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 MANAGEMENT ACCOUNTING-I |
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Hello student`s
Welcome to our Institute. We are here to provide you a Questions Papers for Year 2008 , 2009 and 2011
YEAR-2008 M.B.A-I semester
Time:3 Hours
Total Marks:-70
The Questions paper is divided into three sections.Sections A contains 10 questions of 02 Marks each. All questions are compulsory.
Section B will contain 05 questions of 10 marks each. The candidate are required to answer three questions from this section.
Section C is of 20 Marks and contains case studies or numerical problems only. Question for 40 marks are given in this section.
SECTION-A
Q.1 Mention the three basic objectives of management accounting information system
Q.2 Give a profile of management accounting in terms of its sources of input
Q.3 Define 'Budget' underline its managerial significance
Q.4 Why is the distinction between 'Capital and Revenue' so much significant and critical for the management?
Q.5 What can be the indicators of corporate performance for you while assisting the management?
Q.6 How can you use the 'common size financial statements' as an aid to management?
Q.7 Are there any underlying assumptions in the CVP Analysis? If so, mention those assumptions.
Q.8 What is an activity and cost object? Also illustrate.
Q.9 Draw a simple 'Profit-Volume Graph'
Q10 If the P/E ratio for firm 'X' is 10 and the industry average is 20, how will you interpret it?
SECTION-B
Q11 Illustrate the concept of 'Static v/s Flexible Budget' with a set of imaginary figures.
Q12 Evaluate the concept of 'ROI' as a measure of performance of managers
Q13 What are the different approaches to the product cost? illustrate their managerial significance.
Q14 M Ltd. manufactures three products,P,Q and R. The unit selling prices of these products are Rs.100,
Rs.80 and Rs.50 respectively. The corresponding unit variable costs are Rs.50, Rs.40 and Rs.20. The
proportions(quantity wise) in which these products are manufactured and sold are 20%, 30% and 50%
respectively. The total fixed costs are Rs. 14,80,000. Given the above information, you are required to work
out the overall break-even quantity and the product wise break up of such quantity.
Q15 Consider the financial statements of X Ltd.
| Balance sheet as on March 31,2001 |
| | (Figure in Rs.Lacs) |
| Liabilities and Equity |
As on March 31, 2001 |
As on March 31,2001 |
| Share Capital | 550 | 500 |
| Reserves | 200 | 100 |
| Profit & Loss Balance | 135 | 125 |
| L T Borrowings | 300 | 250 |
| Current Liabilities | 135 | 100 |
| Provision for Tax | 120 | 75 |
| Proposed Dividend | 55 | 50 |
| Total | 1495 | 1200 |
| Assets |
| Gross Fixed Assets | 750 | 600 |
| Less: Accumulated Depreciation | 390 | 300 |
| Net Fixed Assets | 360 | 300 |
| Investment (all LT) | 250 | 200 |
| Inventories | 190 | 100 |
| Debtors | 120 | 80 |
| Cash & Bank Balance | 50 | 30 |
| Loans and Advantaces | 525 | 490 |
| Total | 1495 | 1200 |
| Profit and Loss Statement for the Year ended March 31, 2001 |
| Income | Figure in Rs.Lacs |
| Sales | 1260 |
| Other Income | 152 |
| Stock adjustment | 18 |
| Total | 1430 |
| |
| Expenditure | |
| Raw materials consumed | 715 |
| Manufacturing expenses | 140 |
| Administrative expenses | 80 |
| Selling and Distribution expenses | 65 |
| Depriciation | 90 |
| Interest | 55 |
| Total | 1,145 |
| Profit Before Tax(PBT) | 285 |
| Provision for tax | 120 |
| Profit After Tax(PAT) | 165 |
| Profit and Loss Balance(Beginning) | 125 |
| Profit available for appropriation | 290 |
| Transfer to reserves | 100 |
| Proposed dividend (including dividend tax) | 55 |
| Balance of Profit carried to B/S | 135 |
Find out cash flow from operating activities under the direct or indirect method showing working notes. Assume that curent
liabilities denote suppliers balance only. 80% of inventories are raw materials. Loans and advance include income tax paid
Rs.120 lacs(previous year Rs. 75 lacs).
