Management Accounting

MBA/Sem I/Management Accounting/Aug 2012 1
Dr. Vikhe Patil Foundations

Pravara Centre for Management Research and Development

SEMESTER I Aug - Nov 2012

QUESTION BANK MANAGEMENT ACCOUNTING

Compiled by Prof. Divya Y. Lakhani

1) Ms. Mona contributes Rs. 400000 to start her business
JOURNAL

Q.1 Journalize: (Simple Application)
2) Purchased goods on cash basis Rs. 20000
3) Cash Sales Rs. 4000
4) Cash received from Ram Rs. 25000
5) Cash paid to Mehta Rs. 30000
6) Rent paid Rs. 4000
7) Commission received Rs. 12000
8) Loan taken from Bank Rs. 500000
9) Goods withdrawn for personal use Rs. 4000
10) Cash deposited in Bank Rs. 40000
11) Goods purchased from Manohar Rs. 34000
12) Goods sold to Mehta Rs. 30000
13) Purchased Machinery for Rs. 50000
14) Wages paid for installation of machinery Rs. 2000
15) Salary Rs. 4000; Rent Rs. 4500 paid

Q.2 Journalize in the books of Mr. Shyam Sharma: (Simple application)
1) Commenced business with cash Rs. 300000 and Building Rs. 500000
2) Opened a Bank A/c with ICICI Bank for Rs. 200000
3) Purchased goods worth Rs. 50000 from Ram
4) Sold goods to Mahesh Rs. 25000
5) Cheque issued to Ram Rs. 35000
6) 60% Cash received from Mahesh
7) Purchased Machinery for Rs. 40000 from RHY Ltd.
8) Installation charges paid for the above machinery Rs. 2000
9) Amount due to RHY Ltd paid by cheque
10) Salary Rs. 13000; commission Rs. 5000 paid
11) Computer purchased for Rs. 20000; Printer Rs. 5000; Table for keeping them Rs. 7000.
payment for all made by cheque
12) Balance amount paid to Ram by cash
13) Mahesh became insolvent and 40% of the dues could be recovered from his private
estate
14) Goods worth Rs. 4000 were distributed as free samples
15) Goods withdrawn by the proprietor for personal use Rs. 10000

Q.3 Pass Journal Entries in the books of Tina: (Application of Discount: Cash & Trade
Discount)
1) Sold goods to Roma for Rs. 40000 @ 2% TD
2) Purchased goods from Meena Rs. 200000 5% TD
3) Cash received from Roma Rs. 37500 in full settlement of her account
4) Amount due to Meena is paid @ 5% discount. The terms of payment were 40% cash &
balance by cheque
5) Sold goods to Kamat for Rs. 50000 @ 2% TD & 5% CD. He paid 60% of the amount
immediately
6) Goods costing Rs. 800000 were purchased @ 5% TD from Mohan
7) Above goods were sold to Sharma at a profit of 20%. He paid half of the amount at a
discount of 2%
8) Amount due to Mohan was paid by cheque at a discount of Rs. 2500
9) Goods sold & cash received Rs. 19000, after a discount of 5%

Q.4 Journalize in the books of Mehta: (Application of Discount: Cash & Trade
Discount)
1) Purchased goods worth Rs. 60000 from Rashmi @ 5% TD
2) 40% of the above goods were sold to Reshma at a profit of 20% on sales. The terms of
sales are 2% TD & 5% CD. She paid 60% of the amount immediately
3) Rashmi was paid 75% of her dues at a discount of 3%
4) Balance cash received from Reshma
5) Purchased goods worth Rs. 40000 from Mohan
6) The balance stock was completely sold to Mahesh at a profit of 20% on cost.
7) Mahesh settled his account by cheque at a discount of 5%

Q.5 Journalize the following transactions in the books of Sharma for the month of
January 2005:
Jan 1 Commenced business with Cash Rs. 250000
Jan 3 Purchased goods worth Rs. 25000 from Ramesh at 5% TD
Jan 5 Sold goods costing Rs. 10000 to Raja at a profit of 15% on cash basis
Jan 6 Balance of the goods was sold to Sita at a profit of 20%. The terms of sale
were 2% TD and 5% CD. She paid half the amount immediately
Jan 9 Purchased goods on cash basis Rs. 20000
Jan 10 Opened a Bank A/c with Rs. 100000
Jan 12 Machinery purchased for Rs. 20000 and payment made by cheque
Jan 15 Installation charges of the above machine Rs. 1000 paid in cash
Jan 20 Cash sales Rs. 15000 of which half the amount deposited in bank
Jan 21 Appointed Sharma as Manager on a monthly salary of Rs. 5000
Jan 25 Discounted a bill of exchange with bank Rs. 4000 at 2% discount
Jan 27 Paid amount to Ramesh at 10% cash discount
Jan 29 Sold goods worth Rs. 10000 to Roma
Jan 31 Rent Rs. 2000; traveling expenses Rs. 300 and salary paid

Q.6 Journalise the following transactions:
1) Outstanding Rent Rs. 2000
2) Prepaid insurance Rs. 500
3) Interest on capital @ 10% p.a. (Capital of Ram being Rs. 250000)
4) Drawings transferred to Rams Capital at the end of the year Rs. 12000
5) Closing stock Rs. 40000
6) Goods withdrawn for personal use Rs. 2000
7) Goods distributed as free samples Rs. 3000
8) Sohan, a customer, became insolvent and only 30% is recovered from his estate in full
and final settlement, total amount due being Rs. 30000
9) Goods given in charity Rs. 300
10) Rs. 4000 is recovered from Mohan whose account was written off as bad in earlier
years
11) Balances as on 1
st
April 2008: Cash Rs. 40000; Stock Rs. 45000; Debtors Rs. 60000;
Machinery Rs. 120000; Bank Loan Rs. 100000; Land & Building Rs. 400000;
Creditors Rs. 25000

April 2
LEDGER & TRIAL BALANCE

Q.7 On 1
st
April 2009, the following were the ledger balances of M/s. Ram Lal & co:
Cash in hand Rs 6,300;Cash at bank Rs 7,000;Bills Payable Rs 7,000;Zahir Rs 800;Stock Rs
4,000;Govind Rs 2,000;Sharma Rs 1,500;Ram Lal (credit) Rs 900; Capital Rs 9,700.
Prepare 1) ledger; 2) Trial Balance.
Bought goods from Govind 900
April 3 Sold goods to Sharma 1000
April 5 Bought goods of Ram Lal 1200
April 8 Sold goods to Zahir 500
April 15 Paid Govind by cheque 1500
April 18 Received from Sharma by cheque 2000
Allowed him discount 50
April 20 Sold goods to Sharma 800
April 20 Paid rent by cheque 150
April 25 Sold goods to Zahir 1000
April 30 Paid salaries in cash 300

Q.8 Rohan commenced business with cash Rs. 500000. The transactions for the month of
April 2010 are:
1) Purchased goods worth Rs. 50000 from Ram
2) Opened a Bank A/c with Rs. 200000
3) Sold goods to Seema Rs. 45000
4) Amount due to Ram paid by cheque at a discount of 5%
5) Cash received from Seema Rs. 5000
6) Rent paid Rs. 5000
7) Purchased Machinery for Rs. 50000 & installation charges amounted to Rs. 2000 and
the payment was made by cheque
8) Seema paid Rs. 19000 to us and discount allowed to her was Rs. 1000.
9) Commission received Rs. 7500
10) Seema became insolvent and only 25% of the amount was recovered from her private
estate
11) Commission Rs. 3500; Salary Rs. 15000 was paid

Pass J ournal entries; prepare Ledger A/c and Trial Balance

Q.9 From the following details of Mr. Sen prepare Ledger A/c and Trial Balance (J ournal not
required)

April 1 Opening Balances: Cash Rs. 50000; Machinery Rs. 80000; Stock Rs.
35000; Ramesh (Dr.) Rs. 30000; Mona (Cr.) Rs. 20000
April 2 Sold goods to Ramesh Rs. 8000
April 4 Ramesh returned goods worth Rs. 3000 as they were defective
April 5 Cash paid to Mona Rs. 5000
April 10 Purchased goods worth Rs. 10000 from Mona @ 5% TD
April 12 Purchased Machinery on credit from XYZ Ltd for Rs. 40000
April 15 Cash received from Ramesh Rs. 15000
April 18 Goods worth Rs. 1500 were distributed as free samples
April 20 Cash withdrawn by Mr. Sen for personal use Rs. 5000
April 24 Machinery worth Rs. 10000 was sold for Rs. 7500
April 27 Ramesh settled his a/c at a discount of 5%
April 29 Received commission Rs. 6000
April 30 Paid Salary Rs. 12000; Rent Rs. 6000, Miscellaneous expenses Rs. 2500

