M.B.

A (Sem - I) (DEC 2013)

ACCOUNTING FOR BUSINESS DECISIONS (2013 pattern)
[Time: 2 hour and 30 minutes]
Marks: 50]

[Max.

Instructions to the candidates:

1) All questions are compulsory.
2) Each question has an internal option.
3) Each question carries 10 marks.
4) Figures to right indicate marks for that question/sub
question.
5) Your answer should be specific & to the point.
6) Support your answers with suitable live examples.
7) Draw neat diagrams & illustrations supportive to your
answer.
8) Use of calculator is permitted (as applicable)
Q. 1 (a) Is there any similarity between Financial and
Management Accounting?
OR
(b) Describe various concept and conventions of proprietary and
limited companies are same? Justify?

Q.2 (a) Do you think that the financial statements of proprietary

and limited companies are same? Justify?
OR
(b) Following is the data of a manufacturing company pertaining
to the financial year 2012-2013 and asking you to record it at
appropriate places as per Schedule VI. Name the appropriate
head and financial statement,

a)
b)
c)
d)
e)
f)
g)
h)
i)
j)

Rs. 1,50,000 received towards rent for the period from

May 2013 to July 2013
Rs. 2,50,000 was sanctioned as a Dividend to Equity
shareholders but out of Rs. 14,500 remain unclaimed.
Provision of Rs. 1,00,000 made for workers benefit.
Amount of Rs. 50,000 as a Loose Tools.
Rs. 50,00,000 form business operations.
Rs. 15,000 remained as cash on 31st March 2013
Guarantee of Rs. 60,000 for other company.
Purchase of materials for Rs. 35,000.
Rs. 7,500 paid by way of Bank interest.
Rs. 5,00,000 towards design and prototypes.

Q.3 (a) Most of the time management is concerned with two

types of decisions such as long-range and short-range. Explain
the cost concept from these decision-making points of view.
OR
(b) (i) From the following figures ascertain: prime cost and cost of
production:
a) Factory overheads Rs. 60,000/b) Administrative overheads Rs. 40,000/c) Direct Wages Rs. 50,000/d) Direct materials Rs. 70,000/e) Selling and distribution overheads Rs. 20,000/(ii) All direct/indirect items of expense of a company are classified
under following heads.
1.
2.
3.
4.
5.
6.

Production
Administration
Selling
Distribution
Application to all four classes of the above
To be omitted from costing records

State under which headings the following would generally be

placed:
A
B
C
D
E
F
G
H

Factory laborers wages

Carriage inward
Advertisement
Works manager Salary
Storekeepers wages
Plant maintenance
Carriage outward
Maintenance of cranes and
hoists

I
J
K
L
M
N
O
P

Lubricating oil
Dividend
Cost of free samples
Discount allowed
Rent
Income Tax
Cleaning Materials
Commission to
travelers

Q.4 (a) Agni Company has recorded the following transactions of

material during the month of September, 2013
Date
1 Sep 2013
5 Sep 2013
9 Sep 2013
14 Sep 2013
1 6 Sep 2013
25 Sep 2013
26 Sep 2013

Particulars
Opening Stock
Purchases
Issues
Purchases
Issues
Purchases
Issues

Qty.
300
250
400
300
200
150
150

Rate
9.70
9.80
10.00
10.50

Calculate closing stock as on 30 Sep 2013 on the basis of FIFO

and LIFO method.
(b) Modern company Ltd. Has three production department X, Y,
& Z and two services department A & B. The following figures are
extracted from the records of the company.
Rent & Rates
Indirect wages

Rs.
5,000
Rs. 1,500

General
Power

Rs. 600
Rs. 1,500

Depreciation on
machinery

Rs.
10,000

Sundries

Rs. 10,000

The following further details are available.

Particulars
Floor space (sq.
ft)
Light point
(Number)
Direct wages
(Rs.)
HP of machine
Value of

Total
10,000

X
2,000

Y
Z
2,500 3,000

60

10

15

10,000

3,000

2,000 3,000

150
2,50,0
00

60
60,000

30
50
80,00 10,000
0

A
2,000

20

B
500
5
500

5,000

5,00
0

Apportion the cost to various departments on the most equitable

basis.

Q.5 (a) The Company furnishes you the following income

information for the current year divided in two sub-parts
Particulars
Sales
Profit earned

First Half
Rs. 8,10,000
Rs. 21,600

Second Half
Rs. 10,26,000
Rs. 64,800

Calculate
i)
ii)
iii)
iv)
OR

Profit/Volume ratio
Fixed cost
Amount of profit or loss when sales are Rs. 6,48,000
Amount of sales required to earn a profit of Rs. 1,08,000

(b) Prepare a flexible budget of a manufacturing company and

show the forecast of profit at 75% and 100% capacity operations,
form the give data:

Capacity worked,
50%
Fixed costs
Salaries
Rent & Rates
Depreciation
Other Admin Exp.
Variable costs
Materials
Labor
Other expense

Amount (Rs.)

Total Amount
(Rs.)

