.

J
State the assumptions underlying Break-even Charts. A company annually manufacture 10 000 . Rs. 4 per unit and there is home ~ark' t ti UnIts of ~ product at a cost of ?f production at the sale price of Rs. 4.~5 or con~ummg the entire volume IS a fall in the demand for home mark t p:~ ~J1It. In the year 2007, there only at a sale price ofRs. 3.72 per u 't er: IC IC~ consume 10,000 units units is: J1I. e ana YSISof the cost per 10,000 Materials Wages Fixed Overheads Variable Overheads Rs. 15,000 11,000 8,000 6,000 ti .
FOURTH SEMESTER

:A/V

END TERM EXAMINATION

(BBA(B&I)) MA V-20lO

Code: BBA (B&I) 204 IPaper PaperlD: 18204

Subject: Management Accounting Maximum Marks: 75

1-- Q 1.
(i) (ii) (iii) (iv) (v) (vi) (vii) (viii)

Time:

3 Hours

Note: Attempt all questions. Questions hav~-internal choice. Your answer should not exceed 50

Comment on any FIVE of the following. words each.

The foreign market is explored and it i

c~~s:~te 2~;01?s0alunitsd~f the product if off:re~~~~ ~:~~p~i~e:;~:.t 3c~ P . so Iscovered that for add'ti I I .'-product (over initial 10,000 units) that fi d J ~na O,?O? UDltSof the per cent. Is it worthwhile to try to captulrXeetheovtier .eads Wikll !Dcrease by 10 orelgn mar et?

The basic function of management accounting is to record all business transactions. The terms 'Analysis' and 'Interpretation' regarding financial statements are synonymous. A decreased stock turnover ratio indicates expanding business. A Cash Flow Statement can very well be equated with an Income Statement. 'Standard Costs' are' Ideal Costs'. A Budget Manual contains a summary of all functional budgets. The valuation of stock is at -higher price in absorption costing as compared to marginal costing. All future costs are not relevant cost.

Q2.

What do you understand by the term Management Accounting? useful in different management functions?

Explain how it is

Explain the meaning of the term Financial Statements. limitations.

State their nature and

(b)

With the following ratios and further information given below, prepare a Trading Account, Profit and Loss Account and a Balance Sheet of Shri Ram: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) Gross Profit Ratio Net Profit/Sales Stock-Turnover Ratio Net Profit/Capital Capital to Total Liabilities Fixed Assets/Capital Fixed AssetsITotal Current Assets Fixed Assets Closing Stock 25% 20% 10 1/5

~
5/4 5/7 Rs. 10,00,000 Rs. 1,00,000

L:"~.J

Prepare Cash Flow Statement as per AS 3 (Revised) from the following Balance Sheets of Krishna Engineering Ltd.: Liabilities Share Capital Reserves Profit & Loss Appropriation Alc Provision for Dividends Creditors Bank Overdraft Bills Payable Loan on Mortgage 2007 Rs. 17,00,000 40,000 1,00,000 70,000 1,00,000 8,000 14,000 10,000 2008 Asseti' Rs. 18,35,000 Buildings 83,700 Plant & Machinery Fixtures & Fittings 1,30,000 Cash 50,000 95,000 Debtors 18,000 Accounts Receivable 13,000 Stock 70,000 Prepaid Expenses Investments Goodwill Preliminary Expenses 2007 Rs. 8,00,000 2,50,000 5,000 2,000 1,00,000 8,000 4,00,000 3,000 1,64,000 3,00,000 10,000 20,42,000 2008 Rs. 10,00,000 3,70,000 6,000 2,200 45,000 9,000 3,43,700 3,100 J,70,000 3,43,700 2,000 22,94,700 (a) (b)

Cash balance on 1" May, 2008 was Rs. 8,000. Plant costing Rs. 16,000 is due for delivery in July, payable 10% on delivery and the balance after 3 months. Advance Tax ofRs. 8,000 each is payable in March and June. Period of credit allowed (i) by suppliers - two months, and (ii) to customers - one month. Lag in payment of manufacturing expenses - Y, montM. Lag in payment of office and selling expenses - one month,

Differentiate between Budgetary Control and Standard Costing. Compute (i) Direct (ii) Direct (iii) Direct (iv) Direct

Labour Labour Labour Labour

Cost Variance Rate Variance Efficiency Variance Yield Variance

20,42,000

22,94,700

Depreciation is charged on building at 3 per cent of cost of Rs. 9,00,000; on Plant and Machinery at 8 per cent of cost of Rs. 4,00,000; Fixtures and Fittings at 5 per cent of cost ofRs. 8,000. Investments were purchased and interest received Rs. 3,000 was used in writing down the book value of investments. The declared dividend for 2007 was paid and interim dividend of Rs. 20,000 for the current year paid out of Profit and Loss Appropriation Account.

Standard Wages: Grade X: 90 Labourers at Rs. 2 per hour. Grade Y: 60 Labourers at Rs. 3 per hour. Actual Wages: Grade X: 80 Labourers Rs. 2.50 per hour. Grade Y: 70 Labourers at Rs. 2.00 per hour. Budgeted Hours 1,000; Actual Hours 900. Budgeted Gross Production 5,000 units; Standard Loss 20%; Actual Loss 900 units.

Q4.

(a)
(b)

Explain the concept of Zero-base Budgeting. Prepare a Cash Budget for the months of May, June and July 2008 on the basis of the following information: (1) Income and Expenditure Forecasts:

Months

March April May June July August

Credit Sales Rs. 60,000 62,000 65,000 58,000 56,000 60,000

Credit Purch(lSes Rs. 36;000 38,000 33,000 35,000 39,000 34,000

Wages Manufacturing Expenses Rs. Rs. 4,000 9,000 3,000 8,000 4,500 10,000 3,500 8,500 4,000 9,500 3,000 8,000

Office Expenses Rs. 2,000 1,500 2,500 2,000 1,000 1,500

Selling Expenses Rs. 4,000 5,000 4,500 3,500 4,500 4,500

The budget of AB Ltd. includes the following data for the forthcoming financial year: Fixed Expenses Rs. 3,00,000 Contribution per unit Product X - Rs. 6 . Product Y - Rs. 2.50 Product Z - Rs. 4 Product X - Rs. 24,000 units @ Rs. 12.50 Product Y - Rs. 1,00,000 units @ Rs. 7.00 Product Z - Rs. 50,000 units @ Rs. 10.00 Calculate the composite P/VRatio and Composite BEP.