Q.10 Anil, a trader in readymade garments, supplies his goods to Sagarikas Creation on a
regular basis. Following transactions are to be recorded in Anils Ledger:
1) Amount Outstanding at the beginning of the period Rs. 450000
2) Anil supplied garments to Sagarikas Creation at Rs. 50000
3) Anil received a cheque of Rs. 100000 from Sagarikas Creation
4) Sagarikas Creation returned garments worth Rs. 3000 as they were defective
5) Sagarikas Creation purchased garments worth Rs. 140000 @ 2% TD
6) Carriage paid on behalf of Sagarikas Creation by Anil Rs. 2000
7) Cheque received from Sagarikas Creation Rs. 100000
8) Above cheque is dishonoured and Bank Charges amounted to Rs. 500
9) Anil draws a Bill on Sagarikas Creation for Rs. 250000 payable 2 months after date
10) At the end of the period, keeping the outstanding amount of Rs. 50000 Sagarikas
Creation paid the balance amount at a discount of 5%

Q.11 The following trial Balance of Shri S.K Das was drafted by his son Shri S.K.DAS a
student, however it was incorrect. Redraft the T.B again. Trial Balance as on 31.03.2009 is:
S.N Account head DR (RS) CR (RS)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Capital
Opening Stock
Closing Stock
Creditors
Debtors
Fixed Assets
Gross Purchases
Gross Sales
Return Inwards
Return Outwards.
Carriage Inwards
Carriage Outwards
Import Duty
Export Duty
Wages & salaries
Bills Receivable
Bills Payable
Rent Receivable
Interest Paid
Bank Overdraft
Cash
Commission Received
Rates & Taxes
Discount Allowed
-------
16,590.
-------
-------
20,670
79,000
60,920
--------
2,400
------
800
--------
1,200
-------
31,400
15,000
--------
3,800
---------
11,000
380
--------
7,130
---------
1,00,000
-------
20,580
12,500
---------
---------
--------
1,02,600.
---------
1,230.
---------
1,850.
---------
800
---------
--------
8,000.
----------
1,100.
---------
---------
870.
---------
760.

Q. 12 Interpret the following account:
Dt
Capital A/c
Dr. Cr.
Particulars Rs. Dt Particulars Rs.
2007 2007
To Cash A/c 50000 April 1 By Balance B/d 500000
To goods A/c 10000 J uly 1 By Bank A/c 100000
2008 2008
To Income Tax 20000 Mar 31 By Int on Cap 46000
To Balance c/d Mar 31 816000 By P/L A/c 250000
TOTAL 896000 TOTAL 896000

April 1
SUBSIDIARY BOOKS

Enter the following transactions in the proper subsidiary books of Nitin, post them in the
ledger accounts and balance the accounts. Prepare a Trial Balance as on 30
th
April 2011:
Nitin started business with cash Rs. 5000 and furniture of Rs. 1000
April 4 Bought goods from Vijay worth Rs. 2000 at 5% trade discount.
April 5 Ram sold goods to Nitin Rs. 1500
April 8 Returned goods of Rs. 100 (gross) to Vijay
April 9 Received goods from Vijay n exchange of those returned on 8
th

April 10 Cash Sales Rs. 1000
April 10 D Narayan purchased goods from Nitin Rs. 500
April 11 Sold goods to Ratan Rs. 800 less TD Rs. 32
April 15 Took for private use goods of Rs. 50 and cash Rs. 100
April 18 Nitin received goods returned by D Narayan Rs. 50
April 20 Ratan returned goods of Rs. 40 (i.e. cost Rs. 50 less: TD 4%)
April 22 Paid cash Rs. 900 and returned goods of Rs. 100 to S. Ram
April 25 Cash purchases from M/s. Kishor & Co. Rs. 500
April 27 S. Ram informed Nitin to transfer Rs. 100 from his A/c to D. Narayans A/c
April 27 Paid cash Rs. 200 to Madhav on behalf of S. Ram. According to his
instructions.
April 30 D Narayan paid office rent of Nitin Rs. 150 and balance due from him in cash.

PARTICULARS
FINAL ACCOUNTS OF SOLE TRADER

Q.1 The trial balance of Mrs. Sharma is extracted for the year ending 31
st
March 2012. You
are required to prepare Trading, Profit & Loss A/c and Balance Sheet.
Dr. Cr.
Drawings and Capital 150000 340000
Purchases and Sales 480000 740000
Returns 12000 8500
Stock on 1
st
April 2011 37800
Printing and stationery 7500
Bills Receivable and Payable 15400 9600
Salary (11 Months) 33000
Wages 94600
Carriage 3400
Rent, rates and taxes 13400
Plant & Machinery 140000
Furniture 8000
General Reserve 20000
Debtors & Creditors 84500 41300
12% Bank loan 50000
Bad debts 1200
Discount 800 450
Provision for bad debts 1450
Advertisement 9600
Telephone charges 13500
Insurance 12000
Goodwill 50000
Cash in hand 14600
10% Investments 40000
TOTAL 1211300 1211300

1) Stock on 31
st
March 2012 is Rs. 42000
ADJUSTMENTS:
2) Write off Rs. 2000 as bad debts and Maintain reserve for bad and doubtful debts @
5%
3) Goods worth Rs. 5000 were sold on 29
th
March 2012 but not recorded in the books of
accounts
4) Depreciate Plant & Machinery @ 10%, Furniture @ 5%

Q.2 Following Trial Balance has been extracted from the books of Mr. Mehta on 31
st
March
2012:

PARTICULARS Dr. Cr.
Returns 3750 2910
Cash in hand and at Bank 7740
Bills receivable 3720
Land & Building 65160
Furniture 10240
Wages 93770
Discount allowed & Received 7920 5970
6% Loan A/c 30000
Bank charges 210
Bad debts 2760
Debtors and creditors 131550 37350
Office salary (9 months) 12840
Stock on 1
st
April 2011 120450
Carriage inward 10360
General expenses 15360
Rent & rates 7260
Insurance 1410
TOTAL 948540 948540

Prepare Final A/c after considering the following information:
1) Closing Stock Rs. 127410
2) Depreciate plant & Machinery by 10% and Furniture at 5%
3) Raise the provision for bad debts to Rs. 15900
4) Insurance includes annual premium of Rs. 720 on a policy which will expire on 30
th

September 2012
5) Purchases include two typewriters costing Rs. 6000

Q.3 From the following Trial Balance of Mr. Sharma at on 31
st
March 2009, prepare Final
Accounts after making the necessary adjustments.
PARTICULARS Dr. Cr.
Returns 2000 1000
Stock on 1
st
April 2008 5000
Debtors & Creditors 8000 6000
Carriage inwards 500
Carriage outwards 500
Wages 3000
Salaries 2000
Factory Rent 200
Office rent 500
Insurance 500
Discount 300 600
Furniture 2000
Bad debts 400
Commission 300
Building 8000
Bills Receivable & Payable 6000 2000
Cash in hand 200
Cash at Bank 600
TOTAL 89600 89600

Adjustments:
1) Closing Stock Rs. 20000
2) Prepaid insurance Rs. 200
3) Outstanding wages Rs. 300, Salary Rs. 200
4) Interest on capital @ 5%
5) Additional bad debts Rs. 400
6) Reserve for bad debts @ 5% and reserve for discount on debtors @ 5%
7) Reserve for discount on creditors @ 2%
8) Interest on drawing @ 6% for 6 months only
9) Commission earned but not received Rs. 200
10) Rent outstanding [office] Rs. 400
11) Depreciation is to be provided @ 10% on furniture and Plant & Machinery
12) Appreciation on Building @ 10%

Q.4 Following is the trial balance of Mr. Ram as on 31
st
March 2012:

PARTICULARS Dr. Cr.
Returns 8600 5800
Freight and carriage 18600
Stock on 1
st
April 2011 46800
Rent and taxes 5700
Salaries and wages 9300
Debtors and creditors 24000 14800
Bank loan @ 6% p.a. 20000
Bank interest 900
Printing and advertising 14600
Miscellaneous income 250
Cash at bank 8000
Discount 1800 4190
Furniture and fittings 5000
Insurance 1300
Postage and telegrams 2330
Cash in hand 380
Traveling expenses 870
Drawings 40000
TOTAL 521330 521330

The following adjustments are to be made:
1) Included amongst the Debtors is Rs. 1000 due from Asha and included amongst the
creditors Rs. 1200 due to her
2) Provision for bad and doubtful debts be created @ 5% and reserve for discount on
debtors @ 2%
3) Depreciate furniture and fittings @ 10%
4) Personal purchases amounting to Rs. 600 had been included in the Purchase Day
Book
5) A quarter of the amount of printing and advertising is to be carried forward to the
next year
6) Credit purchase invoice amounting to Rs. 400 had been omitted from the books
7) Stock on 31
st
March 2012 was Rs. 78600
8) Charge interest on capital @ 10% p.a.
9) Office manager is entitled to a commission of 10% of the net profit after charging
such commission
10) Goods worth Rs. 3000 were sold to Anita and omitted to be recorded in books. These
goods were as yet not dispatched to her

Q.5 On 31
st
March 2008 the trial balance of Ram was as under. You are required to prepare
Final Accounts after considering the additional information.
PARTICULARS Dr Cr
Stock on 1
st
April 2007 8000
Sales 220000
Purchases 126000
Productive wages 56500
Salaries 16000
Stores consumed 6050
Carriage 3050
Rent and rates 5200
Insurance 1320
Machinery 52000
Building 67000
Capital A/c 145600
Sundry debtors and creditors 44000 20000
Secured loan 15000
Furniture 3350
Cash in hand 1930
Bad debts 1020
Bank 6580
TOTAL 400600 400600

ADDITIONAL INFORMATION
1) Stock as on 31
st
March 2008 was Rs. 20600
:
2) Depreciate Machinery @ 10% p.a.
3) Make provision for bad and doubtful debts @ 5%
4) Provide for discount on debtors and creditors @ 2 %
5) Rent, and rates include rent deposit of Rs. 400
6) Insurance prepaid Rs. 120

Q.6 From the following trial balance prepared from the books of Tom and Dick on 31
st

March 2007, prepare final accounts.

