MBA – Sem II

End Session Examination

Paper – Cost & Management Accounting

Q.1: Short Answer Questions (Attempt any TEN)

1. Point out the advantages of Cost Accounting

2. What do you mean by Escalation clause contract
3. What are the importance of Ratio Analysis
4. Given: Selling price per unit (14,000 units) Rs.33; % of marginal cost to sales
66.6666%; Fixed Cost Rs.50,000. Find BEP in Rs. and in units
5. Carry Enterprises has been a permit to run a mini bus on a route covering 20km.The
minibus is 24seater & is expected to run 6 two-way trips during the day for 25 days in
a month. Calculate Total passenger Kms.
6. What do you mean by the term, ‘Work Certified’ and ‘Work uncertified’?
7. List out the objectives of Budgetary control
8. Given: Sales Rs.25,00,000; Cost of Goods Sold Rs.10,00,000 find out Gross Profit
Ratio
9. Write down the components of Current Ratio and Acid Test Ratio
10. Explain in short any two types of costing Technique
11. What is Fixed and Flexible Budget?
12. Mention any five reasons of disagreement in Profit as per Costing and Financial
Records
13. Point out the limitations of Management Accounting
14. What do you mean by Stock Turnover Ratio?
15. Explain the term “Retention Money”

Long Answer Questions: (Attempt any FIVE)

Q.2: The M D of a manufacturing company consults you as to the minimum price at which he
can sell the output of one of the department of the company which is intended for mass
production in future. The company’s record show the following details are extracted for the
production of 100 units: Material Rs.14,000, Direct labour Rs.7,000, works o/h Rs.7,000,
Administration o/h Rs.2,800, Selling exp Rs.3,200, Profit Rs.6,000.
It is ascertain that 40% of the works o/h fluctuates directly with production & 70% of
the selling o/h fluctuates with sales. It is anticipated that the dept would produce 500 units pa
& that direct labour per unit will be reduced by 20%, while fixed works o/h will increase by
Rs.3,000. Administration o/h & fixed selling o/h are expected show an increase of 25% but
otherwise no change is expected.

Q.3: A Contractor who prepares his account on 31st Dec. every year commenced a contract
on 1/4/99. The costing records show the following information as on 31/12/2012.
Particulars Amount
Materials charged to contract 2,58,100
 Labour engaged 5,60,500
Foreman’s salary 79,300
Plant costing Rs.2,60,000 had been on site for 164 days. Their working life is
estimated at 7 years & final scrap value is Rs.15,000. A supervisor who is paid Rs.4,000 p.m.
has devoted approx.3/4th of his time to this contract. The administrative & other exp. amount
to Rs.1,40,000. Materials in hand at site on 31/12/2012 cost Rs.25,400. Some of the material
costing Rs.4,500 was found unsuitable & was sold for Rs.4,000 & a part of plant costing
Rs.5,500 (31/12/2012) unsuited to contract & was sold at a profit of Rs.1,000.
The contract price was Rs.20,00,000. On 31/12/2012, two third of the contract was
completed. Architect’s certificate had been issued covering 50% of the contract price &
Rs.7,50,000 had so far been paid. Prepare Contract A/c, Contractee’s A/c, & show how these
a/c’s would appear in Balance sheet.

Q.4: The following is the Trading & P & L A/c and Balance Sheet of XYZ Co. Ltd for the
31-12-2013
Particulars Amount Particulars Amount
To Opening Stock 99,500 By Sales 8,50,000
Purchases 5,45,250 Closing Stock 1,49,000
Direct Expenses 14,250
To Gross Profit 3,40,000
9,99,000 9,99,000
To Operating Exp: By Gross Profit 3,40,000
S & D Exp 30,000 Non Operating Income:
Admin Exp 1,50,000 Interest 3,000
Fin. Exp 15,000 1,95,000 Profit on sale of shares
Non Operating Exp 4,000 6,000 9,000
To Net Profit 1,50,000
3,49,000 3,49,000

