M.Com. (Semester III) (CBCS) Examination Nov/Dec-2018
ADVANCED COSTING (Paper III)
Time: 2½ Hours Max. Marks: 70
Instructions: All questions are compulsory.
Figures to the right indicate full marks.
Use of Calculator is allowed.
Q.1 Choose the alternatives given below. 14
Traditional approach of financial management dealt with:
Corporate enterprise Episodic events
Working Capital Management Only and above
Conventionally a liquid ratio of considered satisfactory.
2:1 1:1
1:2 3:1
Cost of goods sold Gross Profit
Sales Cost of sales
Purchases Net Profit
Financial Management deals with:
Procurement of funds
Effective use of funds
Procurement of funds and effective use of funds
Anticipated value of money
Debt equity ratio is:
Liquidity ration Activity ratio
Profitability ratio Solvency ratio
Re-order level (Normal usage × Average delivery time)
Re-order Minimum
Maximum Danger
a device to help a firm to plan and control the use of cash.
Capital Budget Cash Budget
Flexible Budget Cash Capital Budget
of a firm provides the framework to determine, whether or not
to extend credit to a customer and how much credit to extend.
Cash Management
Credit Capital
The major categories of costs associated with extension of credit and
accounts receivable are:
Collection Cost Capital Cost
Default Cost All of the above
10) a ratio of the value of material consumed during a period to the
average value of inventory during the period.
Quick Acid Ratio Inventory Turnover Ratio
Debt Equity Ratio None of these
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11) _____management is concerned with the acquisition, financing and
management of assets with some overall goal in mind.
Financial Economical
Traditional Modern
12) Financial decisions involve:
Investment financial and dividend decision
Sales, profit and investment decision
Financing, cash and credit decision
Production cost, Marketing cost and Financial cost decision
13) divided material according to their importance namely
value and quantity.
ABC VED
NPV IRR
14) Ratio analysis is widely used as tool of
Budget Analysis Cost Analysis
Financial Analysis Break Even Analysis
Q.2 Write short answer: 14
Role of Finance Manager
Scope of Financial Management
Q.3 From the following information calculate Inventory Turnover Ratio:
Particulars
Material
Rs.
Material
Rs.
07
Opening Stock 1,000 1,200
Purchases during the year 5,200 4,600
Closing Stock 600 1,600
If the price of material is Rs.15 per unit and the annual consumption is
4000 units, the interest and store-keeping charges are 20 percent of the
value and the cost of placing of an order and receiving the goods is Rs.60,
how much material should be ordered at one time?
07
Q.4 From the following information, make out a statement of proprietors funds
which as many details as possible:
14
Current Ratio 2.5 Working Capital Rs. 60,000
Liquid Ratio 1.5 Reserve Surplus Rs. 40,000
Proprietary Ratio 0.75
(Fixed Asset: Proprietary Fund)
Bank o/d Rs. 10,000
No long term loan or fictitious
Assets
OR
Q.4 From the following information in respect of material Calculate optimum
ordering quantity under
Total cost method and Discount foregone method
Ordering quantities in Kg
Price per kg.
Rs.
Foregone discount
per kg Rs.
Less than 250 6.00 0.40
250 and less than 800 5.90 0.30
800 and less than 2000 5.80 0.20
2000 and less than 4000 5.70 0.10
4000 and above 5.60
The annual demand for the material is 4000 kg. Carrying cost are 20% of the
material cost per annum. The ordering cost is Rs.10 per order.
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Q.5 Sachin Ltd. wishes to prepare cash budget from January. Prepare a cash
budget for the first six months from the following estimated revenue and
expenses:
14
Month Total Sales Materials Wages
Overheads
Production
Selling
Distribution
January 20,000 20,000 4,000 3,200 800
February 22,000 14,000 4,000 3,300 900
March 24,000 14,000 4,600 3,300 800
April 26,000 12,000 4,600 3,400 900
May 28,000 12,000 4,800 3,500 900
June 30,000 16,000 4,800 3,600 1000
Cash balance on 1st January was Rs.10,000. A new machine is to be
installed at Rs.30,000 on credit to be repaid by two equal installments in
March April.
Sales commission on total sales is to be paid within the month
following actual sales.
Rs.10,000 being the amount of 2nd call may be received in March. Share
premium amounting to Rs.2,000 is also obtainable with 2nd call.
Period of credit allowed by suppliers 2 months
Period of credit allowed by customers 1 months
Delay in payment of overheads 1 months
Delay in payment of wages ½ month
Assume cash sales to be 50% of total sales.
OR
Q.5 Two components, A B are used as follows:
Normal usage 50 units each per week
Minimum usage 25 units each per week
Maximum usage 75 units each per week
Re-order quantity A 300 units B 500 units
Re-order period A 4 to 6 weeks B 2 to 4 weeks
Calculate for each component:
Re-order level
Minimum level
Maximum level
Average stock level