SECTION-C
Q.16 Towards the end of 19X1 the director of WM Ltd. decided to expand their business. The annual accounts of the company
for 19X1 and 19X2 may be summarized as follows:
| | | 19X1 | | 19X2 |
| Sales:Cash | 42,000 | | 44,800 | |
| Credit | 3,78,000 | 4,20,000 | 4,78,000 | 5,23,600 |
| Cost of sales | | 3,30,400 | | 4,17,200 |
| Gross Margin | | 89,600 | | 1,06,400 |
| Expenses: | | | | |
| Warehousing | | 18,200 | | 19,600 |
| Transport | | 8,400 | | 14,000 |
| Adiministration | | 26,600 | | 26,600 |
| Selling | | 15,400 | | 19,600 |
| Debentures interest | | -- | | 2,800 |
| | | 68,600 | | 82,600 |
| Net Profit | | 21,000 | | 23,800 |
Fixed assets
(less depriciation) | | 42,000 | | 56,000 |
| Current assets: | | | | |
| Stock | 84,000 | | 1,31,600 | |
| Debtors | 70,000 | | 1,14,800 | |
| Cash | 14,000 | 1,68,000 | 9,800 | 2,56,200 |
| Less:Current liabilities | | 70,000 | | 1,06,400 |
| Net current assets | | 98,000 | | 1,49,800 |
| | | 1,40,000 | | 2,05,800 |
| Share capital | | 1,05,000 | | 1,05,000 |
| Reserves and undistributed profit | | 35,000 | | 58,800 |
| Debentures | | -- | | 42,000 |
| | | 1,40,000 | | 2,05,800 |
You are informed that:
i) All sales were from stocks in the company`s warehouse.
ii) The range of merchandise was not changed and buying prices remained steadly throughout the two years.
iii) Budgeted total sales for 19X2 were Rs.3,90,000,
iv) The debentures loan was received on 1st January 19X2, and additional fixed assets were purchased on that date.
You are required to state the internal accounting ratios that you would use in this type of business to assist the management
of the company in measuring the efficiency of the operations, including its use of capital
Your answer should name the rations and give the figures(calculated to one decimal place) for 19X1 and 19X2,
together with possible reasons for changes in the ratios for the two years. Ratios relating to capital employeed
should be based on the capital at the year end. Ignore taxation. Develop about 10 ratios.
Q.17 (i) XY Co. sold in two successive years 7,000 and 9,000 units incurred a loss of Rs.10,000 and earned Rs.10,000
as profit respectively. The selling price per unit is Rs.100
Calculate:
(a) The amount of fixed cost.
(b) The number of units to earn a profit of Rs.50,000
Q.17 (ii) A company manufactures three products by processing through a machine shop and a finishing department.
Standard products costs are based on the following figures:
| | Product |
| | A | B | C |
| Material cost(each) | Rs. 2.30 | 3.50 | 5.00 |
| Labor hours Machine (50p. per hour)Hrs. | 2 | 21/2 | 1 |
| Finishing (60p. per hour Hrs) | 2 | 11/2 | 1 |
| Selling price(each) Rs. | 8.50 | 10.20 | 12.00 |
Overhead rates, based on normal production as shown in the budget are:
Machine shop Re. 1.00 per hour
Finishing department 60 p.per hour
Examination of the overhead used in the budget shows that at the bugeted level of production one half of the total overheads charged
to each department is of a variable nature, the other half being regarded as fixed. Present information to management to enable the
relative profitability of the three products to be assessed when there is shortage of any of the factors of production.
YEAR-2009
Time: 3Hours
Total Marks: 70
This Question paper is divided in two sections. Section A contains 6 questions out of which the candidate is required to attempt any
4 questions. Section B contains short case study/application based one question which is compulsory. All questions are carrying equal marks.
