DCM 3101 MANAGEMENT ACCOUNTING

Description

SESSION	March 2024
PROGRAM	Bachelor of Commerce (B.Com)
SEMESTER	5
course CODE & NAME	Dcm3101 – management accounting

 

 

Assignment Set – 1

 

1. The following data is available of a manufacturing company for a yearly period at a 50% capacity level:

Fixed Expenses:	(Rs. Lakhs)
Wages & Salaries	9.50
Rent, rates, and taxes	6.60
Depreciation	7.40
Sundry administrative expenses	6.50
Semi- Variable Expenses (at 50% Capacity)
Maintenance and repairs	3.50
Indirect Labour	7.90
Sales department salaries	3.80
Sundry administrative expenses	2.80
Variable expenses (at 50% Capacity)
Materials	21.70
Labour	20.40
Other expenses	7.90
	98.00

 

Assume that the fixed expenses remain constant for all levels of production, and semi-variable expenses remain constant between 45% and 65% of capacity, increasing by 10% between 66% and 79% capacity and by 20% between 80% and 100% capacity. Sales at various levels are:

50% Capacity	100 Lakhs
60% Capacity	120 Lakhs
75% Capacity	150 Lakhs
100% Capacity	200 Lakhs

   

Prepare a flexible budget for the year and forecast the profits at 60%, 75%, and 100% capacity.

Ans 1.

To calculate the profits at 60%, 75%, and 100% capacity levels, we’ll start by calculating the total expenses at each capacity level. These expenses include fixed, semi-variable, and variable expenses.

Fixed Expenses

These expenses are constant regardless of the capacity level:

Here are the detailed tables

 

 

2. Describe the functions of management accounting. Also, elaborate on how management accounting interfaces with financial accounting and cost accounting branches.

Ans 2.

Functions of Management Accounting

Management accounting, a key branch of accounting, plays a crucial role in decision-making, planning, and controlling processes within an organization. Its primary functions are to assist management in financial planning and analysis, make strategic decisions, and optimize day-to-day operations.

Decision Making One of the core functions of management accounting is aiding in decision making. Management accountants analyze financial information to project future trends and outcomes. Their reports help managers make informed decisions regarding product development, pricing

 

 

3. The following figures of sales and profits for two periods are available in respect of a concern:

	Sales (Rs.)	Profit (Rs.)
Period I	100000	15000
Period II	120000	23000

 

You are required to find out:

1. P/V Ratio
2. Fixed cost
3. Break-even point
4. Profit at an estimated sale of Rs.125000
5. Sales required to earn a profit of Rs.20000

Ans 3.

To solve these questions, let’s go through a systematic analysis:

Step 1: Calculate the P/V Ratio

The P/V Ratio (Profit/Volume Ratio), also known as the Contribution Margin Ratio, is calculated using the change in profits and sales between two periods. This ratio represents the contribution per unit of

 

 

Assignment Set – 2

 

 

4. Write a brief note on:
5. Cash flow statement.
6. Responsibility accounting.

Ans 4.

Cash Flow Statement

A cash flow statement is a financial report that provides a detailed analysis of the inflows and outflows of cash in an organization during a specific period. This statement is crucial for assessing the liquidity and financial flexibility of a company. Unlike the income statement, which is based on the accrual principle that recognizes income when earned and expenses when incurred, the cash flow statement reflects only actual cash transactions. It helps stakeholders understand how operations are funded and how funds are being used.

The cash flow statement is divided into three main parts: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities. Cash flows from operati

 

5. The following is the Balance sheet of Praveen Ltd. as on 31^st Dec 2022 and 31^st Dec 2023:

Liabilities	2022	2023	Assets	2022	2023
Share capital	2,00,000	2,50,000	Land & Building	2,00,000	1,90,000
General Reserve	50,000	60,000	Plant	1,50,000	1,74,000
Profit & Loss A/c	30,500	30,600	Stock	1,00,000	74,000
Bank Loan (Short Term)	70,000	–	Debtors	80,000	64,200
Creditors	1,50,000	1,35,200	Cash	500	600
Provision for taxation	30,000	35,000	Bank	–	8,000
	5,30,500	5,10,800		5,30,500	5,10,800

 

Additional information:

2023. Depreciation was written off on plant Rs.14,000 in 2023.
2024. Dividend of Rs.20,000 was paid in2023.
2025. Income tax provision made during the year was Rs.25,000
2026. A piece of land has been sold during the year at cost.

You are required to prepare a Funds flow statement showing sources and application of funds for the year 2023 and a schedule of changes in working capital.

Ans 5.

Step 1: Prepare the Funds Flow Statement for 2023

To prepare the Funds Flow Statement, we need to identify the sources of funds and the applications of funds for the year 2023.

Sources of Funds:

1. Opening Balance: The

 

6. Describe the objectives of preparing management reports. Also, mention the broad classification of types of management reports.

Ans 6.

Objectives of Preparing Management Reports

Facilitating Decision-Making

One of the primary objectives of preparing management reports is to facilitate decision-making within an organization. These reports provide managers with timely, accurate, and relevant information that helps them make informed decisions about strategic planning, resource allocation, and operational improvements. By analyzing these reports, managers can identify trends, predict future outcomes, and decide on the best courses of action to achieve organizational goals.

Monitoring Performance