Particulars Dr Cr
Drawings and capital:
Tom 5000 59400
Dick 5550 60000
Bill receivable 9500
Sundry debtors (including Madans dishonoured
cheque of Rs. 1000)
62000
Manufacturing wages 40970
Returns inwards 2780
Purchases and sales 256590 356430
Rent and taxes 5620
Stock on 1
st
April 2006 89680
Salaries 11000
Travelling expenses 1880
Insurance 400
Cash 530
Bank 18970
Repairs and renewal 3370
Interest on loan 1000
6% loan A/c 20000
Discounts 4870
Bad debts and provision for bad debts 3620 1000
Fixtures and fittings 8970
Sundry creditors 59630
Commission 4640
TOTAL 561100 561100

1) Stock in hand on 31
st
March 2007: Cost Rs. 128960 and Market Value Rs. 134670
Adjustments:
2) Write off half of Madans cheque
3) Create provision of 5% on sundry debtors
4) Manufacturing wages include Rs. 1200 for erection of new machinery purchased
5) Depreciate plant and machinery by 5% p.a. and fixtures and fittings by 10% p.a.
6) Commission not earned but received amounts to Rs. 600
7) Machinery include new machine purchased on 1
st
J anuary 2007 for Rs. 8800


Particulars
COST SHEET

Rs. Rs.
Direct Material Cost:
Opening stock of Raw materials X
Add: Purchases X
Add: Freight/Carriage Inwards X
X
Less: Closing Stock of Raw Materials X X

Direct Wages/Indirect Wages X
Direct Expenses/Chargeable Expenses X
PRIME COST X

Add: Factory/Production Overheads:
Indirect wages X
Depreciation of machinery X
Oil and fuel X
Cost of rectifying defective work X
Any other factory expenses X
X
Add: opening stock of work-in-progress X
X
Less: Closing stock of work-in-progress X
X
Less: Sale of Scrap X X
WORKS COST/FACTORY COST X

Add: Office & Administration Overheads:
Salaries X
Depreciation of furniture X
Rent, rates and taxes X
Printing and stationery X X
COST OF PRODUCTION X
Add: opening stock of Finished Goods X
X
Less: Closing stock of Finished Goods X
COST OF FINISHED GOODS SOLD X

Add: Selling and Distribution Overheads:
Carriage Outwards X
Bad debts X
Salesmans salary X
Depreciation of delivery vans X
Cash Discount allowed X X
TOTAL COST X
Add: Profit X
SALES X

1) Following items do not find any place in cost sheet:
Important Points:
Non-operating expenses like-
i. Preliminary expenses written off
ii. Legal charges for defending suit filed against the Co.
iii. Loss on sale of assets
Provision for taxation, Proposed dividend, transfer to general reserve represent
profits available to shareholders and hence its distribution.
Non-operating incomes like-
i) Dividend received/ interest received on investments
ii) Profit on sale of shares
iii) Discount received
iv) Recovery of bad debts
2) While calculating profit pay attention to whether the profit % is on cost or sales
3) Profit conversion table is:
Profit as a fraction of cost Profit as a fraction of sales
1/3
1/3
1/5 1/6
And so on-----

SELLING
OVERHED
T
O
T
A
L

C
O
S
T

ADMINISTRATION
OVERHEADS
C
O
S
T

O
F

P
R
O
D
U
C
T
I
O
N

FACTORY
OVERHEADS
W
O
R
K
S
/

F
A
C
T
O
R
Y

C
O
S
T

DIRECT
MATERIALS
P
R
I
M
E

C
O
S
T

DIRECT
LABOUR
DIRECT
EXPENSES

Q.1 Prepare Cost sheet for the year ended 31
st
March 2008:

Particulars Rs.
Stock of Raw Materials- Opening 188000
Closing 200000
Materials purchased during the years 832000
Direct wages 238400
Indirect wages 16000
Salaries to administration staff 40000
Freight inwards 32000
Freight outwards 20000
Cash discount allowed 14000
Bad debts written off 18000
Repairs to Plant & Machinery 42400
Rent rates and taxes: Factory 12000
Office 6400
Salesmans salaries and commission 33600
Depreciation: Plant & Machinery 28400
Furniture 2400
Directors fees 24000
Electricity charges Factory 48000
Fuel (for boiler) 64000
General charges 24800
Managers salary 48000

The managers time is shared between the factory and office in the ratio of 20: 80.

Q.2 AB & Co. manufactures two types of pens P and Q. The cost data for the month ended
30
th
September 2007 is as follows:
Direct materials 400000
Direct wages 224000
Production overheads 96000
It is further ascertained that:
1) Direct Materials in type P cost twice as much direct materials in type Q
2) Direct wages for Q were 60% of those for type P
3) Production overheads was of same rate for both types
4) Administration overhead for each was 200% of direct labour
5) Selling costs were 50 paise per pen for both types
6) Production during the month:
Type P 40000 units
Type Q 120000 units
7) Sales during the month:
Type P 36000 units
Type Q 100000 units
8) Selling price were Rs. 14 per pen for type P and Rs. 10 per pen for type Q

Prepare a statement of cost and profit.

Q.3 X Ltd manufactured and sold 1000 refrigerators in year ending 31
st
December 1999. The
Trading and Profit & Loss A/c is as follows:

Particulars Rs. Particulars Rs.
To Cost of Material 80000 By sales 400000
To Direct wages 120000
To Manufacturing Cost 50000
To Gross Profit 150000
Total 400000 Total 400000

To Mgt & Staff Salary 60000 By Gross Profit 150000
To Rent 10000
To Selling Expenses 30000
To General Expenses 20000
To Income Tax 5000
To Net Profit 25000
Total 150000 Total 150000

For the year ending 31
st
December 2000, it is estimated that:
1) Output and Sales will be 1200 refrigerators
2) Price of materials will rise by 20% on the previous years level
3) Wages will rise by 5%
4) Manufacturing cost will rise in proportion to combined cost of materials and wages
5) Selling costs per unit will remain unchanged
6) Other expenses will remain unchanged by the rise in output

You are required to prepare a cost statement showing the rise at which each refrigerator
should be marked so as to show profit of 10% on selling price.

Date
MATERIALS LIFO/FIFO

Q.1 The following transactions took place relating to material X during J anuary:
Particulars Quantity (Kg.) Rate per unit (Rs.)
J anuary 2 Received 2000 10
J anuary 9 Issued 1200 -
J anuary 11 Issued 1000 -
J anuary 31 Issued 200

You are required to write up the stores ledger a/c under FIFO, LIFO, Simple average and
weighted average methods.

Q.2 From the following transactions extracted from the books of accounts of a manufacturing
concern as on 31
st
December 2006, work out
1) Consumption value of raw materials in the month
2) Value of closing stock as on 31
st
December 2006 under the following four methods of
pricing issues
a. FIFO
b. LIFO
c. Simple average
d. Weighted average

OVERHEADS

Item
For Primary Distribution
The usual bases which can be selected for primary apportionment may be as below:

Base
Canteen expenses
Staff supervision
Labour welfare expenses
Time-keeping expenses
Number of workers
Rent/taxes Area
Power HP/KWh
General lighting Number of light point/area
Depreciation
Repairs and maintenance of plant and
machinery
Insurance of stock
Value of assets
Supervision Number of employees/wages paid
Telephone expenses Number of telephones
Number of calls made
Fire insurance Value of stock held/value of assets
Materials handling
Stores overhead
Weight of materials/Value of Materials

It should be noted that some overheads in the above list can be apportioned on more than one
basis. The choice of an appropriate basis is really a matter of judgment. For example, welfare
expenses may be apportioned on the basis of number of employees or total wages. Similarly,
lighting expenses may be apportioned on the basis of number of light points in each
department or on the basis of floor area.

For Secondary Distribution

Rent
PRODUCTION DEPT ONLY
Q. 1 Omega Ltd. Is having four departments. A, B & C are production departments and D is a
servicing department. The actual costs for a period are as follows:

2000
Repairs 1200
Depreciation 900
Light 200
Supervision 3000
Insurance 1000
Employees insurance (employers liability) 300
Power 1800

The following data are also available in respect of departments:

Dept A Dept B Dept C Dept D
Area sq. ft 150 110 90 50
Apportionment of service
department overheads
Apportionment to production
departments onl y
Apportionment to both
departments i.e. production and
service departments
Non-Reciprocal basis Reciprocal basis
Simultaneous Equation Method
Repeated Distribution Method
Number of workers 24 16 12 8
Total wages(Rs.) 8000 6000 4000 2000
Value of Plant 24000 18000 12000 6000
Value of stock 15000 9000 6000 -
Prepare a statement showing apportionment of costs to various departments.

