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 MANAGEMENT ACCOUNTING-II |
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Hello student`s
Welcome to our Institute. We are here to provide you a Questions Papers for Year 2009 and 2011.
Important Questions are available at the Bottom Of The Page
YEAR-2009 M.B.A-II semester
Time:3 Hours
Total Marks:-70
The Questions paper is divided into two sections.Sections A contains 6 questions out of which the candidate is required to attemp any 4 questions. Section B contains short case study/application based on 1 question which is compulsory.
All questions are compulsory.
SECTION-A
Q.1 (a) "The term cost must be qualified according to the context". Discuss the statement referring it`s importance in managerial decision making.
(b) Distinguish between "Relevant" and "Irrelevant" costs. [10+4]
Q.2 (a) Explain various methods of allocating joint cost to joint and by-products.
(b) Sirohi Ltd. produces a single product. Estimated cost per unit is deltailed below :
| Rs. |
| Direct material................... | 12 |
| Direct wages................... | 8 |
| Direct expenses................... | 4 |
| Variable overhead............. | 2 |
Semi variable overheads at 100% level of activity(10,000 units) is Rs. 60,000 and these expense vary in steps of Rs. 3,000 for every change in output of 1,000 units. Fixed overheads are estimated at Rs. 60,000. Selling price is expected to be Rs. 50 per unit. Prepare flexible budget at 50%, 70%, 90% level of activity. [7+7]
Q.3 (a) Briefly describe the provision of Accounting Standard 3(AS : 3) as regards preparation of cash flow statement.
(b) Two divisions of XYZ Ltd. start the year 2008 with identical balance sheets, but the position changed by the end of the year as shown below :
| | 2008 Division 'A' | 2008 Division 'B' |
| January 1 Rs. | January 31 Rs | January 1 Rs. | January 31 Rs |
| Current : Assets | 6,25,000 | 6,25,000 | 6,25,000 | 6,25,000 |
| Current : Liabilities | 3,75,000 | 3,75,000 | 3,75,000 | 3,75,000 |
| Working capital | 2,50,000 | 2,50,000 | 2,50,000 | 2,50,000 |
| Fixed assets(Net) | 2,50,000 | 6,25,000 | 2,50,000 | 5,00,000 |
| Capital employed | 5,00,000 | 8,75,000 | 5,00,000 | 6,25,000 |
Financed by :
Long-term Debt
Equity share capital
& reserve |
|
| 2,50,000 |
| |
| 5,00,000 | 6,25,000 | 5,00,000 | 6,25,000 |
| 5,00,000 | 8,75,000 | 5,00,000 | 6,25,000 |
You have the following additional information :
(a) Both the divisions have identical earning power.
(b) Each division earns a Net Profit Rs. 60,000 after Taxation @ 50%
(c) Depriciation amounts to Rs. 40,000 for each.
You are required to prepare funds flow statements for each division and comment on the financial policy and practices adopted by each as revealed by the Fund Flow Analysis. [4+10]
Q.4 (a) Distinguish between "Earning Per Share(EPS)" and "Diluted Earning Per Share".
(b) X Co. Ltd. produces four joint products by refining crude vegetable oil. These products have ready market value but the company wants to process them further for maximising profit. From the following information advise which products should be processed further and which should be sold at split off point. Assume all costs incurred after split off points are variable :
| Product | Sales value at split-off point Rs. | Sales value after further processing Rs. | Addtional processing Cost Rs |
| A | 40,000 | 50,000 Rs. | 8,000 |
| B | 25,000 | 30,000 Rs. | 7,000 |
| C | 10,000 | 14,000 Rs. | 5,000 |
Find also the maximum profit if joint cost is Rs. 90,000 [4+10]
Q.5 Given below is the balance sheet of Asatayam Ltd. as at 31-3-2009
| Liabilities | Rs | Assets | Rs. |
Share capital :
4,000 equity shares of
Rs. 100 each fully paid | 4,00,000 |
| 1,000 Equity 'A' share of Rs.100 each Rs.50 per share paid | 50,000 |
Development
rebate reserve | 1,50,000 |
Loans(Unsecured)
| 6,40,000 |
| Creditors (including Rs.10,000 holding lien on some assets) | 2,60,000 |
| | |
| | 15,00,000 |
|
| Land and Building | 1,00,000 |
| Machinery | 4,00,000 |
| Motor vans | 40,000 |
| Furniture | 10,000 |
| Investment (market value Rs.40,000) | 50,000 |
| Stock | 1,00,000 |
| Debtors | 1,90,000 |
| Bank balance | 10,000 |
| Profit and Loss A/c | 6,00,000 |
| | 15,00,000 |
|
The company having turned the corner a scheme of reconstruction was prepared and approved as under : (1) To bring in the books the present market value of land and buildings which had appreciated by 150%; (2) Equity shares to be reduced to Rs. 10 per share paid, the face value remaining the same at Rs. 100 and the equity shareholders paying a call of Rs.50 per share to provide funds for the company working; (3) Unsecured loans to be paid immediately to the extent of Rs. 1,00,000;(4) Unsecured creditors to be paid immediately to the extent of 10% of their claims and they accepting a remission of 20% of their claims;(5) Development rebate reserve, being no longer required, to be transfered to profit and loss account; (6) Investment to be brought to their market value and (7) The amount available as a result of the scheme to be used to write off the debit balance in profit and loss account.
