GUJARAT TECHNOLOGICAL UNIVERSITY
MBA SEMESTER 9 EXAMINATION SUMMER-2019
Subject Code: 4190513 Date:04/05/2019
Subject Name: Cost and Management Accounting
Time:02:30 PM To 05:30 PM Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q-1

The standard material cost for 100 kg of chemical D is made up of: Chemical A—30 kg Rs.4 per kg
Chemical B—40 kg Rs.5 per kg
Chemical C—80 kg Rs.6 per kg
In a batch, 100 kg of chemical D were produced from a mix of
Chemical A — 28 kg cost of Rs.4.2
Chemical B — 44 kg cost of Rs.4.8
Chemical C — 88 kg cost of Rs.6.5
Calculate all material variances.
07

How do you differentiate cost accounting from management accounting?
07
Q-2

The following particulars relate to ADM Manufacturing Company which has three production departments B and C and two service departments X and Y.
Department
A
B
C
X
Y
Total overheads as per primary distribution Rs.
6,300
7,400
2,800
4,500
2,000
The Company decided to apportion the service department costs on the following percentages:
A
B
C
X
Y
X
40%
30%
20%
—
10%
Y
30%
30%
20%
20%
—
Find the total overheads of production departments using simultaneous equations method.
07

What do you understand by job order Costing? Under what conditions, it is suitable? How batch costing is different from it?
07
OR

Explain features of process costing. Name the industries where process costing can be applied. Give three different between process Job costing.
07
Q-3

Sunny Spot Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Canadian Air. Sunny Spot's fixed costs are Rs.23,500 per month. Canadian Air charges passengers Rs.1,500 per round-trip ticket.
Calculate the number of tickets Sunny Spot must sell each month to break even and make a target Required operating income of Rs.17,000 per month in each of the following independent cases. Sunny Spot's variable costs are Rs.43 per ticket. Canadian Air pays Sunny Spot commission on ticket price.
07

Differentiate between fixed and flexible budget
07
OR
Q-3

A firm has a capacity to manufacture 15,000 units of a product per annum. Presently, it produces 10,000 units which are sold in the domestic market at Rs25 per unit. The production cost per unit is as under:
Material
8
Labour
6
Factory overheads
Fixed
2
Variable
1.5
Office overheads (fixed)
1
Selling overheads
Fixed
0.5
Variable
1
Total
20
A foreign customer is interested in the product and he is willing to buy 5,000 units (one order) but at a price of Rs17.50 per unit. Should the order be accepted by the firm?
Will your advice be different if the price offered is Rs15 per unit?
07

What is CVP analysis? What is its assumption
07
Q-4

G.S. Ltd. manufactures a single product for which market demand exists for additional quantity. Present sales of Rs60,000 per month utilises only 60% capacity of the plant. Marketing manager assures that with the reduction of 10% in the price he would be in a position to increase the sale by about 25% to 30%.
The following data are available:
Selling price Rs10 per unit
Variable cost Rs3 per unit
Semi-variable cost Rs6,000 fixed 50 paise per unit
Fixed cost Rs20,000 at present level estimated to be Rs24,000 at 80% output.
You are required to prepare the following statements: (i)The operating
07
profits at 70% and 80% levels at current selling price; and (ii)The operating profits at proposed selling price at the above levels.

Explain Abnormal loss, Abnormal Gain and Normal loss with example.
07
OR
Q-4

A company manufactures two products, A and using common facilities. The following cost data for a month are presented to you:
Units produced
1,000
2,000
Direct labour hours per unit
2
3
Machine hours per unit
6
1.5
Set-up of machines
15
50
Orders
18
70
Machines activity expenses Rs.3,00,000
Set-up related expenses Rs.30,000
Expenses relating to orders Rs.35,000
Calculate the overheads per unit absorbed using activity-based costing approach.
07

What is operating costing? To what industries is this method of costing applicable?
07
Q-5

Define Marginal Costing. State its characteristics
07

Elaborate in detail the necessary steps needed to establish a standard costing system.
07
OR
Q-5

R K Ltd has to quote a price for Job No. 450. The cost estimator has produced the following data:
Direct materials: 34 units Rs.2 per unit
Direct labour: Deptt. A 12 hours Rs.2 per hour
Deptt. B 20 hours Rs.1.80 per hour
The following additional information is extracted from the company's budgets:
Deptt. A variable overheads Rs.18,000
Hours to be worked 18,000
Deptt. B variable overheads Rs.18,000
Hours to be worked 10,000
Fixed overheads for the company Rs.1,00,000
Total hours to be worked 50,000
Profit is taken at 20% of the selling price. You are required to prepare a Job Cost Sheet.
07

What do you mean by pricing decision? Explain in detail the objectives of pricing decision.
07