LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com. DEGREE EXAMINATION – CORPORATE SECRETARYSHIP
SIXTH SEMESTER – April 2009
BC 6600 - MANAGEMENT ACCOUNTS
Date & Time: 18/04/2009 / 9:00 - 12:00
Dept. No.
Max. : 100 Marks
PART A
Answer ALL questions
Marks: 10x2-20
Explain the following
1.
Break even sales
2.
Material mix variance
3.
Gross and net working capital
4.
Price earning ratio
5.
Operating profit
6.
Master budget
7.
A plant costing Rs.55,000 (accumulated depreciation Rs.23,000) was sold for Rs.44,000.
Depreciation provided on plant during the year was Rs.12,000. The net profit for the year was Rs.1,20,000.
Calculated fund from operation.
8.
The standard labor cost for one unit of product X is 18 hours at Rs.1.25 per hour. It was found
that the actual time taken for producing X was 16 hours at Rs.1.50 per hour. Calculate labour efficiency and
rate variance.
9.
In the year 2006, X earned a profit of Rs.500 on a sale of Rs.10,000. In the year 2007, the profit
was Rs.1000 on a sale of Rs.14,000. Calculate Break Even sales.
10.
State whether the following statements are True or False:
a)
Purchase of stock on credit will decrease the current ratio.
b)
Issue of shares as consideration for purchase of machinery is a source of funds.
c)
Idle time variance will always be adverse.
d)
If number of units sold increases, the Break even sales will change.
PART B
Answer ANY FIVE questions
11.
Budget
Vivek Ltd. has furnished you the following information for the month of August 1979:
Actual
Output (units)
30,000
Hours
30,000
Fixed overhead (Rs.)
45,000
Working days
25
Calculate the Overhead variances.
12.
Marks: 5x8=40
32,500
33,000
50,000
26
A company produces a standard product. The estimated cost per unit are as follows:
Raw material Rs.4; WagesmRs.2; Variable overhead Rs.5
The semi-variable costs are:
Indirect materials Rs.235; Indirect labour Rs.156; Repairs Rs.570
The variable costs per unit included in semi-variable are:
Indirect materials Re.0.05; Labour Re.0.08 and Repairs Re.0.10
The fixed costs are:
Factory Rs.2,000; Administration Rs.3,000; Selling and distribution Rs.5,000
The above costs are for 70% of normal capacity producing 700 units. The selling price is Rs.30 per unit.
Prepare flexible budget for 80% of normal capacity, showing cost per unit, total cost and profit.
13.
The following particulars are taken from the records of a company engaged in producing two
products X and Y.
Product X
Product Y
(Rs./unit)
(Rs./unit)
Sales
125
Material cost (Rs.25.50 per kg) 25
62.50
Direct labour (Rs.1.50 per hour)
37.50
75
Variable overheads
12.50
25
Comment on the profitability of each product, when:
250
i) Raw material is in short supply
ii)
Labour hours is limited
iii)
When total raw material available is 20,000 kgs and the maximum sales potential of each
product is 1000 units, calculate the most profitable profit mix and the maximum profit for that product mix,
assuming fixed costs are Rs.50,000
14.
Using the information below, prepare a cash budget showing expected cash receipts and
disbursements for the month of June and balance expected on June 30,2009:
Budgeted cash balance June 1, 2009 Rs.1,20,000. Budgeted sales and purchases are as follows:
Month
Sales(Rs.)
Purchases (Rs.)
April
12,00,000
6,00,000
May
15,00,000
8,00,000
June
16,00,000
10,00,000
Half the sales are collected in the month of sale, 40% in the next month and 10% in the third month.
40% of purchases are paid in the month of purchase and 60% paid in next month.
Wages payable in June Rs.1,76,000
Annual insurance premium payable in June Rs.4,000.
Other expenses payable in June Rs.88,000, including depreciation for the month of June Rs.4,000
Accrued taxes for June, payable in December Rs.12,000.
Fixed deposit receipts due June 15 – Rs.3,50,000 plus Rs.20,000 interest.
A computer costing Rs.35,000 is to be purchased in June. Cash down Rs.10,000 is to be paid on delivery
and the balance in 3 monthly installments of Rs.10,000 each, payable at the end of each month.
15.
Cookwell Ltd manufactures pressure cookers, the selling price of which is Rs.300 per unit.
Currently the capacity utilization is 60% with a sales turnover of Rs.18,00,000. The company proposes to
reduce the selling price by 20% but desires to maintain the same profit position by increasing the output.
Assuming that the increased output could be made and sold, determine the level at which the company
should operate to achieve the desired objective.
The following further data are available:
i) Variable cost per unit Rs.60
ii)
Semi variable cost (including a variable element of Rs.10 per unit) Rs.1,80,000
iii)
Fixed cost Rs.3,00,000.
16.
A company has the following transactions during the year ended 30th June 2008:
Rs.
Increase in stock
Profit before tax
Decrease in receivables
Increase in paid up capital
Dividend payment
Rs.
4,500 Depreciation
3,000
12,000 Decrease in creditors
1,500
4,500 Increase in long term loan
7,500
3,000 Increase in cash balance
4,500
6,000 Decrease in marketable investments 1,500
Purchase of fixed assets
12,000 Payment of taxes
Prepare Funds Flow statement for the year 2007-08
3,000
17.
How is marginal costing useful in decision making?
18.
What is zero based budgeting? Explain its merits and limitations.
PART C
Answer ANY TWO questions
20=40
19.
The following are the Balance Sheets of ABC Ltd as on 31st March 2006 and 31st March 2007.
31/3/2006 31/3/2007
Rs.
Rs.
Share capital
3,00,000
3,50,000
Fixed Assets
P/L Account
4,90,000
6,96,000
Investments
Long-term loans
5,00,000
2,00,000
Stock
Creditors
70,000
58,000
Debtors
Tax provision
86,000
1,02,000
Bank
Proposed Dividend 24,000
30,000
Cash
14,70,000
a)
b)
c)
d)
e)
Marks: 2 x
14,36,000
31/3/2006 31/3/2007
Rs
Rs.
13,36,000
12,78,000
20,000
20,000
24,000
38,000
56,000
50,000
48,000
6,000
30,000
14,70,000
14,36,000
Depreciation provided on Fixed Assets Rs.1,00,000
Fixed Asset whose book value was Rs.50,000 was sold for Rs.40,000
Tax paid during the year Rs.80,000
The proposed dividend of 2006 was paid in 2007
Investments were sold at a profit of Rs.2000
Prepare Fund Flow Statement.
20.
S.V.Ltd manufactures a product, the standard mix of which is:
Material A
60% at Rs.20 per kg
Material B
40% at Rs.10 per kg
Normal loss in production is 20% of input. Due to shortage of material A, the standard mix was
changed. Actual results for March 1989 were:
Material A 105 kg at Rs.20 per kg
Material B
95 kg at Rs.9 per kg
Input
200 kgs
Less: Loss
35 kg
Output
165 kgs
Calculate: (i) Material price variance; (ii) Material usage variance; (iii) Material mix variance
and
(iv) Material yield variance.
21.
Using the following data, complete the balance sheet below:
Gross profit ratio
20%
Current ratio
1.8
Stock turnover ratio
4 times
Debt collection period (360 days per year)
20 days
Long-term debt to shareholders’ equity
40%
Total assets turnover
0.3 times
Credit sales to total sales
80%
Gross profit
Rs.1,08,000
Shareholders’ equity
Rs.12,00,000
@@@