Q.2 The following data were obtained from the books of X Ltd for the half year ended 30
th

September 2009. Prepare an overhead distribution summary:

Production departments Service departments
A B C X Y
Direct
Wages
7000 6000 5000 1000 1000
Direct
materials
3000 2500 2000 1500 1000
OTHER DETAILS
Area
occupied
(sq.yd)
800 600 600 200 200
Assets Rs. 50000 30000 20000 10000 10000
KWh 8000 6000 6000 2000 3000
Number of
employees
200 150 150 50 50
Light points 10 15 15 5 5

The expenses for 6 months are:
Stores overhead 400 Depreciation 6000
Motive power 1500 Repairs and maintenance 1200
Electric lighting 200 General overheads 10000
Labour Welfare 3000 Rent and taxes 600
Apportion the expenses of Department X in the ratio of 4:3:3 and that of Department Y in the
proportion of direct wages to Department A, B and C respectively.

Q.3 Following figures are extracted from the accounts of M/s. C Ltd for the month of J uly
1990:

P1 P2 S1 S2 S3
Indirect
material
280 140 170 350 160
Indirect
wages
324 312 296 190 218

Area (sq.ft) 400 200 100 200 100
Assets 8000 4000 7000 5000 6000
KWh 4000 3000 1000 1000 1000
Number of
employees
150 100 75 100 125
Direct
labour hours
5000 5000
Number of
requisitions
1000 300

Power and light 3000
Supervision charges 2200
Rent and rates 500
Insurance on assets 60

Depreciation @ 12% on capital value of asset is to be considered.
a) The expenses of service departments should be apportioned straight to production
departments with the information that S1 is tools room, S2 is maintenance department and
S3 is stores department. From the above information and the following departmental data,
prepare overhead recovery rates for the production departments on the basis of direct
labour rates.
b) Find cost of J ob A and J ob B from the following information:
Job A Job B
Direct material cost 100 100
Direct wages 10 10
Hours in dept P1 9 3
Hours in dept P2 3 9

NON-RECIPROCAL METHOD

Q.4 Calculate the overheads applicable to production departments A and B. there are also two
service departments X and Y. X renders service worth Rs. 12000 to Y and balance to A and B
as 3:2. Y renders service to A and B as 9:1.

A B X Y
Floor space (sq.feet) 5000 4000 1000 2000
Assets (Rs. In lacs) 10 5 3 1
H.P. of Machines 1000 500 400 100
Number of workers 100 50 50 25
Light points 50 30 20 20

Details of expenses:
Insurance 15200 Depreciation 190000
Power 20000 Canteen expenses 10800
Electricity 4800 Rent and taxes 36000

RECIPROCAL METHOD

Q.5 A company has 3 production departments and 2 service departments and for a period
departmental distribution summary has the following totals:
Production Dept A Rs. 800
B Dept Rs. 700
C Dept Rs. 500
Service Dept I Rs. 234
II Rs. 300.
The expenses of service departments are charged out on a % basis:

A B C I II
Service Department I 20% 40% 30% - 10%
Service Department II 40% 20% 20% 20% -

You are required to show the apportionment of overhead by repeated distribution method.

Q.6 The following particulars relate to a manufacturing company which has three production
departments A, B & C and two service departments X and Y.

A B C X Y
Total departmental overhead as per
primary distribution
6300 7400 2800 4500 2000

The company decided to charge the service department cost on the basis of the following
percentages:

A B C X Y
Service Department X 40% 30% 20% - 10%
Service Department Y 30% 30% 20% 20% -

Find the total overheads of production departments by using the following two methods:
1) Simultaneous equation method
2) Repeated distribution method

Dept
UNDER/OVER ABSORPTION OF OVERHEADS

Q.7 A manufacturing company absorbs overhead into the cost of the three production
departments by means of pre-determined departmental rates per direct labour-hour. The
following information regarding overhead incurred and overhead absorbed is obtained from
the accounts for the year:

Overhead
incurred
Actual
direct
labour
hours.
Predetermined
departmental
rate used
Total
overhead
absorbed
Direct labour hours
contained in
WIP
Hours
FG
Hours
A 10000 25000 0.50 12500 3000 7000
B 37800 84000 0.30 25200 14000 8000
C 32500 45000 0.40 18000 2000 4000

You are required to:
a) Calculate for each department the direct labour hour rates of overhead incurred,
b) Calculate the extent to which the values of the
1) Closing work-in-progress
2) Closing finished goods should be increased or decreased for each department
for the year in view of the corrected overhead rates.

Q.8 In a manufacturing unit, overhead was recovered at a predetermined rate of Rs. 25 per
man-day. The total factory overhead incurred and the man-days actually worked were Rs.
4150000 and 150000 man-days respectively.

Out of the 40000 units produced in a period, 30000 units were sold. There were also 30000
uncompleted units which may be reckoned at 66.67% complete.

On analyzing the reasons, it was found that 40% of the under-absorbed overheads were due to
defective planning and the rest were attributable to increase in overhead cost.

How would under-absorbed overheads be treated in cost accounts?

Particulars
MARGINAL COSTING CVP ANALYSIS

Q.1 X Ltd has supplied you the following information in respect of one of its products:
Total fixed costs 18000
Total variable costs 30000
Total sales 60000
Units sold 20000
Find: (1) Contribution per unit (2) Break Even Point (3) Margin of Safety (4) Profit and (5)
Volume of sale to earn a profit of Rs. 24000

Q.2 From the following date calculate:
(1) Break even point expressed in amount of sales in rupees
(2) Number of units that must be sold to earn a profit of Rs. 60000 per year
(3) How many units must be sold to earn a net income of 10% of sales?

Selling Price Rs. 20 per unit
Variable manufacturing cost Rs. 11 per unit
Variable selling costs Rs. 3 per unit
Fixed factory overheads Rs. 540000
Fixed selling costs Rs. 252000

Q.3 A company furnishes you the following information:
Year 2008
First half Second half
Sales 810000 1026000
Profit earned 21600 64800
From the above you are required to compute the following assuming that the fixed costs
remain the same in both the periods:
1. Profit/volume ratio
2. Fixed cost
3. The amount of profit or loss where sales are Rs. 648000
4. The amount of sales required to earn a profit of Rs. 108000

Q.4 The following figures relate to a company manufacturing a varied range of products:
Particulars Year ending
31
st
March 1990 31
st
March 1991
Sales 2223000 2451000
Total costs 1983600 2143200
Assuming stability in prices, with variable costs carefully controlled to reflect predetermined
relationships and an unvarying figure for fixed costs, calculate:
1. The Profit/Volume ratio to reflect the rates of growth for profit and sales
2. Fixed cost
3. Fixed cost percentage to sales
4. Break Even Point
5. Margin of Safety for 1990 and 1991

Q.5 Company A and B, both under the same management, make and sell the same type of
product. Their budgeted profit and loss account is as follows:
Company A Company B
Sales 300000 300000
Less:
Variable cost 240000 200000
Fixed cost 30000 70000
Profit 30000 30000

1. Calculate the break-even point for each
2. Calculate the sales volume at which each of the two companies will make a profit of
Rs. 10000
3. Assess how their profitability will change with increase or decrease in sales volume

Q.6 A, B &C are three similar plants under the same management who want them to be
merged for better operation. The details are as under:
(Rs. In Lakhs)
Plant A Plant B Plant C
Capacity utilization 100% 70% 50%
Turnover 300 280 150
Variable cost 200 210 75
Fixed cost 70 50 62
Find out:
1. The capacity of the merged plant for break-even
2. The profit at 75% capacity of the merged plant
3. The turnover from the merged plant to give a profit of Rs. 28 Lakhs

Q.7 From the following data recommend the mot profitable product mix, presuming that
direct labour hours available are only 700:

Particulars Products
A B
Contribution per unit 30 20
Direct labour per unit 10 hours 5 hours

The maximum production possible for each of the products A and B is 100 units. The fixed
overheads are Rs. 1000

Q.8 XYZ Ltd which produces three products furnishes you the following data for the year
2008:
Products
A B C
Selling price p.u. 100 75 50
P/V ratio 10% 20% 40%
Maximum sales potential (units) 40000 25000 10000
Raw material content as % of
variable cost
50% 50% 50%
The fixed expenses are estimated at Rs. 680000. The company uses a single raw material in
all the three products. Raw material is in short supply and the company ha a quota for the
supply of raw materials of the value of R. 1800000 for the year for the manufacture of its
products to meet its sales demand.
You are required to
1. Set a product mix which will give the maximum overall profit keeping the short
supply of raw material in view
2. compute the maximum profit

Q.9 Draw a Break Even Chart:
Plant capacity 160000 units p.a.
Fixed cost Rs. 400000
Variable cost Rs. 5 per unit
Selling price Rs. 10 per unit

Q.10 From the following particulars draw a break even chart and find out the break even
point:
Variable cost per unit Rs. 15
Fixed expenses Rs. 54000
Selling price per unit Rs. 20
What should be the selling price per unit, if the break even point is to be brought down to
6000 units?

