M.Com DCM 6202 MANAGEMENET ACCOUNTING

Description

SESSION	Sep 2023
PROGRAM	M.Com
SEMESTER	II
course CODE & NAME	DCM6202_Management accounting
CREDITS	4

 

 

Set – 1

Questions

1. a) Differentiate between standard costing and budgetary control
2. b) Calculate Labour cost variance from the information:    

 Standard production    : 100 units      

Standard Hours     : 500 hours      

Wage rate per hour    : Rs. 2     

Actual production    : 85 units     

Actual time taken    : 450 hours     

Actual wage rate paid   : Rs. 2.10 per hour.

Ans: Definition: 

Standard Costing: It is a system that establishes predetermined costs for producing goods or services. These costs serve as benchmarks against which actual costs are compared.

Budgetary Control: It is a process of planning, coordinating, and controlling an organization’s activities by establishing budgets and comparing actual performance against the budget.

Focus:  Standard Its Half solved only

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2. Explain in detail the classification of budgets according to

(a) Time

(b) Functions and

(c) Flexibility.

Ans: Classification of Budgets:  Budgets, as financial planning tools, can be classified based on various criteria such as time, functions, and flexibility.

Let’s explore each classification in detail: 

1. a) Classification According to Time:

Long-term Budgets: 

Time Frame: Typically

 

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:To find the answers to the questions, we’ll use the formulas related to the Profit-Volume (P/V) Ratio, Fixed Cost, Break-Even Point, and Profit calculation.

The Profit-Volume (P/V) Ratio is calculated as the ratio of contribution to sales. The contribution is calculated as sales minus variable expenses.

Given

 

Set – 2

Questions

1. The following is the balance sheet of Heinz in Ltd. Convert these into common size Balance sheets and interpret the same.

I.                   Equity & Liabilities:	2021	2022
1.      Shareholders’ funds:
A)    Share Capital	300000	300000
B)    Reserves & Surplus	650000	436000
2.      Non-Current Liabilities:
A)    Long-term Borrowings	250000	200000
3.      Current Liabilities:
A)    Trade Payables	285000	240000
B)    Short-term provisions	15000	24000
	15,00,000	12,00,000
II.                Assets
1.      Non-Current assets:
A)    Fixed assets	500000	500000
B)    Non-Current investments	310000	196000
2.      Current assets:
A)    Inventories	369000	258000
B)    Trade receivables	225000	198000
C)    Cash and Cash equivalents	96000	48000
	15,00,000	12,00,000

Ans:

Common Size Balance Sheets:  A common size balance sheet expresses each item as a percentage of the total assets. This helps in understanding the proportion of each component in relation to the total assets. Similarly, the liabilities and equity are expressed as a percentage of the total liabilities and equity.

Here are the

 

 

2. “Responsibility accounting is a responsibility set-up of management accounting”. Comment on the statement by detailing on components, and types of responsibility centres. Also, state the advantages and disadvantages of responsibility accounting.

Ans:

 

3. The following are the ratios relating to the activities of National Traders Ltd.

Stock Velocity            : 6 Months

Creditors Velocity     : 2 Months

Debtors Velocity       : 3 Months

Gross Profit ration   : 25%

Gross Profit for the year ended 31^st Dec2020 amount to Rs.400000. Closing stock of the year is Rs.10000 above the opening stock. Bills receivable amount to Rs.25000 and bills payable to Rs.10000

Find Out:

1. Sales
2. Purchases
3. Sundry creditors
4. Sundry debtors
5. Closing stock

 

Ans: Responsibility Accounting:  Comment on the Statement: The statement “Responsibility accounting is a responsibility set-up of management accounting” highlights the role of responsibility accounting in allocating responsibility and accountability within an organization’s