LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034

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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI – 600 034
B.Com. DEGREE EXAMINATION –COMMERCE
SUPPLEMENTARY EXAMINATION – JUNE 2007
CO 6605 - MANAGEMENT ACCOUNTS
Date & Time: 27/06/2007 / 9:00 - 12:00
Dept. No.
Max. : 100 Marks
SECTION – A
Answer all Questions .
(10X2=20)
1.What is Zero base budgeting?
2.Fill in the blanks.
a. Accounting designed to serve parties external to the operating responsibility of the
firm is termed as --------.
b.Accounting designed for use in the operational needs of the business is termed as --.
3.Fixed cost are variable per unit ,while variable costs are fixed per unit.-comment.
4.Distinquish between funds flow and cash flow of a firm.
5.State whether each of the following statement is True or False:
a. All price variances are controllable
b. Material yield variance is favorable if the standard out put is more than actual
output .
6.What is price Earning Ratio?
7.Calculate operating ratio and net profit ratio.
Sales rs.18,00,000 Gross profit on sales 36%, administration and selling expenses are
Rs.2,30,000 and rs.1,00,000 respectively . Loss on sale of machinery Rs.20,000 ,Profit
on sale of assets Rs.50,000.
8.Determine the interest cover for 8%debenture of Rs.8,00,000, Net profit after interest
amounting to Rs.10,00,000.
9.The management of a company finds that while the cost of making the component is
Rs.20 which includes fixed expenses per unit rs.3. The same is available in the market
at rs.18 per unit with an assurance of continues supply . give suggestion as to make or
buy the component.
10.Find out the number of units to be produced when expected sales are 150000units,
estimated stock as on 1.4.05 and 31.3.06 are 14000 and 15000 units respectively.
SECTION-B
Answer Any FIVE Questions:
(5x8=40)
11.Define management accounting. Explain its objective.
12.Distinquish between budgetary control and standard costing.
13.What type of transactions will not be reflected in the statement of sources and
application of funds ? explain with example.
14.Calculate labour variances from the following.
Standard wages :
Actual wages:
Grade X: 90 workers at Rs.2 per hour.
Grade Y:60 workers at rs.3 per hour
Grade X:80 workers Rs.2.50 per hr.
Grade Y:70 workers rs.2.00 per hr
Budgeted hours 1000 , actual hours 900
Budgeted gross production 5000 units ,standard loss 20% actual loss 900 units.
15.Sri ltd. Manufactures two products X and Y. its sales dept. has three divisions: the
sales assessment of the managers were
Product; X= east-300000 units, west-600000 units and north-150000units.
Product Y= east -400000 units ,west-500000 units, and north-nil
Selling price X Rs.5 and Y Rs.4 in all areas.
Arrangements are made for the extensive advertising of both products and it is
estimated that the east division sales will increase by 150000units ,arrangements also
have been made to bring sales in the north for product Y and 600000 units are
expected. Sales in the west division represented unsatisfactory target ,it is agreed to
increase both the estimate by 20%.
Prepare a sales budget for the next period.
16. From the following ,find the most profitable product mix assuming that the
Direct Labour hours , the key factor is limited to 18,600 hours.
Products
A
B
C
Selling price per unit(Rs.)
60
55
50
Requirement per unit;
Direct material
5kg
3kg
4kg
Direct Labour
4hrs
3hrs
2hrs
Variable overhead
Rs.7
Rs.13
Rs.8
Cost of direct material per kg Rs.4
Rs.4
Rs.4
Direct Labour rate
Rs.2
Rs.2
Rs.2
Maximum possible units of sale 4000
5000
1500
All three products are produced from the same direct material using the same
type of machine and Labour.
17. Following is the balance sheet of mic ltd .as at 31st march 2006.
Liabilities
Rs.
Assets
Rs.
Equity share capital
2,00,000 cash at bank
18,000
10%pref. share capital
2,00,000 Bills receivable
60,000
8% Debenture
80,000 short term investment40,000
9%public debts
40,000 Debtors
1,40,000
Bank overdraft
80,000 stock
80,000
Creditors
1,34,000 furniture
60,000
Proposed dividend
20,000 machinery
6,40,000
Reserves
3,00,000 goodwill
70,000
Provision for tax
40,000 preliminary expenses 20,000
Profit / loss a/c
40,000
--------------------11,34,000
11,34,000
---------------------Comment on the financial position of the above co. by determining solvency ratios.
18.
The following are the comparative balance sheet of xy ltd.as on 31-3-98&99
Liabilities 1998
1999
Assets
1998
1999
Share capital 3,50,000
3,70,000
land
1,00,000
1,50,000
Profit /loss a/c 50,400
52,800
stocks
2,46,000
2,13,500
9%debenture
60,000
30,000
goodwill
50,000
25,000
Creditors
51,600
59,200
cash
45,000
39,000
Debtors
71,000
84,500
--------------------------------------------5,12,000
5,12,000
5,12,000
5,12,000
--------------------------------------------2
Dividends declared and paid during the year Rs.17,500
Land was revalued at Rs.1,50,00 and the profit on revaluation credited to
profit/loss a/c. Prepare cash flow statement as per AS3.
SECTION-C
Answer any two questions:
(2x20=40)
19.Following are the summarized balance sheets of Airland co ltd.as as on 31.12.05&06
Liabilities
2005
2006
Assets
2005
2006
Eq share capital 3,00,000 3,00,000
Cash at bank
24,000
27,000
General reserve 64,200
78,000
Building
1,40,400
1,35,000
Profit /loss a/c
51,000 48,000
Investment
30,000
33,750
Creditors
29,250 19,140 Goodwill
39,000
39,000
Provision for debts 3,000
3,600
Stock
90,000
84,000
Provision for
57,000 63,000
Debtors
66,000
66,000
taxation
prepaid expenses
210
900
Machinery
1,14,840
1,26090
---------- ------------------- --------5,04,450 5,11,740
5,04,450
5,11,740
------------ ----------------------------------a. Additional machinery was purchased in 1st June 2006 for Rs.15,000
b. An interim dividend of Rs.15,000 was paid in sep.2006 for Rs.15,000
c. Investment (cost Rs.15,000) was sold in 2006 for Rs.14,400 and an another
investment was made for Rs.18,750.
d. Income tax Rs.54,000 was paid during the year.
You are required to prepare a statement showing sources and application of funds.
Show all the workings that are part of the answer.
20.A Manufacturing is operating at 75% of normal capacity . It is proposed to offer a
price reduction of 5% to 10% depending upon the sales volume desired. Given
below are the relevant data.
Capacity
75%
85%
100%
Output in units
75,000
85,000
1,00,000
Selling price per unit Rs.
96
5%off
10%off
Material cost per unitRs.
40
10%less
15%less
Wages per unit Rs.
10
10
10
Fixed overhead:
Production overhead Rs. 14,00,000
Selling & adm overhead
5,00,000
Variable production overhead:……………………………Rs.14,00,000
Variable selling and adm. Overhead………………………Rs.4,40,000
Prepare a budget to show profit/loss at each level of output and also
compute variable and fixed cost per unit at different levels of operation and
indicate which of the three level is most profitable.
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21.From the following information ,you are required to prepare a balance sheet.
Current Ratio
1.75
Liquid ratio
1.25
Stock turn over ratio (cost of sales/closing stock) 9
Gross profit ratio
25%
Debt collection period
1.5 months
Reserves and surplus to capital
0.20
Turn over to fixed assets ( on cost of sales)
1.2
Capital gearing ratio
0.60
Fixed assets to net worth
1.25
Sales for the year
Rs.12,00,000
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