AD–909

B.Com. Part—III (Semester—VI) Examination

MANAGEMENT ACCOUNTING
(Commerce)

Time : Three Hours] [Maximum Marks : 80

13
Note :— All Sections are compulsory.

4 SECTION—A
(Multiple Choice Questions)
1. Which are the features of Management Accounting ?

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(a) Forecasting (b) Improve Efficiency
(c) Assist Management (d) All of the above
2. The term Management Accounting was first coined in :
(a) 1950 (b) 1945
(c) 1955 (d) 1960
3. The use of Management Accounting is :
(a) Optional
1 3
(b) Legally obligatory 4
(c) Compulsory
(d) Compulsory to some and optional to others
4. Management Accounting can be stated on extension of :
(a) Cost Accounting (b) Financial Accounting
(c) Responsibility Accounting (d) All of the above
5. What is margin of safety, if Sales is 10,000 units and B.E.P. is 5,000 units ?
(a) 25,000 units (b) 5,000 units
(c) Rs. 5,000 (d) Rs. 25,000
6. Given Selling Price is Rs. 20 per unit, Variable Cost is Rs. 12 per unit and Fixed Cost is
Rs. 10,000. What is Break-Even-Point ?
(a) 1,000 units (b) 1,250 units

13 3
(c) 2,500 units (d) None of the above
7. 4
Profit on Sales is measured as : 4 1
(a) Sales × P/V Ratio – Fixed Cost (b) Sales × P/V Ratio + Fixed Cost
(c) Sales + P/V Ratio + Fixed Cost (d) None of the above

LT—1084 1 (Contd.)
8. Break Even Point is :
(a) Profit (b) Loss
(c) No Profit No Loss (d) None of the above
9. The ideal level of Current Ratio is :
(a) 4 : 2 (b) 2 : 1
(c) Both (a) and (b) (d) None of the above

3
10. Given Sales is Rs. 60,000 and Gross Profit is Rs. 30,000 the Gross Profit Ratio is :
1
4
(a) 24% (b) 25%
(c) 50% (d) 44%
11. Determine Stock Turnover Ratio if, Opening Stock is Rs. 30,000, Closing Stock is

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Rs. 30,000, Sales is Rs. 4,00,000 and Gross Profit Ratio is 25% on Sales :
(a) 30 times (b) 10 times
(c) 8 times (d) 12 times
12. What will be the Gross Profit Ratio, if total Sales is Rs. 5,20,000, Cost of Net Goods Sold
is Rs. 4,00,000 and Sales Return is Rs. 20,000 ?
(a) 13% (b) 28%
(c) 26% (d) 20%
13. Budget is prepared for a :
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(a) Indefinite period (b) Definite period
(c) Period of one year (d) Six months
14. Budget period depends upon :
(a) The type of budget (b) The nature of business
(c) The length of trade cycles (d) All of the above
15. What is included in Cash Receipts :
(a) Cash Balance (b) Cash Sales
(c) Collection from receivables (d) All of the above
16. Which of the following will not appear in a cash budget ?
(a) Depreciation of Machinery (b) Wages
(c) Sales (d) Purchase

3 3
17. In order to prepare a flexible budget, items of anticipated expenditures are classified into
1 1
4
_____ classes.
(a) Five (b) Three
4
(c) Two (d) None of the above

LT—1084 2 (Contd.)
18. In _____ actual performance can easily be compared due to availability of budgets at
different levels of activity.
(a) Fixed Budget (b) Flexible Budget
(c) Both (a) and (b) (d) None of the above
19. Budgetary Control System defines the objective and policies of the _____ Department.
(a) Marketing (b) Finance
(c) Production (d) All of the above

1 3
20. Which of the following is/are objectives of budgetary control ?
4
(a) Planning (b) Co-ordination
(c) Control (d) All of the above 1×20=20

3
SECTION—B

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1. Explain meaning of Management Accounting. 4
OR
Write objectives of Management Accounting. 4
2. From the following data calculate BEP in units and amount :
Fixed Exp. 2,00,000, Variable Exp. Rs. 5 per unit, Selling Price Rs. 10 per unit. 4
OR

3
From the following particulars calculate the BEP in units :
1
4
Fixed Exp. Rs. 60,000, Variable Cost Rs. 12 per unit, Selling price Rs. 18 per unit. 4
3. Calculate Net Profit Ratio if Sales are Rs. 3,60,000, Gross Profit Rs. 1,44,000, Net Profit
Rs. 48,000. 4
OR
From the following information calculate Gross Profit Ratio :
Sales – 5,00,000, Net Profit – 50,000, Administrative Exp. – 1,50,000, Selling
Exp. – 45,000. 4
4. Write any five objectives of Budgets. 4
OR
Write Proforma of Cash Budget. 4
5. Write any five limitations of Budgetary Control. 4
OR
Write Proforma of Flexible Budget. 4

1 3 SECTION—C
1 3
1. 4
Write Nature and Scope of Management Accounting. 4 8
OR
Write difference between Management Accounting and Financial Accounting. 8

LT—1084 3 (Contd.)
2. From the following information of Balaji Co. Ltd. you will calculate :
(a) P/V/Ratio
(b) BEP
(c) Margin of Safety
Particulars Year 2022 Year 2023
Rs. Rs.
Sales 4,00,000 5,00,000

4 13 Fixed Cost
Variable Cost
2,00,000
1,00,000
3,00,000
1,80,000 8
OR
From the following information of Vinod Co. Ltd. you will calculate :