BUDGETARY CONTROL

FLEXIBLE BUDGET
Q.1 Prepare a flexible budget for production at 80% and 100% activity on the basis of the
following information:

Production at 50% capacity 5000 units
Raw materials Rs. 80 per unit
Direct labour Rs. 50 per unit
Direct expenses Rs. 15 per unit
Factory expenses Rs. 50000 (50% fixed)
Administration expenses Rs. 60000 (60% variable)

Q.2 Draw up a flexible budget for overhead expenses on the basis of the following data and
determine the overhead rates at 70%, 80% and 90% plant capacity:

At 80% capacity
Variable overheads:
Stores including spares 4000
Indirect labour 12000
Semi-variable overheads:
Power (30% Fixed) 20000
Repairs & Maintenance (40% variable) 2000
Fixed overheads:
Depreciation 11000
Insurance 3000
Salaries 10000
Estimated direct labour hours 124000 Hours

Q.3 Prepare a Flexible Budget for production of 40000 units and 75000 units, distinctly
showing variable cost and fixed cost as well as total cost. Also indicate element-wise cost per
unit. Budgeted output is 100000 units and budgeted cost per unit is as follows:

Rs.
Direct materials 95
Direct labour 50
Production overhead (variable) 40
Production overhead (fixed) 5
Administration overhead (fixed) 5
Selling overhead (10% fixed) 10
Distribution overhead (20% fixed) 15

Q.4 For a production department of a manufacturing company you are required to:
a) Prepare a Fixed Budget of overheads
b) Prepare a Flexible Budget of overheads at 70% and 110% of budgeted volume
c) Calculate a departmental hourly rates of overhead absorption as per (a) and (b) above

The budgeted level of activity of the department is 5000 hours per period and a study of
the various items of expenditure reveals the following:
Rs. Re. / hr
Indirect wages 0.40
Repairs
Up to 2000 hours 100
For each additional 500 hours up to a total of 4000 hrs 35
Additional from 4001 to 5000 hours 60
Additional above 5000 hours 70
Rent and rates 350
Power
Up to 3600 hours 0.25
For hours above 3600 0.20
Consumable supplies 0.24
Supervision
Additional for each extra 600 hours above 2500 hours
and up to 4900 hours
100
Additional above 4900 hours 150
Depreciation
Above 5000 hours and up to 6500 hours 820
Cleaning
Up to 4000 hours 60
Above 4000 hours 80
Heat and lighting
From 2100 hours to 3500 hours 120
From above 3500 hours to 5000 hours 150
Above 5000 hours 175

Also indicate the nature of each overhead

Q.5 From the following particulars prepare a flexible budget at 60% and 80% capacity.
Particulars 70% capacity
Variable overhead:
Materials 5000
Labour 15000
Semi-variable overhead:
Electricity (variable 60%) 50000
Repairs and maintenance (variable 65%) 5000
Fixed overhead:
Salaries 10000
Depreciation 14000
Insurance 6000
TOTAL 105000
The company estimated the direct labour hours to be worked at 70% capacity as 140000
hours.
Also calculate the overhead recovery rate at 60%, 70% and 80% capacity.

PRODUCTION BUDGET

Q.1 From the following particulars, prepare a production budget of a company for the month
ending J un 30, 2008:
Sales (units) Estimated stock (units)
Product (as per sales budget) 1
st
J une 2008 30
th
J une 2008
A 150000 14000 15000
B 100000 5000 14500
C 70000 8000 8000

Q.2 The following are the estimated sales of a company for 8 months ending 30
th
Oct:

Month Estimated sales (units) Month Estimated sales (units)
April 12000 May 13000
J une 9000 J uly 8000
Aug 10000 Sept 12000
Oct 14000 Nov 12000

As a matter of policy, the company maintains the closing balance of finished goods and raw
materials as follows:

Stock item Closing balance of a month
Finished goods 50% of the estimated sales for the next month
Raw materials Estimated consumption for the next month

Every unit of production requires 2 kg of raw material costing Rs. 5 per Kg

Month
CASH BUDGET

Q.1 A company is expecting to have Rs. 25000 cash in hand on 1
st
April 2008 and it requires
you to prepare cash budget for quarter ending 30
th
J une 2008. Following information is
supplied to you:

Sales Purchases Wages Expenses
February 70000 40000 8000 6000
March 80000 50000 8000 7000
April 92000 52000 9000 7000
May 100000 60000 10000 8000
J une 120000 55000 12000 9000

Other information:
1) Period of credit allowed by suppliers is 2 months
2) 25% of sale is for cash and period of credit allowed to customers for credit sale is one
month
3) Delay in payment of wages and expenses one month
4) Income tax Rs. 25000 is to be paid in J une

Q.2 Prepare a cash budget for quarter ending 30
th
J une 2008 from the following information:


Month Sales Materials Wages Overheads
February 14000 9600 3000 1700
March 15000 9000 3000 1900
April 16000 9200 3200 2000
May 17000 10000 3600 2200
J une 18000 10400 4000 2300

1) Credit terms: 10% sales are on cash basis. Of the credit sales, 50% are collected next
month and the balance in the following month
2) Creditors for materials 2 months; wages month and overheads month
3) Cash and bank balance on 1
st
April 2008 is expected to be Rs. 6000
4) Plant and Machinery will be installed in February at a cost of Rs. 96000. the monthly
instalment of Rs. 2000 is payable from April onwards
5) Dividend @ 5% on Preference Share Capital of Rs. 200000 will be paid on 1
st
J une
6) Advance to be received for sale of vehicles is Rs. 9000 in J une
7) Dividend from investments amounting to Rs. 1000 are expected to be received in J une
8) Income tax(advance) to be paid in J une is Rs. 2000

Q.3 A company expects to have Rs. 157500 cash in hand on 1
st
April, and requires you to
prepare an estimate of cash position during the three months ending 30
th
J une. The following
information is supplied to you:

Month Sales Purchase Wages Overheads
Factory Office Selling
Feb 75000 45000 9000 7500 6000 4500
March 84000 48000 9750 8250 6000 4500
April 90000 52000 10500 9000 6000 5250
May 120000 60000 13500 11250 6000 6750
J une 135000 60000 14250 14000 7000 7000

Other information:
1. Period of credit allowed by suppliers 2 months
2. 20% of sales is for cash and period of credit allowed to customers for credit is one month
3. Delay in payment of all expenses 1 month
4. Income tax of Rs. 57500 is due to be paid in 15
th
J une
5. The company is to pay dividend to shareholders and bonus to workers of Rs. 15000 and
Rs. 22500 respectively in the month of April
6. Plant has been ordered to be received and paid in May. It will cost Rs. 120000


STANDARD COSTING

FORMULAS FOR VARIANCE ANALYSIS

MATERIAL COST VARIANCES:

1) Materials Cost Variance [MCV]:
=Standard cost for actual output Actual Cost
=Std Qty for actual output X Std Rate Actual Qty X Actual Price

2) Material Price Variance [MPV]:
=[Std Price Actual Price] X Actual Qty

3) Material Usage Variance [MUV]:
=[Std Qty for actual output Actual Qty] X Std Price

Check: MCV =MPV +MUV

4) Material Mix Variance:
a) If the total input of standard mix and actual mix are same
=[Std Qty Actual Qty] X Std Price

b) If the total input of standard mix and actual mix are different
=[Revised Std Qty Actual Qty] X Std Price

Where,
Revised Std Qty =Total of Actual Mix X Std Qty of a particular material
Total of Standard Mix

5) Material Yield Variance:
=[Std output for actul mix Actual output] X Std cost per unit of output

Check: MUV =MMV +MYV

1) Std Qty for actual output =
IMPORTANT:
Std Output

Std Qty X Actual Output
2) Std output for actual mix =
Std Mix

Std Output X Actual Mix

LABOUR COST VARIANCES:

1) Labour Cost Variance [LCV]:
=Standard cost for actual output Actual Cost
=Std hours for actual output X Std Rate Actual hours X Actual Rate

2) Labour Rate Variance [LRV]:
=[Std Rate Actual Rate] X Actual Hours

3) Labour Efficiency Variance [LEFFV]:
=[Std Hours for actual output Actual Hours] X Std Rate

Check: LCV =LRV +LEFFV

4) Labour Mix Variance:
a) If the total input of standard mix and actual mix are same
=[Std Hours Actual Hours] X Std Rate

b) If the total input of standard mix and actual mix are different
=[Revised Std Hours Actual Hours] X Std Rate

Where,
Revised Std Hrs =Total of Actual Mix X Std Hrs of a particular category
Total of Standard Mix

5) Labour Yield Variance:
=[Std output for actul mix Actual output] X Std cost per unit of output

Check: LEFFV =LMV +LYV

3) Std Hrs for actual output =
IMPORTANT:
Std Output

Std Hrs X Actual Output
4) Std output for actual mix =
Std Mix

Std Output X Actual Mix
Material
MATERIAL VARIANCES

Q.1 Following standard and actual data relates to a manufacturing concern producing
Chemical X:

Standard
To produce 1 Ton of X
Actual
To Produce 6.25 Tons of X
Qty (Kgs.) Rate per Kg Qty (Tons) Cost (Rs.)
A 240 6 1.6 11200
B 400 12 2.4 30000
C 640 10 4.5 47250

Analyze the Material Variances
[Ans: MCV 9450A; MPV 5050A; MUV 4400A; MMV 537.5F]

Q.2 Calculate the Material Variances from the following information:

Material Standard Actual
Qty (Kgs.) Rate per Kg Qty (Kgs.) Rate per Kg
A 500 6 400 6
B 400 3.75 500 3.6
C 3 300 2.8 400
1200 1300
Loss 120 220
Output 1080 1080

[Ans: MCV 80F; MPV 155F; MUV 75A; MMV 375F & MYV N450A]

Q.3 Compute Material Variances:

Material Standard Actual
Qty (Kgs.) Rate per Kg Qty (Kgs.) Rate per Kg
A 40 75 240000 80
B 10 50 40000 52
C 50 50 220000 21
Standard input is 100 Kgs with standard output of finished product is 90Kgs.
Actual output of finished product 420000 Kgs.

