LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.B.A. DEGREE EXAMINATION – BUSINESS ADMINISTRATION
SUPPLEMENTARY EXAMINATION – JUNE 2008
BU 6600 - ADV. COST MANAGEMENT ACCOUNTS
Date : 27-06-08
Time : 9.00 – 12.00
Dept. No.
Max. : 100 Marks
PART A
Answer any 3 questions
Explain the following
1. Zero base budget
2. Cost plus contract
3. Margin of safety
4. Master Budget
5. Material Mix Variance
6. Limiting factor
7. Standard cost
8. Joint and By-products
9. Equivalent production
10. Normal and abnormal loss
(3 x 8) = 24 marks
PART B
Answer FIVE questions, choosing at least TWO questions from each section.
(5 x 8) = 40 marks
SECTION I
11. Draw up a flexible budget for production at 75% and 100% capacity on the basis of the following data
for a 50% activitiy.
Per Unit (Rs.)
Materials
100
Labour
50
Variable expenses (direct)
10
Administrative expenses (50% fixed)
40,000
Selling and distribution expenses (60% fixed)
50,000
Present production (50% activity):
1,000 units
12. From the following information, calculate
a) Break-even point
b) Number of units that must be sold to earn a profit of Rs.60,000 per year
c) Number of units that must be sold to earn a net income of 10% on sales.
Sales price
Rs.20 per unit
Variable cost
Rs.14 per unit
Fixed cost
Rs.79,200
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13. The following details relate to Product X during the month of March 2009. You are required to
compute the material and labour cost variances.
Standard cost per unit
Material 50 kgs @ Rs.40 per kg
Labour 400 hrs at Re.1 per hour
Actual cost for the month
Material 4,900 kgs @ Rs.42 per kg
Labour 39,600 hours @ Re.1.10 per hour
Actual production 100 units
14. “Marginal costing is a valuable aid for managerial decisions”. Explain
SECTION II
15. A contractor obtained a contract for Rs.6,00,000 on 1st Jan.1988. the expenses incurred during the year
ended 31st Dec.1988 were as under:
Rs.
Materials
1,80,000
Wages paid
1,60,000
Wages accrued
10,000
Other expenses
25,000
The plant, specially installed for the contract, worth Rs.45,000 was returned to the stores subject to a
depreciation of 20%. Materials at site on 31.12.88 were valued at Rs.24,000
The contractor had received Rs.3,60,000 in cash upto 31.12.88 representing 80% of the work certified.
Work uncertified was estimated at Rs.4,000.
Prepare the contract account.
16. A by product B is obtained in the course of manufacturing Product A. The By product is further
processed for sale. From the following data prepare a statement showing the cost per kg of Product A
and By Product B.
Joint expenses
Separate expenses
(Rs.)
A(Rs.)
B (Rs.)
Material
10,000
6,000
500
Labour
7,000
5,000
2,000
Overheads
2,500
1,500
600
100 kgs of A and 50 kgs of B were produced. The selling price of B was Rs.120 per kg and the profit
earned was 20%.
17. A transport company is running 4 buses between two towns which are 50 kms apart. The seating
capacity of each bus is 40 passengers. The following particulars were obtained from their books for
April 2008:
Wages of driver, conductors etc.
Rs.2,400
Office salaries
Rs.1,000
Diesel
Rs.4,000
Repairs
Rs. 800
Road tax and insurance
Rs.1,600
Depreciation
Rs.2,600
Garage rent
Rs.2,000
Actual passengers carried by 75% of the seating capacity
All the four buses ran on all the days of the month. Each bus made one round trip per day.
Calculate the cost per passenger per km.
If the company wants a profit of 25% on cost, what should be the fare per passenger per km?
18. Distinguish between ‘Job costing’ and ‘Process costing’.
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PART C
Answer both questions
(2 x 20)=40 marks
19a.From the following data forecast the cash position at the end of April, May and June 1998.
Month
Sales(Rs.)
Purchase(Rs.) Wages(Rs.)
Sundry expenses(Rs.)
1998
February
1,20,000
80,000
10,000
7,000
March
1,30,000
98,000
12,000
9,000
April
70,000
1,00,000
8,000
5,000
May
1,16,000
1,03,000
10,000
10,000
June
85,000
80,000
8,000
6,000
Further information:
10% of sales are for cash Balance equally realized in two subsequent months.
Purchases: Creditors are paid in the month following the month of supply.
Wages: 20% paid in arrears in the following month.
Sundry expenses paid in the month itself.
Income tax Rs.20,000 payable in June.
Dividend Rs.12,000 payable in June.
Income from investments Rs.2,000 received half-yearly in March and September.
Cash balance on hand as on 1.4.98 Rs.40,000.
OR
19b. the sales turnover and profit during 2 years were as follows:
Year
Sales(Rs.)
Profit(Rs.)
2006
1,50,000
20,000
2007
1,70,000
25,000
Assuming that selling price per unit, variable cost per unit and the total fixed cost for the two years
remain the same, calculate:
a) PV ratio
b) Break even sales
c) Sales to earn a profit of Rs.40,000
d) Profit when sales are Rs.2,50,000
e) Margin of safety when profit is Rs.50,000
f) Variable cost in 2007
20a. From the following data ascertain the profit as per cost accounts and financial accounts and reconcile
the two profits.
a) No. of units produced and sold 2000 units
b) Direct material Rs.10 per unit
c) Direct wages Rs.5 per unit
d) Selling price Rs.40 per unit
e) The works overhead is charged at 80% of direct wages, office overheads at 25% on works cost and
selling overheads at 10% on works cost. The actual works expenses were Rs.4,500, office
overheads Rs.3,900 and selling overheads Rs.2000.
f) The following items were included in financial accounts:
Loss on sale of assets Rs.1000; Dividend received Rs.500
OR
20.b A company produces a product which passes through three processes A, B and C. 20000 units are
introduced in processing at a cost of Rs.1 each. Other details are as follows:
A
B
C
Materials consumed (Rs.)
10,000
8,000
4,000
Direct wages
8,000
6,000
3,000
Factory expenses
1,000
1,000
1,500
Normal loss (%age on input)
2%
5%
10%
Sale value of loss per unit (Rs)
0.25
0.50
1
Output in units
19,500
18,800
16,000
Prepare Process Accounts.
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