2006 Acharya Nagarjuna University B.Com Part II - Commerce, Paper III - ADVANCED MANAGEMENT ACCOUNTING - Dec 2006 Question paper
B.Com. DEGREE EXAMINATION, DECEMBER 2006
(Examination at the end of Final Year)
Part II - Commerce
Paper III - ADVANCED MANAGEMENT ACCOUNTING
Time : Three hours Maximum : 100 marks
SECTION A - (4 X 5 = 20 marks)
Answer any FOUR of the following questions.
1. What are the duties and responsibilities of a management accountant?
2. Discuss management information system.
3. Explain the objectives and advantages of budgetary control.
4. State the need for working capital.
5. Write the advantages of funds flow statement.
6. Discuss the importance of P/V ratio with examples.
7. Explain the meaning and significance of variance analysis.
8. Why cash flow statement is given more importance than funds flow statement?
SECTION B - (2 X 10 = 20 marks)
Answer any TWO questions.
All questions carry equal marks.
9. Prepare a flexible overhead budget for levels of output of 20,000 ; 24,000 and 32,000 units respectively. The standard level of activity has been set at 28,000 units. Total overheads incurred at this level would be Rs.42,000 of which variable overheads would be Rs.1.20 per unit. You are required to show
(a) The budgeted total overheads incurred
(b) The overheads incurred per unit manufactured
(c) The budgeted overheads absorbed per unit manufactured
(d) The budgeted total overheads absorbed.
10. From the following information you are required to find out:
(a) Contribution (b) Break-even point in units
(c) Margin of safety and (d) Profit.
Rs.
Total fixed costs 4,500
Total variable costs 7,500
Total sales 15,000
Units sold 5,000
11. XYZ Ltd. has achieved a turnover of Rs.85 crores for the accounting year 2004-05. It is anticipated that the turnover of the company will reach Rs.110 crores for the year 2005-06. The financial position of the company as on 31st March, 2005 is as follows:
Liabilities Rs. in crores Assets Rs. in crore
Equity share capital 10 Land and Buildings 4
Reserves and surplus 4 Plant and Machinery 5
Secured loans 5 Inventories 11
Unsecured loans 3 Receivables 7
Sundry creditors 6 Cash and Bank 3
Provision for taxation 2
30 30
Estimate the working capital requirement for the year 2005-2006.
12. From the following information, calculate:
(a) Material cost variance
(b) Material price variance, and
(c) Material usage variance.
Standard output 100 units
Standard material per unit 3lb
Standard price per lb Rs.2
Actual output 80 units
Actual price Rs.2.50
Actual materials used 250 lb
SECTION C - (3 X 20 = 60 marks)
Answer any THREE of the following questions.
All questions carry equal marks.
13. Balance Sheet of A and B on 1st January 2005 and 31st December 2005 were as follows:
Balance Sheet
Liabilities 1.1.2005 31.12.2005 Assets 1.1.2005 31.12.2005
Rs. Rs. Rs. Rs.
Creditors 40,000 44,000 Cash 10,000 7,000
Mrs. A.s loan 25,000 -------- Debtors 30,000 50,000
Loans from bank 40,000 50,000 Stock 35,000 25,000
Capital 1,25,000 1,53,000 Machinery 80,000 55,000
Land 40,000 50,000
Buildings 35,000 60,000
2,30,000 2,47,000 2,30,000 2,47,000
During the year a machine costing Rs.10,000 (accumulated depreciation Rs.3,000) sold for Rs.5,000. The provision for depreciation against machinery as on 1.1.2005 was Rs.25,000 and on 31.12.2005 Rs.40,000. Net profit for the year 2005 amounted to Rs.45,000. You are required to prepare cash flow statement.
14. XYZ Company manufactures a product ABC by mixing three raw materials. For every 100 kg of ABC, 125kg of raw materials are used. In April, 2005, there was an output of 5,600 kg of ABC. The standard and actual particulars of April 2005 are as follows:
Standard Actual
Raw material Mix Price/kg Mix Price/kg
I 50 40 60 42
II 30 20 20 16
III 20 10 20 12
Calculate all variances.
15. The budgeted results of A Co. Ltd. include.
Product Sales value P/V ratio
Rs.
A 50,000 50%
B 80,000 40%
O 1,20,000 30%
Fixed overheads for the (year) period Rs.1,00,000
The directors are worried about the results of the Company. They have requested you to prepare a statement showing the amount of loss expected and recommend a change in the sales of each product or in total mix which will eliminate the expected loss.
16. The following information relates to the productive activities of G Ltd. for three months ended 31.12.2005:
Rs.
Fixed expenses:
Management salaries 2,10,000
Rent and Taxes 1,40,000
Depreciation on machinery 1,75,000
Sundry office expenses 2,22,500
7,47,500
Semi-Variable expenses at 50% capacity:
Plant maintenance 62,500
Indirect labour 2,47,500
Sales men.s salaries 72,500
Sundry expenses 65,000
4,47,500
Variable expenses at 50% capacity:
Materials 6,00,000
Labour 6,40,000
Salesmen.s commission 95,000
13,35,000
It is further noted that semi-variable expenses remain constant between 40% and 70% capacity, increase by 10% of the above figures between 70% and 85% capacity and increase by 15% of the above figures between 85% and 100% capacity. Fixed expenses remain constant whatever the level of activity may be. Sales at 60% capacity are Rs.25,50,000 ; at 80% capacity Rs.34,00,000 and at 100% capacity Rs.42,50,000. Assuming that all items produced are sold, prepare a flexible budget at 60% ; 80% and 100% production capacity.
17. The following are the summarised Balance Sheets of M/s. Vivek Ltd. on 31.12.2004 and 31.12.2005:
Balance Sheet
31.12.2004 31.12.2005 31.12.2004 31.12.2005
Liabilities Rs. Rs. Assets Rs. Rs.
Share Capital 12,00,000 16,00,000 Plant and Machinery
Debentures 4,00,000 6,00,000 (at cost) 8,00,000 12,90,000
P & L a/c. 2,50,000 5,00,000 Land and Buildings
Creditors 2,30,000 1,80,000 (at cost) 6,00,000 8,00,000
Provision for: Stock 6,00,000 7,00,000
Bad and Doubtful Debts 12,000 6,000 Bank 40,000 80,000
Depreciation on Land Preliminary Expenses 14,000 12,000
and Buildings 40,000 48,000 Debtors 1,38,000 1,22,000
Depreciation on Plant
and Machinery 60,000 70,000
21,92,000 30,04,000 21,92,000 30,04,000
Additional information:
(a) During the year, a part of machinery, costing Rs.1,40,000 (accumulated depreciation there on Rs.4,000) was sold for Rs.12,000.
(b) Dividend for Rs.1,00,000 was paid during the year.
Ascertain:
(i) Change in working capital for 2005.
(ii) funds flow statement for 2005.
18. The following information is received from the books of Mehta & Co.:
Normal overhead rate Rs.3
Actual hours operated 20,000
Allowed hours for actual production 21,000
Allowed overheads for budgeted hours Rs.70,000
Actual overheads Rs.72,000
Calculate:
(a) Overhead budget variance
(b) Volume variance
(c) Efficiency variance
(d) Capacity variance and
(e) Total overhead cost variance.
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