DMBA217 MANAGEMENT ACCOUNTING

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SESSION JULY-AUGUST 2025
PROGRAM MASTER OF BUSINESS ADMINISTRATION (MBA)
SEMESTER II
COURSE CODE & NAME DMBA217 MANAGEMENT ACCOUNTING
   
   

 

 

Assignment Set – 1

 

 

Q1. Explain Management Accounting and highlight key challenges of implementing management accounting in organisations?       3+7     

Ans 1.

Management Accounting is a specialized branch of accounting that focuses on providing financial and non-financial information to managers for decision-making, planning, and control purposes. Unlike financial accounting, which records and reports transactions for external users, management accounting emphasizes internal analysis, forecasting, and strategy formulation to enhance business performance. It integrates accounting, finance, and management disciplines to ensure effective organizational control.

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Q2. Discuss the role of Fund Flow Analysis in financial decision-making and explain how does an increase or decrease in working capital impact fund flow? 5+5         

Ans 2.

Fund Flow Analysis is a vital financial tool used to examine the movement of funds within an organization during a specific period. It highlights how financial resources are generated and utilized, providing insights into the company’s financial health and liquidity position. This analysis helps management understand the changes in working capital and assists in strategic financial decision-making.

Role of Fund Flow Analysis in

 

 

Q3. From the following balance sheets of Joy Ltd prepare a cash flow statement with the indirect method.

Liabilities 31/3/24 31/3/25
Equity share capital 3,00,000 4,00,000
8% redeemable preference share capital 1,50,000 1,00,000
General reserve 40,000 70,000
Profit and loss account 30,000 48,000
Proposed dividend 42,000 50,000
Trade payables 55,000 83,000
Bills payable 20,000 16,000
Provision for taxation 40,000 50,000
Total 6,77,000 8,17,000
Assets    
Goodwill 1,15,000 90,000
Land and buildings 2,00,000 1,70,000
Plant 80,000 2,00,000
Trade receivables 1,60,000 2,00,000
Stock 77,000 1,09,000
Bills receivable 20,000 30,000
Cash 15,000 10,000
Bank 10,000 8,000
Total 6,77,000 8,17,000

 

Ans 3.

Cash Flow Statement of Joy Ltd. for the Year Ended 31st March, 2025 (Indirect Method)

Step 1: Calculation of Net Profit for the Year

Profit & Loss Account (Closing ₹48,000 – Opening ₹30,000) = ₹18,000

Add: Transfer to General Reserve = ₹30,000

Add: Proposed

 

 

Assignment Set – 2

 

 

Q4. ‘The profit is the product of the P/V ratio and the margin of safety’. Comment. 10

Ans 4.

The statement “Profit is the product of the P/V ratio and the margin of safety” is an important principle in cost–volume–profit (CVP) analysis, which forms the basis of managerial decision-making in management accounting. The Profit/Volume (P/V) ratio, also known as the contribution margin ratio, measures the relationship between contribution and sales, while the margin of safety indicates

 

Q5. Outline the steps to install a budgetary control system in an organisation, including roles of the Budget Controller and Budget Committee. 6+4     

Ans 5.

Steps to Install a Budgetary Control System

A budgetary control system is a systematic process for planning, coordinating, and controlling financial activities within an organisation. Its installation requires careful structuring, clear communication, and accountability mechanisms.

  1. Establishment of Objectives:

The first step is to clearly define the

 

 

Q6. Standard time = 1.5 hours per unit;

Standard rate (SR) = ₹120 per hour.

Actual output = 600 units;

Actual hours (AH) = 960 hours at Actual rate (AR) = ₹125 per hour.

Compute the following:

Labour Cost Variance (LCV),

Labour Rate Variance (LRV) and

Labour Efficiency Variance (LEV). 3+3+4

Ans 6.

Calculation of Labour Cost Variances

Given:

Particular Symbol Value
Standard time per unit ST 1.5 hours