SECTION-A
Q.1 (a) "The structure of management accounting is created by adopting concepts and techniques from a number of disciplines". Explain [7]
(b) Explain Money measurement, separate entity and matching concept of Financial Accounting. [7]
Q.2 (a) What are the guiding principles of Corporate Governance? [4]
(b) Following balances have been extracted from the books of Shri Gagan Shivani on 31stMarch 2008:
Opening stock Rs.15,000 Purchase Rs.50,000, Sales Rs.80,000 , Return Inward Rs.300, Return Outward Rs.2,000, Debtors Rs.40,500
Fixed deposit in Bank Rs. 10,000, Creditors Rs.25,000, B/R Rs.11,400,B/P Rs. 8,000, Interest received on fixed deposit Rs.900
Drawing Rs.6,300, Cash Rs.1,000, Capital Rs.37,300, Discount(Dr.) Rs.600, Commission(Cr.) 2,200; Repairs Rs. 800,
Wages Rs.2,400, Salaries for 11 months Rs.5,500, Advertisements Rs.1,200, Trademark Rs. 1,500, Building Rs.10,000,
Bad debts Rs.800, Provision for Bad debts Rs 1,900.
Prepare Final Account for the year ending 31stMarch 2008 after taking into cosideration of following adjustment:
1) Closing stock on 31stMarch 2008 Rs.28,400
2) Interest accrued on fixed deposits in Bank for 3 months, commission received in advance Rs.400
3) Further Bad-debts Rs.500 and maintain provision for bad-debts at 5% on debtors.
4) Depreciate Building by 5%
5) Goods worth Rs. 300 were donated for which no en was made in the books.
6) Provide for Manager`s commission 5% on net profit after charging this commission. [10]
Q.3 (a) From the Balance sheets and information given below, prepare statement of sources and uses for the year 2008
| Liabilities | 2007(Rs.) | 2008(Rs.) | Assets | 2007(Rs.) | 2008(Rs.) |
| Creditors | 40,000 | 44,000 | Cash | 10,000 | 7,000 |
| Loan from A | 25,000 | -- | Debtors | 30,000 | 50,000 |
| Loan from Bank | 40,000 | 50,000 | Stock | 35,000 | 25,000 |
| Capital | 1,25,000 | 1,53,000 | Machinery | 80,000 | 55,000 |
| | | | Building | 35,000 | 60,000 |
| | | | Land | 40,000 | 50,000 |
| | 2,30,000 | 2,47,000 | | 2,30,000 | 2,47,000 |
During the year 2008 a Machine costing Rs.10,000(accumulated depreciation Rs.3,000) was sold for Rs.5,000.
The provision for depreciation on Jan. 2008 and 31st Dec.2008 were Rs.25,000 and Rs.40,000 respectively.Net
profit for the year 2008 was amounted to Rs.45,000 [10]
(b) Write notes on: [4]
i) Recent developments in management accounting
ii) Comparative financial statement
Q.4 (a) Following informations are obtained from the books of Varun Textiles Limited and you are required to ascertain cash
from operation there from for the year 2007-08: [8]
| | 31-3-2007 Rs | 31-3-2008 |
| Profit and Loss accounts | 3,20,000 | 4,80,000 |
| Sundry creditors | 80,000 | 84,000 |
| Sundry debtors | 1,07,000 | 1,31,000 |
| Prepaid expenses | 4,800 | 3,900 |
| Accured Interest | 3,600 | 3,300 |
| Provision for depriciation | 90,000 | 1,15,000 |
| Fixed assets(at cost) | 4,50,000 | 5,60,000 |
| Income tax payable | 26,000 | 19,000 |
Additional information for the year 2007-08:
i) Interest on debenture paid and debited to profit and loss account for the year was Rs.36,000 and interest received
and credited to profit and loss account was Rs.7,800
ii) A machine costing Rs. 18,000 (accumulated depreciation Rs. 11,000) was sold for Rs. 13,500
iii) Furniture costing Rs. 10,000 (Net Book value Rs. 3,800) was sold at book value.
iv) Interim dividend paid Rs. 16,000 and Income tax paid Rs.76,000
(b) Write short notes on: [6]
i) Controlled costs and uncontrolled costs
ii) Opportunity cost and sunk cost.