Give journal entries to record the above and give the balance sheet after the reconstruction is effected. [14]
Q.6 (a) Write brief notes on : [4+4+6]
(i) Economic Value Addition(EVA)
(ii) Human resource accounting.
(b) You are furnished with the following information as regards X Ltd. :
(i) Profit Volume Ratio(PVR) for the year 2008, 40%
(ii) Company wants to increase selling price by 10% now in 2009
(iii) Variable cost will be higher by 5% in 2009
(iv) Total fixed will increase from Rs. 3,00,000 in 2008 to Rs. 4,27,300 in 2009
Work out Break Even Point(BEP) in term of sales in 2008 and 2009
SECTION-B
Active manufactures are producing "Dinner Rolls" in batches of 12 dozen using a standard costing system. 200 of these batches were budgeted for a period of 4 week. Total fixed overhead for this level were Rs. 15,000. Standard cost per batch is detailed below.
| Rs. |
| Wheat flour(20 kgs)...................................... | 60 |
| Mixing cooking direct labour hours(15)........... | 150 |
| Direct expenses........................................... | 4 |
| Total factory overhead.............................. | 2 |
Following costs were incurred in producing 225 batches of rolls during the above period. Besides, there were 50 batches in work in progress(WIP) which were 50% completed as regards all elements of cost. However, there was no opening stock of any kind. Actual were as follows. :
| Rs. |
| Direct material consumed 5250 kgs....................... | 13,650 |
| Direct labour hours(Mixing-cooking) 3650........... | 30,660 |
| Actual variable overhead................................. | 11,050 |
| Actual fixed overhead.................................. | 15,500 |
Required :
(i) Prepare a table for all variances relating to material and labour costs.
(ii) Overhead variances using two way and three way analysis of variance. [8+6]
YEAR-2011
Time:3 Hours
Total Marks:-70
The Questions paper is divided into two sections.Sections A contains 6 questions out of which the candidate is required to attemp any 4 questions. Section B contains short case study/application based on 1 question which is compulsory.
All questions are compulsory.
Q.1 "Management Accounting is an application of accounting information for managerial decisions.The managerial decisions now focus on value creation through mergers and acquisitions which in turn rely heavily on published accounting information".What do you infer from the above? Explain the changing role of management accountant along with micro level drivers.{14}
Q.2 (a) From the following information of a company, calculate the break even point and turnover required to earn a profit of Rs. 36,000.
| Fixed overheads = | Rs.1,80,000 |
| Selling price = | Rs.20 |
| Variable cost per unit = | Rs.2 |
If the company is earning a profit of Rs.36,000, express the margin of safety available to it.{5}
(b) There are two companies A Ltd and B Ltd.Both expect same sales volume for the next two years. Company A Ltd. has more proportion of fixed cost in total cost. What should company A Ltd do to reduce fixed cost ? Will increase in turnover help the company to reduce the fixed cost burden ? {3}
(c) Company A Ltd is making large capital expenditures than Company B Ltd. Can we say that profitability of A Ltd is more than that of B Ltd and A Ltd is more efficient than B Ltd? {3}
(d) From the viewpoint of equity shares holders, does that debt in Capital Structure affect both the risk and profitability of the firm. {3}
Q.3 Write short notes on :
(a) ABC
(b) Kaizen costing
(c) EVA
(d) HRA 3,3,4,4
Q.4 (a) What is the difference between Cost control and cost reduction.
(b) ABC Ltd. is engaged in the process engineering industry. During the month of April 2009,2,000 units were introduced in process 'X'. The normal loss is estimated at 5% of input.At the end of the month, 1,400 units had been produced and transferred to process 'Y',460 were incomplete units and 140 units had to be scrapped at the end of the process. The incomplete units reached the following degree of completion :
| Materials : | 75% |
| Labour : | 50% |
| Overheads : | 50% |
| Following are the further details regarding Process 'X' |
| Cost of 2000 units introduced | Rs.58,000 |
| Additional materials consumed | Rs.14,400 |
| Direct Labour | Rs.33,400 |
| Allocated overheads | Rs.16,700 |
| Note : The scrapped units fetched Rs.10 each |
Prepare :
(i) Statement of equivalent production
(ii) Statement of Cost
(iii) Statement of evaluation
(iv) Process 'X' Account
Q.5 (a) 100 skilled workmen, 40 semiskilled workmen and 60 unskilled workmen were to work for 30 weeks to get a contract work completed. The standard weekely wages were Rs.60, Rs.36 and Rs.24 respectively. The job was actually completed in 32 weeks by 80 skilled, 50 semiskilled and 70 unskilled workmen who were paid Rs.64, Rs. 40 and Rs.20 respectively as weekly wages.
