[This question paper contains 12 printed pages.

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Your RolI No

Sr. No. of Quesfion Paper : 2654 C

Unique Paper Code 224t750t

Name of the Paper Management Accounting

Name of the Course B.Com. (H) Part-III

Semester

Duration : 3 Hours Maximum Marks : 75

Ins tructions for Canilidates

1 Write your Roll No. on the top immediately on receipt of this question paper.

2. Attempt any five questions.

3. All questions carry equal marks.

4 Use of simple calculator is allowed.

5 Answors may be written either in English or Hindi; but the same medium should
be used throughout the paper.

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2654
1 "Management accountant collect, analyzes and presents the accounting and other
useful information in such a way as to assist the management in the planning;
decision making and control. Elucidate.

Or

Explain the distinction between cost control and cost reduction. Enumerate some
of the important tools/techniques of cost reduction and cost control.

2 The Budget Manager of a company is preparing a flexible budget for the coming
accounting year. The.corrpany produces a single product. The following information
ii provided:

Direct material costs Rs.l20 per unit. Direct labour averages Rs.50 per hour and
requires 1.8 hours to produce one unit of the product. Sul".rn"n are paid a
commission of Rs. l0 per unit sold. other variable selling and adminisiration
expenses are estimated as Rs.S per unit. Fixed selling and administration expensbs
amount 1o Rs.2,50,000 per year.

Manufachrring overhead has been estimated in the following amounts under given
conditions of volume:

Volume of production & Sale (units) 12,000 15,000

Expenses Rs. Rs.

Indirect materials ') 40 000 3,00,000

lndirect labour 1,20,000 1,50,000

Inspection 84,000 I 05 000

Maintenance 60 000 69,000

Supervision 1,40,000 1,55,000

Depreciation- plant & equipment 1,00,000 1,00,000

Engineering iervices 80,000 80,000

Total manufacturing overhead 814,(m0 959,000

265A 3

Prepare a budget of total cost at 14,000 units of output.

Or

ABC Ltd. newly started company wishes to prepare cash budget from January.
a
Prepare a cash budget for the first six months from the following estimated revenue
and expenses.

Selling &
Production
Month ToaI Sales Materials Wages Distribution
Overheads
Overheads
Jut 20,000 20,000 4,000 3,2N E00

Feb 22,0W 14,000 4,400 3,300 900

March 28,000 14,000 4,600 3,400 900

April 36,000 22,000 4,600 3,500 1,000

May 30,000 20,000 4,000 3,200 900

Jrme tJ.000 25,000 5,000 3,600 1,200

(i) Cash balance on January, I was Rs. 10,000.

(ii) New machinery is to be installed at Rs.20,000 on crehit, to be repaid by

two equal instalments in March. and April.

(iii) Sales commission il @ 5% on total sales is to be paid withiri a month

following actual sales.

(iv) Rs.10,000 being the amount of 2nd call may be received in March.

(v) Share premium amounting to Rs.2,000 is also obtainable with the 2nd call

(vi) Period of credit allowed by suppliers - 2 months

(vii) Period of credit allowed to customers - I month

(viii) Delay in payment of overheads - 1 month

(ix) Delay in payment of wages - 1/2 month

(x) Assume cash sales to be 50% of total sales

265A 4

J SP Limited produces a single product and standard costing system is followed in

the organization. The standard cost card of the product shows the following cost
of material and labour per unit :

Particulars Rs.
Direct materials 20 Rs.2

E
40
Direct labour (4 hours Rs. 16 per hour)

Budgeted output for the third quarter of a year was 2,000 units. Actual output
is 1,800 units. Actual costs for the quarter are as follows:
Production and Sale 2,000 units 1,800 units

Direct Materials 10,000 Kg.@ Rs.2 per Kg 10,500 Kg @ Rs.2.50 per Kg

Direct Labour 8,000 hours @Rs. l6 per hour 7,400 @Rs. I 8 per hour

You are required to calculate

(i) Material Cost Variance

(ii) Material Price Variance

(iii) Material Usage Variance

(iv) Labour Cost Variance

(v) Labour Rate Variance

(vi) Labour Efficiency Variance

Or

ABC Industries provides the following inforrnation from their records : Standard
mix for production of l0 kgs. of a product is :

Material Quantity (kgs.) Rate per kg.(Rs.)

A 4 6
B 8 4
265A 5

During the April,2022, 1.000 \gs. of the product were produced. The actual
consumption of material was as under:

Material Quantity (kgs.) Rate per kg.(Rs.)

