M.Com. DEGREE EXAMINATION, APRIL 2017
Second Semester
Commerce
ADVANCED MANAGEMENT ACCOUNTING
(2016 onwards)
Time 3 Hours Maximum 75 Marks
Part A x 3 15)
Answer all questions.
All questions carry equal marks.
1. Enumerate the limitations of management accounting.
2. What are the uses of ratio analysis?
3. State the objectives of preparing cash flow statement.
4. Write a short note on zero based budgeting.
5. Write a short note on Cost-volume profit analysis.
Part B 10 50)
Answer all questions choosing either or
6. Explain the role of management accountant.
Or
Summarise the differences between management
accounting and cost accounting.
Sub. Code
611201
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7. Explain the types of ratio analysis and its
usefulness.
Or
Calculate current Ratio and Quick Ratio from the
following information:
Total Assets Rs. 3,50,000
Fixed Assets Rs. 1,75,000
Investment Rs. 70,000
Fictitious Assets Rs.. 5,000
Share holders fund: Rs. 2,00,000
Long term Debts Rs. 1,00,000
Inventory Rs. 45,000
8. What are the internal and external sources of cash
to a firm?
Or
Following are the balance sheets of a Vijay son:
Liabilities 1-1-05 31-12-05 Assets 1-1-05 31-12-05
Creditors 36,000 41,000 Cash 4,000 3,600
Loan from Partner 20,000 Debtor 35,000 38,400
Loan from Bank 30,000 25,000 Stock 25,000 22,000
Capital 1,48,000 1,49,000 Land 20,000 30,000
Building 50,000 55,000
Machinery 80,000 86,000
2,14,000 2,35,000 2,14,000 2,35,000
During the year Rs. 26,000 paid as dividend. The
provision made for depreciation against machinery
as on 1.1.05 was Rs. 27,000 and on 31.12.05
Rs. 36,000.
Prepare a cash flow statement.
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9. At a capacity level of 2500 units for article the
cost per unit is Rs. 7.50. The details are given under
A below.
A B
Material cost Rs. 70,000 100% varying
Labour cost Rs. 30,000 100% varying
Power Rs. 4,000 80% varying
Repairs Rs. 6,000 75% varying
Stores Rs. 2,000 100% varying
Inspection Rs. 1,200 20% varying
Depreciation Rs. 20,000 100% fixed
Administration overhead Rs. 10,800 20% varying
Selling overhead Rs. 6,000 50% varying
Rs. 15,00,000
Calculate the cost per unit of the product, showing
at production levels of 2000 units and 3000 units,
the individual expenses.
Or
Compare the budget from budgetary control.
10. Elaborate the importance of marginal costing.
Or
The income statement for Davann Co. presented
below shows the operating results for the fiscal year
just ended. Davann had sales of 1,800 tons of
product during that year. The manufacturing
capacity of Davann's facilities is 3,000 tons of
product.
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Revenues Rs. 9,00,000
Variable costs:
Manufacturing Rs. 3,15,000
Non manufacturing Rs. 180,000
Rs. 495,000
Contribution margin Rs. 405,000
Fixed costs:
Manufacturing Rs. 90,000
Non manufacturing Rs. 157,500
Rs. 247,500
Operating income Rs. 157,500
Income taxes Rs. 63,000
Net income Rs. 94,500
If the sales volume is estimated to be 2,100
tons for next year, and if the selling price and
cost behaviour patterns remain the same next
year, how much net income does Davann
expect to earn next year?
Assume Davann estimates the selling price
per ton will decline 10% next year, variable
cost will increase by Rs.40 per ton, and total
fixed costs will not change. Compute how
many tons must be sold next year to earn net
income of Rs. 94,500.
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Part C 10 10)
Compulsory
Case study
11. Read the following case and answer the questions given
at the end.
Beta Company sells blouses in Washington, USA. Blouses
are imported from Pakistan and are sold to customers in
Washington at a profit. Salespersons are paid basic
salary plus a decent commission on sales made by them.
Sales and expense data is given below:
Selling price per blouse Rs. 80.00
Variable expenses per blouse:
Invoice cost Rs. 36.00
Sales commission Rs. 14.00
Total Rs. 50.00
Annual fixed expenses:
Rent Rs. 1,60,000
Marketing Rs. 3,00,000
Salaries Rs. 1,40,000
Total Rs. 6,00,000
Required:
Compute the number of units to be sold to breakeven.
Prepare a CVP graph (break-even chart) and show
the break-even point on the graph.
If the manage is paid a commission of Rs. 6 blouse
(in addition to the salesperson's commission), what
will be the effect on company's break-even point?
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As an alternative to above, company is thinking
to pay Rs. 6 commission to manager on each blouse
sold in excess of break-even point. What will be the
effect of these changes on the net operating income
or loss of the Beta Company if 23,500 blouses are
sold in a year?
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