84,000
56,000
70,000
80,000

2,90,000

2,40,000
2,56,000
38,000

5,34,000

Possible sales at various levels of working are:

75% capacity Sales Rs. 11,50,000
100% capacity Sales Rs. 15,25,000

M.B.A (Sem - I) (May 2013)

ACCOUNTING FOR BUSINESS DECISIONS (2013 pattern)
[Time: 2 hour and 30 minutes]
Marks: 50]

[Max.

Instructions to the candidates:

1) All questions are compulsory.
2) Each question has an internal option.
3) Each question carries 10 marks.
4) Figures to right indicate marks for that question/sub
question.
5) Your answer should be specific & to the point.
6) Support your answers with suitable live examples.
7) Draw neat diagrams & illustrations supportive to your
answer.
8) Use of calculator is permitted (as applicable)
Q.1 (a) Accounting concepts and conventions are the basis on
which all accounting system are based. Elaborate.
OR
(b) Is Financial Management, Management Accounting and cost
accounting related to each other? Explain with examples.

Q.2 (a) State the nature of the financial statement and give any
five examples of capital Expenditure.
OR
(b) Briefly explain the guidelines of Schedule VI of the Companies
Act 1956 for any five of following items with regard to the general
instruction for preparation of Balance sheet:
i) Current Liability
ii) Current Assets
iii)Reserves and Surplus
iv)Short Term Borrowings
v) Contingent Liability
vi)Share Capital
vii)
Provisions
viii)
Long term borrowings
ix)Contingent Liability

Q.3 (a) Cost Management is an intergral part for taking decisions

related to the performance of various functions in a department.
Explain in detail.
OR
(b) Classify the following items into following and explain with
reason any five items excluded from cost sheet.

i)
ii)
iii)
iv)
1
2

Factory Overheads
Administration Overheads
Selling and Distribution Overheads
Items excluded from Cost Sheet
Cost of gas and water
Grease and oil for machines

3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30

Unproductive wages
Advertisement cost
Directors remuneration
Chargeable expenses
Dividend paid
Bad debts
Provision for bad debts
Appropriation to sinking fund
Factory repairs and renewals
Wages of foreman
Carriage inward
Carriage outward
Upkeep of delivery van
Sales branches office expenses
Transfer of general reserve
Collection charge
Mobile phone charges of salesman
Travelling charges of salesman
Stationery office
Stationery showroom
Income tax paid
Legal charges
Preliminary expenses written of
Labor welfare expenses
Warehouse rent
Electricity office
Electricity faculty
Electricity showroom

Q.4 The modern company has four department A,B and C are the
production department and D is a servicing department.
Apportion the cost of the various departments on the most
equitable method. The actual cost for a period is as follows:
Indirect material
A
B

Rs. (000)
950
1200

Producing
Department
Servicing
Department D

200
1500

Indirect wages
Producing
Department
Servicing
Department D

Rs. (000)
900
1100
300

A
B
C

10000

Rent = 2000
Repair = 1200
Depreciation = 900
Fight = 200
Supervision = 3000
Factory Insurance = 1000

Employees Insurance (Employers liability)

Liability = 300
Power = 1800
The following data are also available in respect of four
departments
Other Detail
Area (Sq. Ft)
No. of workers
Total wages (000) (Rs.)
Value of plant (000) (Rs.)
Value of stock (000) (Rs.)

A
150
24
8000

B
C
D
90
50
50
12
8
8
4000 2000 200
0
24000 1200 6000 600
0
0
15000 6000 -

OR
(b) Prepare a stores leader account from the following details
using LIFO method of pricing the issue of materials.
Sr.
No.
1
2
3
4
5
6
7
8
9
10

Date

Particulars

1/1/201
3
2/1/201
3
3/1/201
3
5/1/201
3
6/1/201
3
7/1/201
3
8/1/201
3
9/1/201
3
10/1/20
13
12/1/20
13

Opening balance 10850 Kg. @Rs. 130 per

Kg.
Purchased 20000 Kg. @ Rs. 134 per Kg.
134
Issued 6750 Kg. to production
Issued 8500 Kg. to production
Received back 550kg from production
Purchased 17550 Kg @ 128 per Kg
Issued 11250 kg to production
Loss 250 kg
Issued 8950 kg to production
Issued 6300 kg to production

Q. 5 (a) Profit volume ratio of a company 30% and fixed cost is Rs.
120000. Find out its Break Even point in Rupees and Sales when
profit is Rs. 120000.
(b) From the following particulars compute
i)
Material cost variance
ii)
Material Price Variance
1. Qty of materials purchased 3000 units

2. Value of materials purchased Rs. 9000

3. Standard quantity of materials required per kg of output 30
units
4. Standard rate of materials Rs. 2.50 per unit.
5. Opening stock of materials Nil.
6. Closing stock of materials 500 units.
7. Output during the period 80 kgs.
OR
For the production of 1000 units the following are budgeted
expenses.
Particulars
Direct material
Direct labor
Variable overheads
Fixed overhead (Rs. 1000000)
Variable expenses (Direct)
Selling Expenses (10% Fixed)
Administrative Expenses (Rs. 50000)
Distribution expenses (20% fixed)
Total

Per Unit Cost

(Rs.)
70
25
20
10
5
13
5
7
155

Prepare a budget for the production of

a) 8000 units
b) 6000 units
Assume that administrative expenses are rigid (does not change)
for all levels of production.