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(a) P/V/ Ratio
(b) BEP
(c) Net profit from the sales of Rs. 1,50,000
(d) Required Sales for Net Profit Rs. 40,000
Sales – 1,25,000, Variable Cost – 45,000, Fixed Cost – 50,000 8
3. The Profit and Loss Account of Vijay Motors Ltd. as on 30th June, 2022 is as follows :
Trading and Profit and Loss Account

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Particulars Amount Particulars Amount
To Opening Stock
To Purchase
4
99,500
4,45,250
By Sales
By Closing Stock
8,50,000
1,49,000
To Direct Expenses 14,250
To Gross Profit 3,40,000
9,99,000 9,99,000
To Selling & Distribution Exp. 30,000 By Gross Profit 3,40,000
To Administrative Exp. 1,50,000 By Non-Operating Income :
To Financial Exp. 15,000 Interest 3,000
To Non-Operating Exp. : Profit on Sale of Share 6,000
Loss by Fire 4,000
To Net Profit 1,50,000
3,49,000 3,49,000
You have to calculate :
(i) Gross Profit Ratio

1 3
(ii) Net Profit Ratio
1 3
4
(iii) Operating Ratio 4
(iv) Stock Turn Over Ratio. 8
OR

LT—1084 4 (Contd.)
 You are given the Balance Sheet of Manoj Co. Ltd. for the year ending December, 2022 :

Balance Sheet

As on 31st December, 2022

Liabilities Rs. Assets Rs.
Share Capital : Land and Building 50,000
5,000 Equity Shares 50,000 Plant and Machinery 20,000
1 3
4 General Reserve 40,000 Stock 15,000

Profit and Loss A/c 15,000 Debtors 25,000

3
Creditors 20,000 Bank Balance 15,000

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1,25,000 1,25,000
Calculate the following ratios :
(i) Current Ratio

(ii) Quick Ratio

(iii) Proprietary Ratio. 8
4. Amol Company wishes to arrange overdraft facilities with its bankers during the period from
1 3
4
March to May when it will be manufacturing most for stock. Prepare Cash Budget for the
above period from the following data indicating the extent of bank facilities the company
will require at the end of each month :
Months Sales (Rs.) Purchase (Rs.) Wages (Rs.)
January 36,000 24,960 2,400
February 38,400 28,800 2,800
March 21,600 48,600 2,200

April 34,800 49,200 2,000

May 25,200 53,600 3,000
Additional Information :
(i) 50% credit sales are realized in the month following sales and the remaining 50% in
the second month following.

1 3
(ii) Creditors are paid in the month following month of purchase.
1 3
4
(iii) Cash as on 1st March, 2022 is Rs. 25,000. 4 8

OR

LT—1084 5 (Contd.)
 Summarized below are the Income and Expenditure of Priyanka Co. Ltd. forecast for the
month of March to August, 2022 :
Months Credit Credit Wages Manufacturing Office Selling
Sales Purchase Expenses Expenses Expenses
Rs. Rs. Rs. Rs. Rs. Rs.
March 60,000 36,000 9,000 4,000 2,000 4,000

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April 62,000 38,000 8,000 3,000 1,500 5,000

4
May 64,000 33,000 10,000 4,500 2,500 4,500
June 58,000 35,000 8,500 3,500 2,000 3,500

3
July 56,000 39,000 9,500 4,000 1,000 4,500

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August 60,000 34,000 8,000 3,000 1,500 4,500
Additional Information :
(1) Plant Costing Rs. 16,000 is due for delivery in July payable 10% on delivery and the
balance after three months.
(2) Advance Tax of Rs. 8,000 is payable in March and June each.
(3) Period of credit allowed by suppliers 2 months and to customers 1 month.

3
(4) Lag in payment of manufacturing expenses ½ month.
1
4
(5) Lag in payment of all other expenses 1 month.
You are required to prepare a Cash Budget for three months starting on 1st May, 2022 when
there was a cash balance of Rs. 8,000. 8
5. In Rajaram Manufacturing Company the expenses for the production of 5,000 units are given
below :
Particulars Per Unit Rs.
Material 50
Labour 20
Variable Overheads 15
Fixed Overheads (Rs. 50,000) 10
Administrative Exp. (5% Variable) 10
Selling Exp. (20% Fixed) 6

13 3
Distribution Exp. (10% Fixed) 5

4 Total Cost of Sales 116

4 1
You are required to prepare a flexible budget for the production of 7,000 Units. 8
OR

LT—1084 6 (Contd.)
 The following information at 50% capacity is given. Prepare a flexible budget and forecast
the profit or loss at 60%, 70% and 90% capacity.
Particulars Expenses at 50% Capacity
Fixed Expenses :
Salaries 50,000
Rent and Taxes 40,000

1 3Depreciation 60,000
4 Administrative Expenses 70,000
Variable Expenses :

3
Materials 2,00,000

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Labour 2,50,000
Others 40,000
Semi-Variable Expenses :
Repairs 1,00,000
Indirect Labour 1,50,000
Others
Additional Information : 4 13 90,000

(i) It is estimated that fixed expenses will remain constant at all capacities.
(ii) Semi-Variable Expenses will not change between 45% and 60% capacity, will rise by
10% between 60% and 75% capacity, a further increase of 5% when capacity crosses
75%.
(iii) Estimated sales at various level of capacity are : 60% Capacity Sales Rs. 11,00,000
at 70% Capacity Sales Rs. 13,00,000 and 90% Capacity Sales Rs. 15,00,000. 8

1 3 1 3
4 4

LT—1084 7 25