Find out the labour cost variance, labour rate variance, labour mix variance and labour efficiency variance. {7}
(b) Ritu international manufactures a product ABC by mixing three raw materials. For every 100 kg of ABC, 125 kgs of materials are used in April 2009 there was an output of 5,600 kg of ABC. The standard and actual particulars of April 2009 are as follows :
| Raw material | Standard | Actual |
| | Mix Price per kg
% Rs. | Units Price per kg
% Rs. |
| Raw material A | 50 40 | 4500 42 |
| Raw material B | 30 20 | 1500 16 |
| Raw material C | 20 10 | 1500 12 |
Calculate all variance. {7}
Q.6 (a) The balance sheet of ABC Ltd is as under :
| Share capital : | Rs. | | Rs. |
5,000 10% Preference
Share of Rs.10 each
fully paid up | 50,000 |
Goodwill |
12,500 |
500 Equity Shares of Rs.
100 each fully paid up | 50,000 | Fixed Assets at cost | 45,000 |
| Liabilities | 7,500 | Stock | 12,000 |
| | | Debtors | 15,000 |
| | | Profit and Loss A/c | 22,500 |
| | 1,07,500 | | 1,07,500 |
The following resolutions were passed and the scheme was duly approved by the court :
(i) Equity Shares of Rs.100 each to be reduced to Rs.50 each fully paid up.
(ii) 10% Preference Shares of Rs.10 each to be reduced to Rs.6 fully paid up 10% preference shares.
(iii) Goodwill and Profit and Loss A/c to be written off completely and the balance of amount to be used to write off Fixed Assets.
Give journal entries and prepare the Balance Sheet after the reduction in Share capital.
(b) Write a note on ZBB. {5}
SECTION-B
Q.7 Draw inference from the following ratios of SPIC Auto Ltd. {14}
| S.No | Particulars | Year1 | Year2 | Year3 |
| 1 | Current Ratio | 2.65 | 2.7 | 3 |
| 2 | Acid Test Ratio | 1.5 | 1.1 | 0.9 |
| 3 | Working capital Turnover | 2.75 | 3.00 | 3.25 |
| 4 | Receivables turnover(times) | 9.83 | 8.41 | 7.2 |
| 5 | Collection Period(days) | 37 | 43 | 50 |
| 6 | Inventory to Working capital | 0.95 | 1 | 1.1 |
| 7 | Inventory Turnover(times) | 6.11 | 6.01 | 5.41 |
| 8 | EPS(Rs) | 5.10 | 4.05 | 2.5 |
| 9 | Net income to net worth | 0.11 | 0.08 | 0.07 |
| 10 | Operating expenses to Net Sales | 0.22 | 0.23 | 0.25 |
| 11 | Sales increase during the year | 0.10 | 0.16 | 0.23 |
| 12 | Cost of goods sold to Net sales | 0.70 | 0.71 | 0.73 |
| 13 | Dividend per share | 3 | 3 | 3 |
| 14 | Fixed Assets to Net Worth | 0.16 | 0.18 | 0.22 |
| 15 | Net Profit to Net Sales | 0.07 | 0.05 | 0.02 |
MA-Most Probable Questions
1. Distinguish between “Normal” and “abnormal” costs.
2. What do you mean by Zero base Budgeting? Write difference between traditional budgeting
and Zero base budgeting.
3. What are the functions of management accounting?
4. Define financial analysis? Describe the tools of financial analysis.
5. What do you mean by “Human Resource Accounting”? What are the objectives of human
resource Accounting.
6. “The term cost must be qualified according to the context”. Discuss the statement referring
it’s importance in managerial decision making.
7. What do you mean by Management Accounting? Explain any five techniques of Management
Accounting.
8. Calculate Material Cost Variance from the following Data:
Standards: 100 kg material for 70 kg finished product @ Rs. 2 per Kg.
Actual: Output 21,000 kg: Material Used 28,000 kg, cost of material Rs. 50,400.
9. What do you mean by activity based costing? Explain how cost is determined under activity based costing
10. Explain various methods of allocating joint cost to joint and by-product.
11. Briefly described the provisions of Accounting Standard 3 (AS:3) as regards preparation of
cash flow statement.
12. Write Brief Notes on:
(a) Economic Value Addition (EVA).
(b) Human Resources Accounting.
13. What do you mean by cost? Explain clearly different elements of cost.
14. How will you use marginal costing for fixation of selling prices?
15. What is product pricing? Explain differential cost pricing and competition oriented pricing
methods.
16. Differentiate between expired cost and unexpired cost.
17. Write the short notes on KAIZEN.
18. Short notes on “Need of process costing method”.
19. What is the percentage of margin of safety? Sales are Rs. 6,00,000; variable cost 75% of
sales and fixed expenses Rs. 1,20,000.
20. What do you mean by performance budgeting?
21. Narrate the objects of amalgamation of companies. Describe main features of Accounting
standard 14 on “Accounting for Amalgamation”.
22. Define management accounting? Explain the functions of management accounting.
23. Differentiate between cost control and cost reduction? Explain any five techniques.
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