Category
LABOUR VARIANCES

Q.4 Following details is available from the records of A Ltd for a month, regarding the
standard labour hours and rates of an hour for a product. The production for the product was
1500 units for which the actual hours worked and rates are also provided:

Standard Actual
Hours Rate/hr Hours Rate/hr
Skilled 10 3 13,500 3.50
Semi-skilled 8 12 12,600 1.80
Unskilled 16 1 30,000 1.20
Compute:
1) Labour Cost variance
2) Labour rate variance
3) Labour efficiency variance
4) Labour mix variance
[Ans: LCV 18930A; LRV 16530A; LEFFV 2400A; LMV 6300F]

Q.5 The standard labour component and the actual labour component engaged in a week for a
job are as under:

Skilled Semi-skilled Unskilled
Standard no. of workers in gang 32 12 6
Standard wage rate per hour 3 2 1
Actual no. of workers in gang 28 18 4
Actual wage rate per hour 4 3 2

During the 40 hours working week, the gang produced 1800m standard hours of work

Calculate the following variances:
1) Labour Cost variance
2) Labour efficiency variance
3) Labour rate variance
4) Labour mix variance

UNIVERSITY PAPERS

102-MANAGEMENT ACCOUNTING 2008 PATTERN MAY 2009

1) Q. No 1 is compulsory
Instructions to candidates:
2) Attempt any two questions from Section I and Section II each.
3) Figures to the right indicate full marks.
4) Use of simple calculator is allowed.

Q.1 What do you understand by the terms Budget and Budgetary Control? What are the
advantages of budgetary control? (10)
a) Idle time
SECTION I

Q.2 The emphasis of financial accounting is different from that of Cost Accounting.
Comment. (15)

Q.3 Explain:
b) Time keeping and time booking
c) Labour turnover

Q.4 What is marginal costing? Explain a) P/V Ratio b) Margin of Safety c) Break Even Point.
(15)

Q.5 Write short notes on (any three):
a) Dual aspect concept.
b) Management Accounting
c) Cost sheet
d) Subsidiary books.
e) FIFO. (15)

PARTICULARS
SECTION II

Q.6 Following is the trial balance of Mr. Kumar for the year ended 31
st
March 2002. Prepare
Final Accounts. (15)
DR. CR.
12% Investments 35000
Stock on 1
st
April 2001 30400
Purchases 98700
Sales 207600
Carriage Inward 2900
Carriage Outward 5600
Salary 19600
Vehicle expenses 8400
Printing and Stationery 6870
Insurance on Machinery 8420
Plant and Machinery 70000
Furniture and Fixtures 18000
Vehicles 25000
Debtors 36000
Creditors 46700
Capital 125000
Commission received 5400
Loan 16000
Rent paid 12000
Cash in hand 2500
Bank balance 24000
Interest on Bank 2690
TOTAL 403390 403390

Adjustments
1) Closing Stock is valued at Rs. 22420.
:
2) Depreciation provided @ 10% on Plant and Machinery, @5% on Vehicles and @
2.5% on Furniture and Fixtures.
3) Provide 5% on Debtors for doubtful debts.
4) Outstanding salary is Rs. 4800.
5) Investments are purchased on 1/10/2001.

Q.7 Rahul and Sujatha have a unit each, for manufacturing cricket bats. Details are as under:
(15)

Rahul Sujatha
Rs. Lakhs Rs. Lakhs
Sales 300 120
Variable costs 220 90
Fixed overhead 40 20

Rahuls unit runs at 100% capacity and Sujathas at 60% capacity. They decide to merge the
two units to form Kumar Brothers.
a) Calculate for the individual pre-merger status (i) P/V Ratio (ii) BEP.
b) Calculate the post-merger status (i) P/V Ratio (ii) BEP.
c) Find the profit of the merged firm at 75% capacity.

Q.8 The standard mix of a product P is shown below:

Raw Material Units Rs.
X 30 @ 20 each
Y 70 @ 30 each
Standard Loss is 10% of Input.

Actual data:
Raw Material Units Rs.
X 34 @ 18 each
Y 66 @ 36 each
Actual Loss is 15% of Input.

Calculate material variances. (15)

Q.9 Distinguish between (any three):
a) Fixed budget and flexible budget
b) Capital expenditure and revenue expenditure
c) Trade discount and cash discount
d) J ournal and ledger
e) Direct and indirect expenses.

102-MANAGEMENT ACCOUNTING 2008 PATTERN DEC 2009

5) Attempt
any four
6) Attempt
questions from Section I
any two
questions from Section II
8) Use of non programmable, portable, electronic calculator is allowed.

a) Cash Discount
SECTION I

Q.1 Differentiate between Management Accounting and Financial Accounting? (10)

Q.2 Why a J ournal is called as Book of original Entry? Explain the rules for recording the
real, personal and nominal accounts in the J ournal? (10)

Q.3 What is a Trial Balance? What are the objects of preparing it? (10)

Q.4 What is a Budget? What are the different types of budgets? Explain (10)

Q.5 Explain the following:
b) Revenue Expenditure
c) Ledger (10)

Q.6 Explain the concept of overheads. State the causes of under and over absorption of
factory overheads. (10)

Q.7 Write short notes on: (any two): (10)
a) Balance Sheet
b) Tangible and Intangible Assets
c) Labour Turnover

Nov
SECTION II

Q.8 From the following details of store receipts and issues of material Alpha in a mfg unit,
prepare the store ledger using weighted average method of valuing the issues.(15)

1 Opening stock 2000 units @ Rs. 5 each
3 Issued 1500 units of production
4 Received 4500 units @ Rs. 6 each.
8 Issued 1600 units to production
9 Returned to stores 100 units by production department (from issues of Nov 3)
16 Received 2400 units @ Rs. 6.50 each
19 Returned to supplier 200 units out of quantity received on Nov. 4
20 Received 1000 units @ Rs. 7 each
24 Issued to production 2100 units
27 Received 1200 units @ Rs. 7.50 each
29 Issued to production 2800 units

Q.9 Calculate Prime Cost, Factory Cost, Cost of Production, Cost of Sales and Profit from the
following particulars: (15)

Direct Materials 100000 Depreciation:
Direct Wages 30000 Factory 500
Wages of foreman 2500 Office 1250
Electric Power 500 Stores consumable 2500
Lighting: Managers Salary 5000
Factory 1500 Director s fees 1250
Office 500 Office stationery 500
Storekeepers wages 1000 Telephone charges 125
Oil and water 500 Postage 250
Rent: Salesman salary 1250
Factory 5000 Travelling expenses 500
Office 2500 Advertising 1250
Repairs and renewals: Warehouse charges 500
Factory 3500 Sales 189500
Office 500 Carriage outwards 375
Transfer to reserves 1000 Income tax 10000
Discount on shares w/off 500 Dividend 2000

Q.10 From the following Trial Balance of Shri. Haribhau and additional information, prepare
Trading and Profit and Loss A/c for the year ended 31
st
March 2009 and Balance Sheet as on
that date. (15)

Heads of Accounts Dr. Cr.
Capital 100000
Furniture 20000
Purchases 150000
Debtors 200000
Interest earned 4000
Salaries 30000
Sales 321000
Purchase returns 5000
Wages 20000
Rent 15000
Sales return 10000
Bad debts written off 7000
Creditors 120000
Drawings 24000
Insurance 12000
Opening stock 50000
Office expenses 12000
Provision for depreciation 2000
TOTAL 558000 558000

Adjustments:
1) Depreciate furniture by 10% on original cost
2) A provision for doubtful debts needs to be created to the extent of 5% of sundry
debtors.
3) Salaries for the month of March 2009 amounting to Rs. 3000 were unpaid which must
be provided for. However, salaries include Rs. 2000 paid in advance.
4) Insurance premium amounting to Rs. 2000 is prepaid.
5) Provide for outstanding office expenses Rs. 8000
6) Stock used for private purpose Rs. 6000
7) Closing stock-in-trade Rs. 6000

Q.11 a) Explain the significance of Break Even Point. (3)
b) From the following particulars calculate:
1) Contribution
2) P/V Ratio
3) BEP in units and rupees
4) What will be the selling price per unit if BEP is brought down to 25000 units?

