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Description
| 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.
- 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 |


