LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com. DEGREE EXAMINATION – COMMERCE
SUPPLEMENTARY EXAMINATION – JUNE 2008
CO 6605 - MANAGEMENT ACCOUNTS
Date : 27-06-08
Time : 9.00 – 12.00
Dept. No.
Max. : 100 Marks
PART A
Answer ALL questions
10 x 2 = 20 marks
Explain the following
1. Break even sales
2. Margin of safety
3. Zero base budget
4. Cash and cash equivalents
5. Material mix variance
6. Current ratio
7. Cash from financing activities
8. Operating profit
9. Standard cost
10. Working capital
PART B
Answer ANY FIVE questions
5 x 8 = 40 marks
11. “management accounting is accounting for effective management”. Explain the statement.
12. Explain the uses and limitations of Ratio Analysis.
13. A firm manufactures for product A, details of which are as follows:
Selling price per unit Rs.50
Material per unit Rs.20
Labour per unit Rs.10
Variable overheads 100% of labour
Fixed expenses Rs.20,000
Calculate
a) break even sales in units
b) profit if sales are 4000 units
c) sales in units, if the company earns a profit of Rs.1 lakh
d) If the company should break even at 1000 units, what should be the selling price?
14. The standard cost card for a unit of Product A shows the following:
Material 2 kgs at Rs.10 per kg.20
Labor 1 hr at Rs.5 per hour 5
During the month of July 2000 units of Product A were produced and the actual cost comprised
of the following:
Material 4200 kgs at Rs.9 per kg 37800
Labor 1900 hrs at Rs.6 per hr
11400
Calculate material and labor variances
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15. The following is budgeted cost per unit for the production of 5000 units at 50% capacity.
Material
Rs.20
Labor
Rs.10
Factory overheads
Rs. 5 (20% fixed)
Administration overheads Rs. 4 (fixed)
Selling overheads
Rs. 2 (40% variable)
Prepare a budget for a production of 8,000 units and calculate the budgeted profit, if the selling
price is Rs.50 per unit.
16. Ratios relating to a company are given below:
Stock velocity 8 months
Debtors velocity 3 months
Creditors velocity 2 months
Gross profit ratio 25%
Gross profit for the year Rs.4 lakhs
Closing stock is Rs.10000 more than the Opening stock
Calculate:
a) Sales
b) Debtors
c) Closing stock
d) Creditors
17. From the following data calculate fund from operations:
Opening balance of P/L account RS.60,000
Closing balance of P/L Rs.30,000
The following items appeared in the P/L account:
Interim dividend paid Rs.20,000
Proposed dividend Rs.30,000
Depreciation Rs.50,000
Loss on sale of machinery Rs.3,000
Salaries paid Rs.6,000
Profit on sale of car Rs.8,000
Tax provision Rs.5,000
18. From the following data calculate Cash Flow statement as per AS3, .
Profit before tax Rs.30,000
Depreciation provided on machinery during the year RS.15,000
Interest paid Rs.12,000
Machinery having a book value of RS.25,000 was sold for Rs.20,000
Investments costing Rs.8,000 was sold for Rs.8,500.
Tax paid during the year Rs.18,000
Increase in stock during the year Rs.4,000.
Increase in creditors during the year Rs.3,000.
Interest received on investments Rs.6,000
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PART C
Answer ANY TWO questions
2 x 20 = 40 marks
19. The Balance Sheet of XYZ Co. as on 31/12/2005 and 31/12/2006 are given below:
2005
(Rs.)
2006
(Rs.)
2005
(Rs.)
2006
(Rs.)
Equity capital
1,00,000
1,50,000
Fixed assets 2,00,000
3,50,000
P/L a/c
40,000
80,000
Investments
40,000
60,000
General Reserve
30,000
50,000
Stock
60,000
50,000
12% Debentures 1,00,000
2,00,000
Debtors
50,000
70,000
Creditors
80,000
50,000
Cash
20,000
30,000
Tax provision
80,000
1,00,000
Bank
60,000
70,000
-------------------------------------4,30,000
6,30,000
4,30,000
6,30,000
a) Fixed assets of the book value of Rs.40,000 was sold for Rs.32,000
b) Depreciation provided on fixed assets during the year 2006 was Rs.48,000
c) Investments costing Rs.26,000 was sold during the year for Rs.30,000
d) Tax paid during the year Rs.70,000
e) Interim dividend paid during the year Rs.25,000
Prepare statement showing sources and application of funds.
20 From the following data prepare a Balance Sheet:
Current ratio 1.75
Liquid ratio 1.25
Stock turnover ratio (on closing stock) 9
Gross profit ratio 25%
Debt collection period 1.5 months
Reserve and surplus to capital 0.2
Fixed asset turnover (on cost of sales) 1.2
Long term debt to share capital 0.6
Fixed assets to net worth 1.25
Sales for the year Rs.12,00,000
21. From the following data forecast, prepare a Cash budget for three months ending 30th June 1998.
Month
Sales(Rs.)
Purchase(Rs.) Wages(Rs.) Sales 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:
a) Creditors are paid in the month following the month of supply.
b) Debtors are given 2 months credit.
c) Wages: 20% paid in arrears in the following month.
d) Sales expenses paid in the month itself.
e) Income tax Rs.20,000 and dividends Rs.12,000 are payable in June.
f) Income from investments Rs.2,000 are receivable half-yearly in March and September.
g) Cash balance on hand as on 1.4.98 Rs.40,000.
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