DCM3101 MANAGEMENT ACCOUNTING

Description

SESSION	JULY-AUG 2025
PROGRAM	BACHELOR OF COMMERCE (B.COM)
SEMESTER	V
COURSE CODE & NAME	DCM3101 MANAGEMENT ACCOUNTING

 

 

Set – 1

 

 

Q1. Explain in detail the classification of budgets according to

(i) Time

(ii) Functions and

(iii) Flexibility   3+4+3

Ans 1.

 (i) Classification According to Time

Budgets based on time are prepared for different durations depending on business needs. These include:

1. Long-Term Budgets: These budgets typically cover a period of five to ten years and are used for strategic planning. They focus on long-term objectives such as capacity expansion, research and development, or diversification. For example, a manufacturing company may prepare a long-term budget to plan new factory construction.
2. Short-Term Budgets: Covering one year or less, short-term budgets translate long-term goals into operational plans. They are more detailed and are used for day-to-day management of activities like

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Q2. Explain the interlinkage and points of differentiation of management accounting with cost accounting and financial accounting.

Ans 2.

Accounting serves as the language of business, providing critical financial information for planning, control, and decision-making. Within this framework, financial accounting, cost accounting, and management accounting are three closely related but distinct branches. While they share interdependencies, each serves a unique purpose, audience, and focus in the organizational conte

 

Q3. Nexer ltd. manufactures towing equipment and operates a standard costing system. A standard cost sheet for Model A94 is as follows:-

Raw material                                  3kg at Rs.20 per kg

Direct Labour per model                  1 hour at Rs.40 per hour

The actual production of this model for period 1 resulted in the following details:

Number of items produced               2000

Quantity of material used                 6400 Kg

Purchase price of material                Rs.22 per kg

Labour hours worked                       1800 hours

Actual labour rate                             Rs.41 per hour

There was no defective output, and all production was complete.

Calculate Direct Labour Cost variance, Direct Labour rate variances and Direct Labour Efficiency variance for the production period1    4+4+2

Ans 3.

Given

• Standard labour per unit = 1 hour @ ₹40/hr
• Actual output = 2,000 units
• Actual hours (AH) = 1,800 hours
• Actual rate (AR) = ₹41/hr
• Standard rate (SR) = ₹40/hr
• Standard hours for actual output (SH) = 2,000 units × 1 hr = 2,000 hours
• Actual labour

Set – 2

 

 

Q4. “Analysis without interpretation is meaningless and interpretation without analysis is impossible”. Discuss this statement, considering techniques and the objectives of financial statement analysis.

Ans 4.

The statement “Analysis without interpretation is meaningless and interpretation without analysis is impossible” reflects the interdependence of two essential stages in financial statement analysis. Financial analysis is the process of evaluating a company’s financial data to understand its performance, stability, and profitability. However, the process does not end with mere computation of ratios or figures; the results must be interpreted logically to derive meaningful conclusions. In essence, analysis and interpretation are two sides of the same coin—neither can exist

 

 

Q5. From the following balance sheet of Shri Krishna Ltd dated 31.3.2024:

Calculate: –

Current Ratio

Quick ratio

Debt-Equity ratio

Proprietary ratio

Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
Equity Share Capital	40,000	Plant and Machinery	24,000
Capital Reserve	8,000	Land and Buildings	40,000
8% Loan on Mortgage	32,000	Furniture & Fixtures	16,000
Creditors	16,000	Stock	12,000
Bank Overdraft	4,000	Debtors	12,000
Current Taxation	4,000	Investments (Short-term)	4,000
Future Taxation	4,000	Cash in Hand	12,000
Profit and Loss A/C	12,000
	1,20,000		1,20,000

 

2.5*4

Ans 5.

The ratios for Shri Krishna Ltd. (31-03-2024) with clear formulas and workings:

1) Current Ratio

Formula: Current Assets / Current Liabilities

• Current Assets = Stock 12,000 + Debtors 12,000 + Short-term Investments 4,000 + Cash 12,000 = ₹40,000
• Current Liabilities = Creditors 16,000 + Bank Overdraft 4,000 + Current Taxation 4,000 = ₹24,

 

Q6. Explain the concept of responsibility accounting. Also, describe the types of responsibility centre in detail. 2+8     

Ans 6.

Concept of Responsibility Accounting and Types of Responsibility Centres

Responsibility accounting is a vital component of management accounting designed to measure the performance of various divisions, departments, or individuals within an organization. It is based on the principle of assigning specific responsibilities to managers and evaluating their performance in relation to the objectives and resources under their control. Responsibility accounting ensures accountability by linking organizational goals with individual performance, thereby enhancing coordination, efficiency, and control.