A 500 7

B 760 5

You are required to calculate

(i) Material Cost Variance

(ii) Material Price Variance
(iii) Material Usage Variance

(iv) Material Mix Variance

(v) Material Ycild Variance

4 (a) What do mean by P/V ratio. Discuss its importance. How can it be
improved? (5)

(b) ABC manufacturing company provides you the following financial information
about their spectacles frames business which they started two years ago:

Financial Year Financial Year

2020-21 (Rs.) 2021-22 (Rs.)

Total Sales 40,000 60,000

Total Cost 35 500 43,200

You are required to compute :

(i) P/V ratio

(ii) Break-even sales level

(iii) Margin of safety (10)

Or
265A 6

SR Steel Company produces three grades of steel namely Super, Good and
Normal. Each ofthese three grades ofsteel are high in demand and the company
is able to sell whatever is produced.

The processing hours is a bottle-neck. The company is operating at 100% capacity.

The variable conversion cost par unit is at Rs.l00 per process hour. The fixed
cost is Rs.24,00,000. In addition, the Cost Accountant was able to extract the
following information about the three grades of steel.

Product Super Good Normal

Budgeted Production (units) 3,000 3 000 3,000
Selli ng price per unit (Rs.) 4,500 3,600 3,000

Direct Materials cost per unit (Rs.) 1,200 1,500 1,400

Process hours per unit 20 l2 l0

Required :

(i) Determine the contribution margin per unit and statement of profitability at
budgeted operations.

(ii) Present an analysis to management showing the relative profitability of tkee

grades of steel assuming processing hours is a bottle-neck.

(iii) Management wishes to improve profitability by changing the product mix.

Assuming as per managemett policy the prgduction of any product cannot
exceeds 4,000 units and a minimum of 1,000 units ofeach grade of steel has
to b9 produced. Find the most profitable mix as per management policy and
profit thereon.

5. A company currently operating at 80%o.capacity hg.s the following particulars :

Rs.
Sales 32,00,000
Direct materials 10,00,000
Direct labour 4,00,000
Variable overheads 2,00,000
Fixed overheads 13,00,000
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Sales 32,00,000
Direct materials 10,00,000
Direct labour 4 00 000
Variable overheads 2,00,000
Fixed overheads t3,00,000

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Financial Year Financial Year
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Total Sales 40 000 60,000
Total Cost 35,500 43,200

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Product Supcr Good Normal

Budgeted Production (units) 3,000 3,000 3,000

Selling price per unit (Rs.) 4,500 3 600 3,000

Direct Materials cost per unit (Rs.) t,200 t,500 1,400

Process hours per unit ' 20 '12 l0

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Material Quantiry Ggs ) Rate per kg.(Rs.)

A 4 6

B 8 4

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B 760 5

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Particulars Rs.
Direct materialq (?0 kg. @ Rs. 2 per kg) 40
Direct labour (4 hours @ Rs. 16 per hour) 64

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Direct Materials 10,000 Kg.@ Rs.2 per Kg 10,500 Kg.@ Rs.2.50 per Kg

Direct Labour 8,000 hours @Rs.16 per hour 7,400 @Rs. l8 per hour
2654 7

An export order has beoa received that would utilise half the capacity of the
factory. The order cannot be isplit, i.e., it has to be taken in full and executed at
l0% below the normal domestic prices, or rejected totally. The alternatives
available te the management are :

(i) Reject the order and continue with the domestic sales only (as at present);
or
(ii) Accept the order, split capacity betw.een overseas and domestic sales and
turn away excess domestic demand
Prepare, a comprehensive statement of profitability and suggest the best
altemalive.

Or

Briefly explain the any two of the following statements :

(i) Responsibility accounting is an important device for control.
(ii) Performance of a division can be measured on number of criteria.
(iv) Marginal costing and differential costing is one and same technique

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2654 8

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Volume of production & Sale (units) 12,0,00 15,000

Expenses Rs. Rs-

Indirect materials 2,40,M 3,00,000

Indirect labour 1,20,000 1,50,000

Inspection 84 000 I 05 000

Maintenance 60,000 69,000

Supervision 1,40,000 1,55,000

Depreciation- plant & equipm.ent 1 00 000 I 00 000

Engineeriag services 80 000 80,000

Total manufacturing overherd 8,24,000 959,fi)o

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Production
Selling &
Month Total Sales Materials Wages Distsibution
Overheads
Overheads
Jan 20,000 20,000 4,000 3,200 . E00

Feb 22,000 14,000 4,400 3,300 900

Mar'ch 2r,000 14,000 4,600 3,400 900

Aprit 36,000 22,000 4,600 3,500 I 000

May 30,000 20,000 4,000 3,200 900

Jrme 40 000 25,000 5,000 3,600 r,2w