Fixed expenses Rs. 150000
Selling price per unit Rs. 15 (12)


1) Q. No. 1 is Compulsory.
4) Use of non programmable, portable, electronic calculator is allowed.

Q.1 Define Management Accounting. How does it differ from financial accounting?
(10)

a) P/V Ratio
SECTION I

Q.2 Explain the various concepts and conventions of book-keeping and accounting.
(15)
Q.3 Prepare a standard format of cost sheet. Explain the various terms and levels of cost.
What is the need for preparing a cost sheet? (15)

Q.4 What is Marginal Costing? Explain
b) Margin of safety
c) Break even point (15)

a) Time keeping and time booking
b) Apportionment and absorption of overheads
c) Fixed and variable cost
d) J ournal and ledger
e) FIFO and LIFO methods of inventory valuation. (15)

SECTION II

Q.6 The standard cost of a certain chemical mixture is
30% of material A at Rs. 40 per kg.
70% of material B at Rs. 56 per kg.

A standard loss of 5% is expected in production.

Actual material used during the period:
125 Kgs of material A @ Rs. 45 per kg.
275 Kgs of material B @ Rs. 50 per kg.
The actual output was 360 Kgs.
Calculate material variances. (15)

Q.7 Following is the Trial Balance of Mr. XYZ for the year ended 31
st
March 2001. Prepare
Final Accounts. (15)
Particulars Dr. Cr.
Stock as on 1
st
April 2000 17500
Purchases 180730
Returns inwards 7990
Carriage inwards 4500
Carriage outwards 1280
Sales 259600
Returns outwards 3820
Salary 36400
Advertising 5000
Insurance 6210
Plant and Machinery 80000
Land & Building 62000
Debtors 48000
Creditors 48740
Capital 100000
Commission received 47450
Interest received 10200
Rent paid 24000
Cash in hand 5500
Bank balance 18600
Interest paid on bank overdraft 1680
TOTAL 488410 488410

ADJ USTMENTS:
a) Closing Stock is valued at Rs. 12300
b) Depreciation provided @ 10% on plant and machinery
c) Provide 5% on debtors for doubtful debts
d) Outstanding salary is Rs. 3600

a) Zero Base Budgeting
b) Different ways of classifying overheads
c) Labour turnover
d) Bank reconciliation statement
e) Principles of double entry (15)

Q.9 Prepare a cash budget for the three months ending 30
th
J une 1994 from the following
information of PQR Ltd. (15)

a) Month wise sales/expenses:
Month Sales Materials Wages Overheads
February 14000 9600 3000 1700
March 15000 9000 3000 1900
April 16000 9200 3200 2000
May 17000 10000 3600 2200
J une 18000 10400 4000 2300

b) Terms of credit:
Sales/debtors 10% of sales are cash. 50% of credit sales are collected next month and
the balance in the following month.
Creditors for materials 2 months
Wages due month
Overheads month
c) Cash and Bank Balance on 1
st
April 1994 is expected to be Rs. 6000.
d) Other relevant information available reveals that:
Plant and Machinery will be installed in February 1994 at a cost of Rs. 96000. the
repayment will be done from April 1994 onwards in monthly installments of Rs. 2000.
Dividend @ 5% on preference shares capital of Rs. 200000 will be paid in J une 1994.
Advance for the sale of vehicle amounting Rs. 9000 is to be received in J une 1994.
Dividends from investments amounting to Rs. 1000 are expected to be received in J une
1994.
Income tax (advance) of Rs. 2000 is to be paid in J une 1994.


9) Q. No 1 is compulsory

Q.1 What are the accounting concepts and conventions? Name them and explain any two
accounting concepts in detail. (10)

a) Normal and abnormal idle time.
SECTION I
Q.2 Cost may be classified in a variety of ways according to their nature and the information
needs of management. Explain and discuss the statement giving examples of classification
required for different purposes. (15)

Q.3 Define standard costing. Discuss budgetary control and distinguish it from standard
costing. (15)

Q.4 Distinguish between:
b) Time keeping and time booking
c) Avoidable and Unavoidable cause of labour turnover (15)

a) Management Accounting
b) Subsidiary books
c) Overheads
d) Break even analysis
e) Flexible budget (15)

Materials
SECTION II

Q.6 A factory engaged in manufacturing plastic buckets is working at 40% capacity and
produces 10000 buckets per month. The present cost break up per bucket is as under:
Rs. 20
Labour Rs. 6
Overheads Rs. 10 (60% fixed)
Selling price Rs. 40

If it is decided to work the factory at 50% capacity, the selling price falls by 3%. At 90%
capacity, the selling price falls by 5% accompanied by a similar fall in the price of materials.
Prepare a statement showing the profits at 50% and 90% capacities and determine the break
even point at each of these production levels in sales value and sales volume. (15)

Q.7 The following transactions occur in the purchase and issue of material.

April 2 Purchased 40000 units @ Rs. 4 per unit
April 20 Purchased 5000 units @ Rs. 5 per unit
May 5 Issued 20000 units
May 10 Purchased 60000 units @ Rs. 6 per unit
May 12 Issued 40000 units
J une 2 Issued 10000 units
J une 15 Purchased 45000 units @ Rs. 5.50 per unit

Prepare stores ledger account:
a) by FIFO method
b) by LIFO method (15)

Q.8 The following trial balance was extracted from the books of Mr. Anant as on 31
st
March
2008:

Particulars Dr. Cr.
Capital A/c 100000
Machinery 78000
Furniture 2000
Sales 127000
Purchases 60000
Returns 1000 750
Opening stock 30000
Discount 425 800
Debtors 45000
Creditors 25000
Salaries 7550
Wages 10000
Carriage outward 1200
Rent 10000
Advertisement 2000
Cash 6900
TOTAL 254075 254075

a) Closing Stock was valued at Rs. 34220
Adjustments:
b) Allow interest on capital at 10% p.a.
c) Depreciate Machinery @ 10% p.a.
d) Provision for bad debts is to be kept at 5%
e) Mr. Anant has taken goods worth Rs. 5000 for personal use and distributed goods
worth Rs. 1000 as free samples. (15)

Q.9 A company has 3 production and 2 service departments. The following are the totals of
overheads of production and service departments.
Production Department A 96000
B 84000
C 60000
Service Department X 28080
Y 36000
TOTAL 304080

The expenses of service departments are to be apportioned as follows:
Production Department Service Department
Service Department X 20% 40% 30% - 10%
Service Department Y 40% 20% 20% 20% -

Calculate overheads of production departments after distributing the overhead costs of
service departments by both
a) Repeated distribution method
b) Simultaneous equation method. (15)


13) Attempt any five questions
14) All questions carry equal marks.

Q.1 State and explain different concepts of accounting. Explain the importance of following
them in business.

Q.2 Write short notes on any two:
a) Cash Basis and Accrual basis of Accounting
b) BEP analysis
c) Differentiate between Halsey and Rowan premium system.

Q.3 A company is preparing budget for year 2010-11. Following estimates were made:
Sales 15000 units
Fixed cost Rs. 34000
Sales value Rs. 150,000

You are required to calculate:
a) P/V Ratio
b) BEP (sales)
c) Margin of safety
d) Calculate the effect of
i. Decrease of 10% in selling price
ii. Increase of 10% in variable cost

Q.4 From the following trial balance prepare Trading and Profit and Loss A/c of Mr. Amar
for the year ended 31.12.2009 and the Balance Sheet as on that date:
Particulars Rs. Particulars Rs.
Office rent 650 Capital 15000
Insurance 200 Sundry creditors 10000
Machinery 15000 Bank overdraft 3000
Sundry debtors 13000 Fixed deposit from customer 14000
Interest on loan 3500 Sales 50200
Wages 14000 Bills payable 6250
Furniture 3500
Salaries 2500
Land and Building 20000
Office expenses 250
Opening stock 3500
Purchases 20000
Cash 350
Carriage inward 1000

Q.5 CVP analysis helps in better profit planning. Comment and explain with suitable
examples

Q.6 State and explain the essentials of a good wage system

Q.7 Following are the factory overheads incurred during a period of one year:

Factory rent 90000 Electricity 30000
Power 60000 Canteen 45000
Storage 30000 Maintenance 24000
Time keeping 6000 Depreciation on plant 10%

If the number of units produced during the year were 20000, compute factory overhead per
unit. Additional information is as follows:
Production Dept Stores Time
keeping
Dept
Maintenance
Dept
Dept I Dept II
Space (sq.ft) 2400 42200 600 600 900
Electric points 100 120 40 30 10
Power consumed (watts) 400 200 - - -
No. of employees 200 200 10 10 30
Cost of plant (Rs.) 300000 500000 - - -
Cost of material consumed (Rs.) 400000 500000


16) Attempt any five questions
17) All questions carry equal marks.

Q.1 State and explain the role of cost accountant in managerial decision making. Give
suitable examples.

Q.2 a) What do you understand by overhead cost. Explain with example
b) Calculation of machine hour rate helps in absorption of overheads. Comment

Q.3 Optimum inventory is important to ensure lower cost of material storage. Comment with
the help of examples.

