DCM 3101 MANAGEMENT ACCOUNTING

Description

SESSION	DEC 2023
PROGRAM	BACHELOR OF COMMERCE
SEMESTER	V
COURSE CODE & NAME	DCM 3101 – MANAGEMENT ACCOUNTING

 

 

Assignment Set – 1

 

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

Ans 1.

Introduction

Management accounting, cost accounting, and financial accounting are three essential branches of accounting, each serving distinct purposes within an organization. While they share some similarities, they also have significant differences in terms of focus, audience, and objectives.

Interlinkage between Management Accounting, Cost Accounting, and Financial Accounting Its Half solved only

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2. The competing companies P Ltd. and Q Ltd. produce and sell the same type of product in the same market. For the year ended March 2021 their forecasted profit and loss accounts are as follows:

	Rs.	P Ltd.	Rs.	Q Ltd.
Sales		300000		300000
Less: Variable Cost	200000		225000
Fixed Cost	50000	(250000)	25000	(250000)
Estimated Profit		50000		50000

 

You are required to Calculate:

Profit Volume ratio, Break-even point  and Margin of safety of each business

State volume at which each business will earn a profit of Rs.30000

Ans 2.

To calculate the Profit Volume ratio, Break-even point, Margin of safety, and the volume at which each business will earn a profit of Rs.30,000, let’s follow these steps:

1. Profit Volume

 

 

3. Describe the concept of marginal costing. Enlist the advantages and limitations of marginal costing.

Ans 3.

Concept of Marginal Costing:

Marginal costing, also known as variable costing, is a costing technique where only variable costs are considered while determining the cost of a product or service. Under marginal costing, fixed costs are treated as period costs and are not allocated to products or services. Instead, only variable costs such as direct materials, direct labor, and variable overheads are attributed to the cost of production. The key principle of marginal costing is to segregate costs into fixed

 

Assignment Set – 2

 

 

1. Following are the Balance sheets of Sansar Indutsries Ltd. for the year ending December 31, 2020 and 2021

Particulars	2020	2021
Equity and Liabilities
Shareholders’ funds:
Equity share capital	400000	600000
Reserves and surplus	312000	354000
Non-Current Liabilities:
Debentures	50000	100000
Long-Term Loans on Mortgage	150000	255000
Current Liabilities:
Accounts Payable	255000	117000
Other Current Liabilities	7000	10000
Total	11,74,000	14,36,000
Assets
Non-Current Assets:
Fixed Assets:
Land & Buildings	270000	170000
Plant & Machinery	310000	786000
Furniture and Fixture	9000	18000
Other Fixed assets	20000	30000
Long-Term Loans given	46000	59000
Current Assets:
Cash in hand and at Bank	118000	10000
Receivables	209000	190000
Inventory	160000	130000
Prepaid expenses	3000	3000
Other Current assets	29000	40000
Total	11,74,000	14,36,000

 

Analyse the financial position of the company with the help of Common-Size Balance sheet.

Ans 1.

A common-size balance sheet is a financial statement that expresses each line item as a percentage of total assets. It helps in analyzing the financial position of a company by highlighting the relative proportions of different assets, liabilities, and equity components. Let’s prepare the common-size balance sheets for Sansar Industries Ltd. for the years ending December 31, 2020, and 2021:

Common-Size Balance Sheet

 

2. The financial statements of the company for the past two years are summarised below:

Particulars	2020	2021
Assets:
Cash	Nil	2000
Trade debtors	55000	40000
Stock-in-trade	55000	45000
Fixed Assets (Net)	137000	145000
	247000	232000
Liabilities:
Trade creditors	32000	25000
Provision for taxation	11000	9000
Bank Overdraft	12000	Nil
Paid-Up capital	150000	150000
General reserve	30000	35000
P& L Appropriation A/c	12000	13000
	247000	232000

 

Net income Statement

		2020		2021
Sales		400000		375000
Less: COGS	245000		225000
Other expenses	130000	(375000)	132000	(357000)
Net Profit		25000		18000

 

Opening stock on 1st January 2020 was Rs.60000

Calculate the following ratios for two years: –

1. Current Ratio
2. Quick ratio
3. Stock Turnover ratio
4. Debtors’ turnover ratio
5. Average collection period
6. Assume 360 days in a year

 

Ans 2.

Let’s calculate the requested ratios for the years 2020 and 2021:

1. Current Ratio

Current Ratio=Current Assets / Current Liabilities

2. Quick Ratio:

Quick Ratio= (Current Assets−Inventory) / Current Liabilities

3. Stock

 

 

 

3. Describe the components of responsibility accounting. Also, explain the advantages and limitations of responsibility accounting.

Ans 3.

Responsibility accounting is a management control system that delegates authority and assigns responsibility to various segments of an organization. It is primarily concerned with evaluating the performance of responsibility centers within an organization. These centers could be departments, divisions, or even individuals, each responsible for specific activities or functions. The components of responsibility accounting typically include:

Budgets: Budgets are the