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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI 600 034 B.B.A.DEGREE EXAMINATION BUSINESS ADMINISTRATION SIXTHSEMESTER APRIL 2017
BU 6606- ACCOUNTING FOR DECISION MAKING
Date: 24-04-2017 Dept. No. Max. 100 Marks Time: 09:00-12:00
PART A ANSWER ALL THE QUESTIONS: (10 X 2 20 MARKS)
1. List out any four duties of management accountant.
2. List out any four limitations of financial accounting.
3. What is Capital Gearing Ratio?
4. Define Zero Base Budgeting.
5. What are Current Assets and Current Liabilities?
6. What are solvency ratios?
7. Write a short on liquid ratio.
8. Define Absorption costing.
9. What do you mean by variance analysis?
10. Define controllable and uncontrollable variance.
PART Answer any FOUR questions: (4x 10= 40 marks)
11. Explain the steps involved in installation of management accounting system.
12. A company's reported current year profit is Rs. 70,000 after incorporating the following:
Loss on sale of equipment Premium on redemption of debentures Discount of issue of debentures Depreciation on machinery Depletion of natural resources Amortization of goodwill Interim dividend
Rs. 10,000 1,500 2,000 20,000 10,000 30,000 25,000
Gain from sale of fixed assets Excess provision for taxation Income from investments Transfer to general reserve Preliminary expenses Profit on revaluation of fixed assets
Rs. 40,000 22,000 4,000 5,000 1,000 2,500
Derive the net flow of funds from the operations.
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13. Prepare a cash budget for March, April and May 2015 from the following information
Month Sales Purchases Expenses Rs. Rs. Rs. February 2015 10,00,000 8,00,000 1,10,000 March 2015 12,00,000 12,00,000 1,30,000 April 2015 14,00,000 8,00,000 1,50,000 May 2015 16,00,000 10,00,000 1,70,000
a. All sales are for cash.
b. The period of credit allowed by the suppliers is one month.
c. Lag in payment of expenses is one month.
d. Opening balance of cash on 1st March is Rs. 90,000.
e. In May, an asset for Rs. 4,00,000 is to be purchased.
14. Examine the advantages of ratio analysis.
15. The standard time and rate for unit component are given below:
Standard hours Standard rate Actual production Actual hours Actual rate per hour
20 Rs. 5 per hour 1,000 units 20,500 Rs. 4.80
Calculate
Labour cost variance
Labour efficiently variance
Labour rate variance
16. David manufacturing company finds that while it costs Rs.6.25 To make each component the same is available in the market at Rs.4.85 Each, with an assurance of continued supply.
The break down of cost is:
Rs.
Materials 2.75 Each
Labour 1.75 Each
Other Variables 0.50 Each
Depreciation and Other Fixed Costs 1.25 Each
Total 6.25
Should you make or buy?
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17. From the following, calculate Operating profit ratio, Operating ratio, Gross profit ratio and Net profit ratio.
Rs. Sales 1,00,000 Dividend received 400 Gross profit 30,000 Net profit 26,600 Administration expenses 1,000 Selling expense 2,000 Loss on sale of investments 800 PART Answer any TWO questions: (2x 20= 40 marks)
18. The following budgeted production and costs are available for 50% and 75% capacity levels of a factory:
Capacity Budgeted production (units)
50% 2,000
75% 3,000
Direct material Direct wages Insurance Depreciation Indirect materials Fuel Maintenance
Rs. 10,000 8,000 4,000 2,000 4,000 6,000 2,000
Rs. 15,000 12,000 4,000 2,000 5,000 8,000 2,200
36,000
48,200
You are required to:
Indicate which of the items are fixed, variable and semi-variable.
Prepare a budget for 90% capacity.
Show the total cost and cost per unit at 75% and 90% capacity levels.
19. From the following particulars calculate
i. Material price variance
ii. Material usage variance and
iii. Material cost variance
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Materials
Standard
Actual
Units
Price
Units
Price
A
1,010
1
1,080
1.2
B
410
1.5
380
1.8
C
350
2
380
1.9
20. Using the information and the form given below compute the Balance Sheet items for a firm having sales of Rs. 36 lakhs.
Sales/ Total assets Sales/ Fixed assets Sales/ Current assets Sales /Inventories Sales/ Debtors Current ratio Total assets/Net worth Debt/equity
3 5 7.5 20 15 2 2.5 1
Balance Sheet
Liabilities
Rs.
Assets
Rs.
Net worth Long-term debt Current liabilities
Fixed assets Inventories Debtors Liquid assets (others)
21. Sales price Rs. 20 per unit
Variable production cost Rs. 11 per unit Variable selling cost Rs. 3 per unit Fixed factory overheads Rs. 5,40,000 per year Fixed selling costs Rs. 2,52,000 per year Calculate:
a. Break Even Point in value and volume
b. Sales required to earn a profit of Rs. 60,000
c. Sales required to earn a profit of 10% of sales