Q.4 Write short notes on any two:
d) Trial Balance
e) Idle time
f) Use of standard costing

Q.5 Following cost information about ABC Ltd is available:
Cost of elements Variable cost (% of sales) Fixed Cost
Direct Materials 32.8%
Direct Labour 28.4%
Factory Overheads 12.6% 189900
Distribution Expenses 4.1% 58400
Administration Expenses 1.1% 66700
Budgeted sales for the next year are Rs. 1850000. You are required to determine
a) Break even sales volume
b) Profit at the budgeted sales volume
c) Profit, if actual sales
a. Drop by 10%
b. Increase by 5% of budgeted sales

Q.6 From the following information supplied for Fino Polex Pvt. Ltd., prepare a statement
showing the cost of production and goods sold for the period from 1.1.2009 to 31.1.2009
Opening Stock 40,00,000
Raw materials purchased 5,00,00,000
Wages paid 2,50,00,000
Factory overheads 80,00,000
WIP 1.1.2009 10,00,000
WIP 31.1.2009 20,00,000
Closing stock of raw material on 31.1.2009 30,00,000
Opening stock of finished goods on 1.1.2009 80,00,000
Closing stock of finished goods on 31.1.2009 70,00,000
Selling and distribution overheads 10,00,000
Administrative overheads 25,00,000
Sales 10,00,00,000

Q.7 From the following information calculate:
1. Material Cost Variance
2. Material Price Variance
3. Material Usage Variance
4. Material Mix Variance
And give your comments on the results.

STANDARD ACTUAL
Material Qty Price Value Qty Price Value
X 50 2 100 40 5 200
Y 30 3 90 20 3 60
Z 4 20 80 3 30 90
100 270 90 350


1) Q. No 1 is compulsory.
2) Attempt any two questions from section I and section II each.

Q.1 Name various Accounting Concepts and explain money measurement concept and Dual
Aspect concept in detail. (10)

a) Management Accounting and Cost Accounting
SECTION I

Q. 2 What do you mean by Management Accounting? Differentiate it with Financial
Accounting. (15)

Q.3 What do you mean by standard costing? Discuss in detail its advantages and
disadvantages. (15)

b) Capital expenditure and Revenue Expenditure
c) Fixed Cost and Variable Cost
d) Over absorption and under absorption of overhead (15)

Q.5 Write short notes (any three):
a) Error disclosed by trial balance
b) Labour turnover
c) Trade discount and cash discount
d) Different methods of inventory valuation (15)

Year
SECTION II

Q.6 The sales and profit during two years were as follows:
Sales Total cost
2009 150000 130000
2010 170000 145000

You are required to calculate:
a) The P/V Ratio
b) The Break even point
c) The sales required to earn a profit of Rs. 40000
d) The profit made when sales are Rs. 250000
e) The margin of safety for 2009 and 2010 (15)

Q.7 A factory is currently working to 50% capacity and produces 10000 units. Estimate the
profits of the company when it works to 60% and 80% capacity. At 60% working material
cost increased by 2% and selling price falls by 2%. At 80% capacity raw material cost
increased by 2% and selling price falls by 2% at 80% capacity raw material cost increases by
5% and selling price falls by 5%.

At 50% capacity working the product costs Rs. 180 per unit and is sold at Rs. 200 per unit.
The unit cost of Rs. 180 is made up as follows:

Material Rs. 100
Labour Rs. 30
Factory overhead Rs. 30 (40% fixed)
Administrative overhead Rs. 20 (50% fixed)

Q.8 From the following Trial Balance of Mr. Aaryan as at 31
st
March 2010. Prepare Trading
and Profit & Loss Account for the year ended 31
st
March 2010 and a Balance Sheet as on that
date:

Debit balances Amount Credit balances Amount
Stock 45000 Capital 75000
Plant and Machinery 75000 Sales 420750
Purchases 225000 Sundry creditors 15000
Trade expenses 10000 Bad debts provision 200
Carriage inward 2500 Bills payable 2000
Factory rent 1500
Discount 350
Insurance 700
Sundry debtors 60000
Office rent (2 years) 3000
Advertising 15000
Bills receivable 6000
Drawings 6000
Salaries 15000
Wages 20000
Furniture 7500
Coal and gas 1000
Cash in hand 2000
Cash at bank 12500

ADDITIONAL INFORMATION:
a) Closing stock amounted to Rs. 35000
b) Depreciate machinery by 10% and furniture by 5%
c) Write bad debts Rs. 500 and provision for bad debts @ 5%
d) Outstanding factory rent Rs. 300 and wages Rs. 2000
e) Insurance paid up to 30
th
Sept 2010. (15)

Q.9 Calculate Prime cost, factory cost, cost of production, cost of sales and profit from the
following particulars:
Direct materials 100000
Direct wages 30000
Wages of foreman 2500
Electric power 500
Lighting (75% factory and 25% office) 2000
Storekeepers wages 1000
Oil and water (factory) 500
Rent (2/3 factory and 1/3 office) 7500
Repairs and renewals:
Factory plant
Office Premises

3500
500
Transfer to reserves 1000
Discount on shares written off 500
Dividend 2000
Depreciation:
Factory Plant
Office premises

500
1250
Consumable stores 2500
Managers salary 5000
Directors fees 1250
Office stationery 500
Telephone charges 125
Postage and telegrams 250
Salesman salary 1250
Advertising 1250
Warehousing charges 500
Sales 189500
Income tax 10000

Managers salary distributed in the ratio of 2:2:1


1) Q.No.1 is compulsory
2) Attempt any two questions from each section.
3) Figures to the right indicate marks.

Q.1 Explain the following terms:
a) Drawings
b) Cost concept
c) Conservatism
d) Money measurement
e) Time keeping and time booking (5X 2 =10)

g) Classification of Accounts
SECTION I

Q.2 What do you mean by Management Accounting? State its objectives and limitations.
Also distinguish between Management Accounting and Financial Accounting. (15)

Q.3 Explain step by step procedure of identifying the material in respect to procurement,
storing and issuing. (15)

Q.4 Discuss the classification of overheads with appropriate examples. Explain the under
absorption and over absorption (15)

Q.5 Write short notes on:
h) Labour Turnover
i) Advantages and disadvantages of Standard costing (3 X 5 =15)

Particulars
SECTION II

Q.6 Prepare Trading and Profit & Loss Account and Balance Sheet from the following
information of M/s. Ganesh & Co. (15)
Trial Balance as on 31-3-2011
Debit Rs. Credit Rs.
Sales 300000
Rent, rates and taxes 20000
Sales return 30000
Freight 4000
Accounts receivable 70000
Opening inventory 120000
Purchases 230000
Discount 5000
Interest 5000
Salaries 70000
Cash in hand 5000
Purchase return 10000
Bank loan 150000
Capital 181500
Accounts payable 40000
Bills payable 26000
Legal charges 500
Cash at bank 20000
Total 707500 707500

Adjustments:
a) Closing stock on 31-3-2011 was valued at Rs. 120000 but its market value was Rs.
130000
b) Interest on bank loan was outstanding of Rs. 7000
c) Depreciate plant and machinery at 10%
d) The owner of M/s. Ganesh & company has withdrawn the goods worth Rs. 20000 for
personal purpose. The accountant has forgotten the said entry while preparing the trial
balance.

Q.7 Following is the data:
Raw materials consumed Rs. 60000
Direct labour charges Rs. 36000
Machine hours worked 3600
Machine hour rate Rs. 5
Administrative overhead 20% on works cost
Selling overheads Re. 1 per unit
Unit produced 10000
Unit sold 9000 at Rs. 20 per unit
Your are required to prepare a cost sheet from the above and also indicate cost and profit per
unit. (15)

Q.8 Two businesses, P Ltd and Q Ltd, sell the same type of product in the same type of
market. Their budgeted profit and loss account for the current year ending March 31, 2001,
are as under:
P LTD Q LTD
Sales 150000 150000
Less: Variable Cost 120000 100000
Fixed Cost 135000 15000 135000 35000
Net budgeted Profit 15000 15000
a) Calculate the break-even point of each business
b) State which business is likely to earn greater profits in conditions of
i. Heavy demand for the product
ii. Low demand for the product

Q.9 A company manufactures two products A and B. Forecast of the units to be sold in the
first seven months of the year is given below: (15)
Month Product A Product B
J anuary 1000 2800
February 1200 2800
March 1600 2400
April 2000 2000
May 2400 1600
J une 2400 1600
J uly 2000 1800
It is anticipated that
a) There will be no work-in-process at the end of any month, and
b) Finished goods equal to half the sale for the next month will be in stock at the end of
each month (including the previous December)
Budgeted production and production cost for the whole year are as follows:
Product A Product B
Product (units) 22000 24000
Per unit direct material Rs. 12.50 Rs. 19
Per unit direct labour Rs. 4.50 Rs. 7
Total factory overhead
(apportioned)
Rs. 66000 Rs. 96000
Prepare for the six months period ending J une,
a. Production budget for each month, and
b. A summarized production cost budget.

Management Accounting

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Management Accounting

Uploaded by

Copyright:

Available Formats

MBA/Sem I/Management Accounting/Aug 2012 1

Dr. Vikhe Patil Foundations

You might also like