Q.5(a) In a factory three products are produced using same inputs. The particulars related to these products are as under:
[10]
| Particulars | Products |
| | X Rs | Y Rs. | Z Rs. |
| Per unit selling price | 250 | 200 | 100 |
| Per unit variable cost material @ Rs. 20 per kg. | 60 | 50 | 40 |
| Skilled labor @ Rs.10 per hour | 40 | 30 | 15 |
| Variable overhead @ Rs.5 per machine hour | 10 | 5 | 5 |
Fixed cost Rs.16,000. state which product is better to be produced and sold if:
a) There are normal business conditions.
b) There is restricted demand of products.
c) There is restriction on total sales in amount.
d) There is shortage of material.
e) There is shrotage of skilled labor hours.
f) There is limited availability of machine hours.
(b) Explain different stages of activity based costing. [4]
Q.6(a) "Budgetary control helps in business progress." Critically examine this statement. [4]
(b) Calculate:
i) Activity ratio,
ii) Capacity ratio
iii) Efficiency ratio,and
iv) Calender ratio from the following information. [4]
(c) A toy manufacture currently earns an average profit of Rs..3 per toy by selling at Rs.15 per toy, producing 6000 toys.
Computation of current cost of sales per toy is as under:
Direct material Rs. 4, Direct wages Re 1, work overhead(50% fixed) Rs.6,and selling overhead(25% varing) Re.1
During the coming year following increases are anticipated:
i) Fixed cost will go up by 10%
ii) Rates of direct labor will increase by 20%
iii) Rates of direct material will increase by 10%
iv) Selling price cannot be increased if sales in units will be maintained at current level of sales.
Under the circumstances he obtains an unexpected order for 2000 toys. What Minimum price will you recommend for accepting
the order to ensure the overall profits of Rs. 18,050 to the toy manufacture. [6]
SECTION-B
Q.7 From the information given below prepare estimate of working capital requirement at the end of the year 2008:
| Budgeted sales for the year 2008 | Rs. 9,00,000 |
| Estimated cash sales and credit sales ratio | 1:4 |
| Debtors velocity | 2 months |
| Estimated gross profit | 20% of sales |
| Operating ratio | Rs. 90% |
| Stock velocity | 8 |
| Proprietary funds to fixed assets | 0.80 |
| Time lag in payment of operating expenses | 1 month |
| Liquidity ratio | 1.8 |
| Net profit on proprietory funds | 15% |
Closing stock level is expected to increases by 40% over opening stock. [14]
YEAR-2011
Time: 3Hours
Total Marks: 70
This Question paper is divided in two sections. Section A contains 6 questions out of which the candidate is required to attempt any
4 questions. Section B contains short case study/application based one question which is compulsory. All questions are carrying equal marks.
SECTION-A
Q.1 (a) Management Accounting has passed through different phases since its inception. Various developments have taken place in the field of management accounting. What are the recent developments that have taken place in the field of management accounting? Explain.
(b) "The Analysis of flow of funds through an organization can be very useful to the management." Elucidate this statement.
[ 7 + 7 ]
Q.2 There are four groups of financial ratios : liquidity, leverage, activity and profitability, Financial analysis is conducted by four types of analysis : management, equity investors. long term creditors and short term creditors. You are required
(a) To explain each type of ratio
(b) To explain the emphasis of each type of analyst, and
(c) To state if the same basic approach to financial analysis should be taken by each group of analyst.[ 5+4+5 ]
Q.3 Prepare the Balance sheet of SKY Ltd.
