DMBA217 MANAGEMENT ACCOUNTING

Description

SESSION	JULY-AUGUST 2026
PROGRAM	MASTER OF BUSINESS ADMINISTRATION (MBA)
SEMESTER	II
COURSE CODE & NAME	DMBA217 MANAGEMENT ACCOUNTING

 

Assignment Set – 1

 

Q.1. Identify the key sources of funds in a Fund Flow Statement and analyse the impact of an increase or decrease in working capital on the flow of funds. (5+5 = 10 Marks)

Ans 1.

Meaning of a Fund Flow Statement

Fund Flow Statement” is a financial statement which illustrates from where the funds of a firm have come during a specific period of time and how it was utilized in the business. A Fund Flow Statement is different from a Balance Sheet in that it does not report on the financial position of a company as of a particular date, but rather the change in the working capital and long term financial position as of a two dates as reported in the Balance Sheet.

Key Sources of Funds

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Q.2. Explain the concept of Management Accounting and distinguish it from Financial Accounting by highlighting their key differences. (4+6 = 10 Marks)

Ans 2.

Meaning of Management Accounting

Management Accounting is the preparation and presentation of information in financial and non financial terms which is useful to managers in planning, controlling and decision making in an organisation. Management Accounting is different from accounting that is primarily for external reporting purposes as it is prepared specifically for internal use and provides information to managers on a day to day basis and in detail.

Nature and Scope of

 

Q.3. From the following balance sheets of ABC Ltd prepare a cash flow statement with the indirect method. (Balance Sheet as at 31.03.2025 and 31.03.2026: Equity Share Capital Rs 2,00,000 / Rs 2,50,000; Profit & Loss Account Rs 30,000 / Rs 50,000; Trade Payables Rs 40,000 / Rs 50,000; Total Liabilities Rs 2,70,000 / Rs 3,50,000; Plant Rs 1,50,000 / Rs 2,00,000; Trade Receivables Rs 50,000 / Rs 60,000; Stock Rs 40,000 / Rs 45,000; Cash and Bank Rs 30,000 / Rs 45,000; Total Assets Rs 2,70,000 / Rs 3,50,000. Additional Information: Depreciation on Plant during the year was Rs 10,000; Equity Shares were issued for Rs 50,000 during the year; Dividend paid during the year was Rs 10,000; No fixed assets were sold during the year.) (10 Marks)

Ans 3.

Meaning of a Cash Flow Statement

A Cash Flow Statement depicts how cash is flowing in and out of a business in a specific accounting period under three major headings: Operating activities, Investing activities and Financing activities. It assists users to appreciate whether a firm made a profit, but also whether the profit resulted in an actual increase in cash available for the operations of the business.

Indirect Method of

 

 

Assignment Set – 2

 

Q.4. ‘The profit is the product of the P/V ratio and the margin of safety’. Comment. (10 Marks)

Ans 4.

Meaning of P/V Ratio

Profit Volume ratio is also known as P/V ratio, which is a ratio of contribution and sales. Contribution is sales minus variable costs, and it is the money left after variable costs to pay fixed costs and from there on, the profits. The P/V ratio indicates the percentage of each rupee of sales that will be converted into contribution and provided that the fixed costs do not change, a higher P/V ratio will yield a

 

Q.5. Outline the steps to install a budgetary control system in an organisation, including roles of the Budget Controller and Budget Committee. (6+4 = 10 Marks)

Ans 5.

Meaning of Budgetary Control

Budgetary Control is a system of controlling business activities in which budgets are prepared for various functions of the organization and actual results are regularly compared with the budgets. The planning and implementation of such a system is not a simple process and involves other people in the organisation at various levels.

Defining Organisational Objectives and Budget Period

The first step in setting up a budgetary control system is to state the general aims of the organisation, because budgets cannot be set without reference to the general aims of the organisation. In addition

 

 

Q.6. Standard time = 1.5 hours per unit; Standard rate (SR) = Rs 120 per hour. Actual output = 600 units; Actual hours (AH) = 960 hours at Actual rate (AR) = Rs 125 per hour. Compute Labour Cost Variance (LCV), Labour Rate Variance (LRV) and Labour Efficiency Variance (LEV). (10 Marks)

Ans 6.

Meaning of Labour Cost Variance

Labour Cost Variance is the overall difference between the standard labour cost allowed to produce the actual output of the period and the actual labour cost incurred in the period. It reflects the overall variance and can be subdivided to determine where the difference occurred to provide management with a better understanding of the labour cost performance.

Labour