Balance Sheet as on 31/12/2013

Liabilities Amount Assets Amount
Issued Capital: 20,000 Land & Building 1,50,000
shares of Rs.10 each 2,00,000 Plant & Machinery 80,000
Reserves 90,000 Stock in Trade 1,49,000
Current Liabilities 1,30,000 Sundry Debtors 71,000
P& L A/c 60,000 Cash & Bank Balance 30,000
4,80,000 4,80,000

You are required to calculate: 1) Current Ratio 2) Operating Ratio 3) Stock Turnover Ratio 4)
Return on Total resources ratio 5) Fixed Assets turnover Ratio

Q.5: Raj Corporations Ltd. has prepared the following budget estimates for the year 2013 –
14. Sales units 15,000 units, Fixed cost Rs.34,000, Sales value Rs.1,50,000, Variable cost
Rs.6/unit. You are required to calculate: 1) PV Ratio, BEP & Margin of Safety 2) Calculate
revised PV Ratio, BEP, & Margin of Safety in each of the following cases: A) Decrease of
10% in selling price 2) Increase of 10% in variable cost 3) Increase of sales volume by 2,000
units 4) Increase of Rs.6,000 in fixed cost.
Q.6: Your Company is manufacturing a single product and sells it at Rs.80 per unit. The
variable cost per unit is Rs.48 and annual fixed cost is Rs.18 lakhs. Based on the above data,
you are required to calculate:
a) Present P/V Ratio and BEP sales
b) Increase in the volume of sales required if the profit is sought to be increased by
Rs.3,60,000
c) Percentage increase/decrease in sales volume: i) to offset an increase of Rs.4 per unit in
variable cost and ii) an increase in selling price by 10 % without affecting quantum of
existing profit.

Q.7: A company expects to have Rs.37,500 cash in hand on 1/4/2004 & requires you to
prepare an estimate of cash position for the three months ending on June 2004. The following
information is supplied to you:
Month Sales Purchases Wages Factory OH Office OH Selling OH
February 75,000 45,000 9,000 7,500 6,000 4,500
March 84,000 48,000 9,750 8,250 6,000 4,500
April 90,000 52,500 10,500 9,000 6,000 5,250
May 1,20,000 60,000 13,500 11,250 6,000 6,570
June 1,35,000 60,000 14,250 14,000 7,000 7,000
Other Information: 1)Period allowed by suppliers is 2 months 2) 20% of sales is for cash &
period allowed to customers is 1 month 3) Delay in payment of all exp is 1 month 4) Income
tax of Rs.57,500 is due to be paid in June 5) The company is to pay dividend & bonus to
shareholders of Rs.15,000 & Rs.22,500 resp. in the month of April 6) Plant has been ordered
to be received in the month of May. It will cost Rs.1,20,000.

Q.8: Following data is available in respect of a manufacturing concern for the half-year ended
on 30-6-2012. (Rs. In hundreds.)
Particulars Amount
Variable Exp.: (at 45%)
Materials 2,580
Labour 1,280
Other Exp. 389
Semi-variable Exp.: (at 45%)
Maintenance 258
Indirect Labour 990
Salaries of Sales dept. 330
Misc. Admin. Exp. 252
Fixed Exp.:
Salaries & Wages 1,234
Rent, Taxes, Insurance 980
Depreciation 550
Sundry Admin.O.H. 890
It is assumed that fixed exp. remain constant at all levels. Semi Variable Exp.
remains constant between 45% & 65%. 10% increase is expected between 65% & 80% and a
further increase of 20% is expected between 80% & 100% capacity. Sales at 45%
Rs.6,00,000, at 60% Rs.6,85,000, at 85% Rs.7,55,000, & at 100% Rs.9,65,000. Prepare
flexible budget & estimate profit.
Q.9: Write short notes on (Any TWO)
a) Elements of Cost b) Duo pont Chart c) Zero base Budgeting d) Importance of Marginal
Costing in terms of Cost Control