LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com. DEGREE EXAMINATION – COMMERCE
SUPPLEMENTARY EXAMINATION – JUNE 2009
CO 6605 - MANAGEMENT ACCOUNTS
Date & Time: 26/06/2009 / 10:00 - 1:00 Dept. No.
Max. : 100 Marks
PART A
Answer ALL questions:
Marks:10x2=20
Explain the following:
1. Marginal cost
2. Accounts Receivable Turnover
3. Net Working Capital
4. Margin of Safety
5. Master Budget
6. Material Mix Variance
7. From the following calculate earnings per share, Profit before Tax Rs.4 lakhs, Tax rate 50%,
10% Preferential capital Rs.4 lakhs and Equity share capital Rs.100 each Rs.10 lakhs.
8. Calculate the increase in working capital from the following:
Increase in cash Rs.1700, increase in stock Rs 1600, decrease in debtors Rs.500 and decrease
in Creditors Rs.2500.
9. Sales Rs.25 lakhs, PV ratio 30%, Fixed cost Rs.5 lakhs. Calculate Profit.
10. Budgeted fixed overheads Rs.30,000. Actual Fixed Overheads Rs.30,500, Budgeted
production 15,000 units actual production 16000 units. Calculate Overhead, volume and
expenditure variance.
PART B
Answer ANY FIVE questions
Marsk:5x8=40
11. Distinguish between “management accounting” and “financial accounting”.
12. What are the advantages and limitations of Ratio Analysis?
13. From the following data calculate (a) PV Ratio, (b) Break even sales in rupees (c) Sales in
rupees, to earn a profit Rs.1,60,000 (d) Margin of Safety, if profit is Rs.20,000.
Selling price per unit Rs.40; Direct Material per unit Rs.10; Direct Labour per unit Rs.7;
Variable Overheads 100% of labour; Fixed expenses Rs.64,000.
14. From the following data, relating to an activity level of 50%, prepare a Production Budget at
75% capacity, showing cost per unit and total cost:
Material
Rs.100 per unit
Labour
Rs.50 per unit
Variable expenses
Rs.10 per unit
Administration expenses (50% fixed)
Rs.40,000
Selling overheads
(60% fixed)
Rs.50,000
Production at 50% activity
1000 units
15. From the following data, calculate:
1
a) Interest coverage ratio
b) Return on capital employed
c) Price earnings ratio
50% equity shares of Rs.10 each
10% Preference shares of Rs.10 each
Reserves
10% Debentures
Profit before interest and tax
Market price of equity share
Tax rate
Rs.5,00,000
Rs.4,00,000
Rs.11,00,000
Rs.5,00,000
Rs.10,50,000
Rs.67
50%
16. From the following data, calculate Labour Variances:
Standard overhead rate per hour
Rs.50
Standard hours per unit
10
During a month 1000 units were produced, 12000 hours were worked and the actual Labour
cost was Rs.7,20,000.
17. From the following details ascertain Fund From Operations:
2007
2008
(Rs.)
(Rs.)
P/L balance
50,000
60,000
General reserve
30,000
40,000
Goodwill
20,000
12,000
Preliminary expenses
6,000
4,000
Depreciation provided during the year was Rs.15,000 and Income received from
Non-trading investments Was Rs.20,000.
Preference shares of the face value of Rs.1,00,000 were redeemed during the year at 10%
premium. The premium was charged to Profit and Loss account.
18. An automobile company finds that the cost of making a component is Rs.6, whereas the same
item is available in the market at Rs.5.60. The cost data to manufacture the part, comprises of:
Material Rs.2; Direct Labour Rs.2.50; variable overheads Rs.0.50 and fixed overheads
(allocated) Re.1.
a) Should the part be made or bought?
b) What would your answer be, if the market price is Rs.4.60?
Show your calculations clearly.
PART C
Answer any TWO questions
19.
Marks:2x20=40
X Ltd., gives you the following budgeted data from which you are required to prepare a cash
budget for the months of April and May 2008.
Month
Sales(Rs)
Purchases(Rs) Wages(Rs)
Production Overheads(Rs)
February
60,000
30,000
20,000
10,000
March
70,000
40,000
25,000
12,000
April
90,000
50,000
30,000
15,000
May
1,00,000
50,000
30,000
14,000
a) 50% of the sales are for cash. Credit sales are collected as follows: 60% in the month
following the sale, 30% in the next month following and 10% are bad debts.
b) 20% of the purchases are for cash. Suppliers allow 1 month credit.
c) Lag in payment of wages ½ month.
2
d) Production overheads are payable in the same month and include Rs.2,000 p.m. as
depreciation.
e) The company plans to buy a computer for Rs.25,000 in May 2008, making a down
payment of Rs.5000 and 5 monthly installments of Rs.5000 each, payable at the end of
each month, including month of sale
f) A fixed deposit of Rs.20,000 will mature in April 2008 together with Rs.2000 interest.
g) Budgeted cash balance on 1st April 2008 Rs.40,000/20.
21.
Prepare a Balance sheet from the following data:
Gross Profit Ratio
20%
Debtors turnover
6 times
Fixed assets to net worth
0.8
Reserves to capital
0.5
Current ratio
2.5
Liquid ratio
1.5
Net working capital
Rs. 3 lakhs
Stock turnover ratio
6
The Balance Sheet of AB Ltd. as on 31/12/2007 and 31/12/2008 are given below:
Equity capital
P/L a/c
General Reserve
12% Debentures
Creditors
Tax provision
a)
b)
c)
d)
e)
2007
(Rs.)
2008
(Rs.)
1,00,000
30,000
30,000
1,00,000
60,000
80,000
---------4,00,000
2,00,000
80,000
50,000
2,00,000
50,000
90,000
----------6,70,000
Fixed assets
Investments
Stock
Debtors
Bank
2007
(Rs.)
2008
(Rs.)
2,00,000
30,000
60,000
50,000
60,000
4,00,000
60,000
50,000
70,000
90,000
---------4,00,000
Fixed assets of the book value of Rs.30,000 was sold for Rs.32,000
Depreciation provided on fixed assets during the year 2008 was Rs.48,000
Investments costing Rs.20,000 was sold during the year for Rs.18,000
Tax provided during the year Rs.85,000
Interim dividend paid during the year Rs.20,000
Prepare statement showing sources and application of funds.
******
3
---------6,70,000