Stock Velocity........................................ 6
Capital turnover ratio.............................. 2
Fixed assets turnover ratio...................... 4
Gross profit ratio................................... 20%
Debt Collection Period................... 2 months
Creditors Payment Period............... 73 days
the Gross profit was Rs. 60,000 Closing Stock was Rs. 10,000 in excess of opening stock
[14]
Q.4 From the following balance sheets of Star Ltd. as on 31 March 2005 and 31 December 2006 prepare a fund flow statement for the year 2006
| Liabilities | 2005 | 2006 | Assets | 2005 | 2006 |
| Share Capital | 50,000 | 60,000 | Plant and Machinery | 30,000 | 25,000 |
| General reserve | 8,000 | 10,000 | Building | 20,000 | 40,000 |
| P&L A/c | 6,000 | 10,000 | Stock | 26,000 | 20,000 |
| Bank Loan(long term) | 10,000 | 4,000 | Debrors | 13,000 | 20,000 |
| Sundry Creditors | 12,000 | 13,000 | Cash | 5,000 | 6,000 |
| Provision for Taxation | 4,000 | 6,000 | | | |
| Outstanding Expenses | 4,000 | 5,000 | | | |
| | 94,000 | 1,11,000 | | 94,000 | 1,11,000 |
Additional Information:
(i) Interest paid on bank loan amounted to Rs. 1000
(ii) Incomet Tax paid for the year 2006 amounted to Rs. 4,400
(iii) Assets of another company were purchased to 4,400 of Rs.10,000 paid in shares. Assets consisted of land and building Rs. 4,000 and stock Rs.6,000
(iv) A machinery consting Rs. 5,000(W.D.V.Rs. 3,000) was solved for Rs. 1,000, the loss being written of against general reserve.
(v) Closing Stock of 2006 was over valued by Rs. 5,000
(vi) Out standing expenses paid during the year were Rs. 4,500
Q.5 Following Information has been made available from the cost records of Nelson Automotives Ltd. Manufacturing Automotives Components :
| Direct Material | Per Unit |
| X | Rs. 8 |
| Y | Rs. 6 |
| Direct Wages | Per Unit |
| X | 24 hours @ 25 paise per hour |
| Y | 16 hours @ 25 paise per hour |
| Variable Overheads | 150% of direct wages |
| Fixed Overheads(total) | Rs. 750 |
| Selling Price | |
| X | Rs. 25 |
| Y | Rs. 20 |
| The directors want to be acquainted with the desirability of adopting anyone of the follwing alternative sales mixes in the budget for the next period : |
| -- | Product A (Rs) | Product B (Rs) |
| Sales per unit | 32 | 26 |
| Direct Material per unit | 16 | 14 |
| Direct Wages per unit | 5 | 5 |
| Variable expenses cost per unit | 5 | 4 |
| Marginal | 26 | 22 |
| Contribution per unit | 6 | 4 |
(a) 250 units of X and 250 units of Y
(b) 400 Units of Y only
(c) 400 units of X and 100 units of Y
(d) 150 units of X and 350 units of Y
State which of the alternatives sales mixes would you recommend to the management.[14]
Q.6 Explain :
(a) Activity Based Costing
(b) Target Costing
(c) Life Cycle Costing
(d) Kaizen Costing
Q.7 The following is a balance sheet of a partnership firm RAJ and SONS.
| Liabilities | March 04 | March 05 | Assets | March 04 | March 05 |
| Creditors | 40,000 | 40,000 | Cash | 10,000 | 7,000 |
| Partner`s Loan | 25,000 | --- | Debtors | 30,000 | 50,000 |
| Bank Loan | 40,000 | 50,000 | Stock | 35,000 | 25,000 |
| Capital | 1,35,000 | 1,53,000 | Machinery | 80,000 | 55,000 |
| | | | Land | 40,000 | 50,000 |
| | | | Building | 45,000 | 60,000 |
| | 2,40,000 | 2,47,000 | | 2,40,000 | 2,47,000 |
During the year, a machine costing Rs. 10,000 (accumulated depreciation Rs.3,000) was sold for Rs. 5,000. The provisions for depreciation against machinery, as on March 04 was Rs. 25,000 and on March 5 it was Rs. 40,000. Net profit for the year 2005 amounted to Rs.45,000. On the basis, prepare a cash flow statement.
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