fixed budgets are drawn for different levels of
activity. A flexible budget often shows the budgeted expenses against each item
of cost corresponding to the different levels of activity. This budget has come
into use for solving the problems caused by the application of the fixed
budget.
(b) A manufacturing company manufactures two products X and Y. An estimate
of the number of units expected to be sold in the first seven months of 2016 is
given below:
Products – X
(Units)
|
Product – Y
(Units)
|
|
January
February
March
April
May
June
July
|
500
600
800
1000
1200
1200
1000
|
1400
1400
1200
1000
800
800
900
|
It is anticipated that:
1.
There will be no work-in-progress at the end of each month;
2.
Finished units equal to half of the anticipated sales
for the next month will be in stock at the end of each month (including December 2015)
The budgeted production and production cost for the year ending 31st
December, 2016 are as follows:
Products – X
|
Product – Y
|
|
Production
Direct Material
Direct wages
Other Manufacturing Expenses
(Apportion able to each type of product)
|
11000 units
Rs. 12 per unit
Rs. 5 per unit
Rs. 33,000
|
12000 units
Rs. 19 per unit
Rs. 7 per unit
Rs. 48,000
|
You are required to prepare:
a)
A production budget showing number of units to be
manufactured each month;
b)
A summarized production cost budget for six months period
from January to June 2016 8+6=14
(Old
Course)
Full
Marks: 80
Pass
Marks: 32
1. (a)
Write True or False: 1x4=4
(i) The
origin of Management Accounting is due to limitations of Financial Accounting
and Cost Accounting. True
(ii) Cash
Flow Statement is a substitute of Cash Account. False
(iii) Margin
of Safety = Fixed Cost/PV Ratio. False
(iv) Material
Cost Variance = Material Price Variance x Material Usage Variance. False
(b) Fill in the blanks: 1x4=4
(i) Management Accountant is ____ in
position to Cost Accountant.
(ii) In a Funds Flow Statement, all receipts are treated as source
of funds.
(i) Break-even
analysis is also known as CVP
analysis.
(ii) Budgetary
Control is a system of controlling Cost.
2. Write
short notes on (any four)
(a) Nature of Management Accounting.
(b) Limitations
of Funds Flow Statement.
(c) Break-even
Chart.
(d) Sales
Budget.
(e) Labour
cost variance.
3. (a)
Define Management Accounting. Distinguish between Management Accounting and
Financial Accounting. 3+9=12
Or
(b) Discuss in detail the functions of Management
Accounting. 12
4. (a)
The following are the Balance Sheets of Blue Sky Co. Ltd. For the years 2014-15
and 2015-16:
Liabilities
|
2014-15
Rs.
|
2015-16
Rs.
|
Assets
|
2014-15
Rs.
|
2015-16
Rs.
|
Share Capital:
Shares of Rs. 10 each.
P/L A/c
10% Debentures
Creditors
|
3,50,000
50,400
60,000
51,600
|
3,70,000
52,800
30,000
59,200
|
Land
Goodwill
Stock
Debtors
Cash
|
1,00,000
50,000
2,46,000
71,000
45,000
|
1,50,000
25,000
2,13,500
84,500
39,000
|
Additional information:
(i) Dividend
paid during the year – Rs. 17,500
(ii) Land
was revalued during the year at Rs. 1,50,000 and the
profit on revaluation transferred to Profit and Loss A/c.
From the above information,
prepare a Cash Flow Statement for the year ended 31st March, 2016. 11
Or
(b) Explain the meaning, importance and
objectives of Funds Flow Statement. 3+4+4=11
5. (a) “The technique of marginal costing is a
valuable aid to management.” Discuss. 11
Or
(b) You are provided the following information:
Units of output
Fixed Cost
Variable cost per unit
Selling price per unit
|
5,000
Rs. 7,50,000
Rs. 2
Rs. 5
|
You are required to determine –
(i) Break-even
point;
(ii) Profit-volume
ratio;
(iii) Sales
required to earn a profit of Rs. 6,00,000 3+3+5=11
6. (a) Explain the meaning and objectives of sales
budget. Distinguish between sales budget and production budget. 2+3+6=11
Or
(b) AB Ltd. has prepared the budget for the production of 100000 units
of the commodity manufactured by them
for a costing period as under:
Per Unit (Rs.)
|
|
Raw Materials
Direct Labour
Direct Expenses
Works Overheads
(60% fixed)
Administrative Overheads (80% Fixed)
Selling Overheads (50%
fixed)
|
2.52
0.75
0.10
2.50
0.40
0.20
|
The annual production during the period was only
60000 units.
Calculate the revised budgeted cost per unit. 11
7. (a)
What is standard costing? Explain its advantages and disadvantages. 2+5+4=11
Or
(b) From the data given below, calculate the
material price variance, material usage variance and material mix variance:
Consumption per 100 units of product
|
||
Raw Materials
|
Standard
|
Actual
|
A
B
|
40 units @ Rs. 50 per unit
60 units @ Rs. 40 per unit
|
50 units @ Rs. 50 per unit
60 units @ Rs. 45 per unit
|
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