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MCO 05: Accounting for Management Decision
Q1. What do you understand by 'Financial Statements'?
Discuss the utility and significance of financial statements for the various
parties interested in a business concern.
Q2. What is the
importance of comparative statements to management? How are these statements
prepared? Elucidate.
Q3. Following are the summary of cash transactions extracted
from the books of AB Ltd.:
|
Rs. |
Balance on 1-7-2016
receipts from Customers
Issue of shares
sales of fixed assets |
35,000
27,83,000
3,00,00
1,28,000 |
|
32,46,000 |
|
Rs. |
Payments to suppliers
Payments for fixed assets
Payments for overheads
Salaries
Income Tax
dividends Paid
Repayments of Bank Loan |
20,47,000
2,30,000
1,15,000
69,000
2,43,000
80,000
2,50,000 |
|
30,34,000 |
Prepare a cash flow statement of the company for the year
ended 30th June, 2017 in accordance with AS-3 (revised) by direct method.
Q4. The following figures are available from sales and costs
forecasts of M/s. XY Ltd. for the year ending 31st December, 2017 at 50% (5000 units)
capacity utilization:
(i) Fixed expenses remain constant for all levels of
production and sales.
(ii) Selling price between 50% and 75% capacity is Rs. 25
per unit.
(iii) Semi-variable expenses will remain unchanged at 50% to
65% capacity but will increase by 10% between 65% to 80% capacity and by 30%
between 80% to 100% capacity.
(iv) At 90% level material cost increases by 5% and selling
price is reduced by 5%.
(v) At 100% both material and labour costs increase by 10%
and selling price is reduced by 8%.
(vi) Semi-variable expenses are Rs. 50,000.
(vii) Fixed expenses are Rs. 58,000.
(viii) Variable expenses are
| Materials |
|
| Labour |
|
| Direct Expenses |
|
Prepare a profit forecast statement through flexible budget
at 60%. 75%, 90% and 100% capacity.
Q5. Explain the term 'Budgetary Control' and mention some of
its advantages. On what does the success of such control depend?
Q6. What is meant by Standard Costs? How are the standards
fixed? Illustrate your answer.
Q7. Define 'Responsibility Accounting'. Discuss its salient
features.
Q8. (a) X Products Ltd. produces one standard type of
article. Their results during the last five months of the year were as follows:
| Month |
Output |
| August |
100 units |
| September |
200 units |
| October |
300 units |
| November |
400 units |
| December |
500 units |
Prime Cost Rs. 5 per unit
Variable Overheads Rs. 1 per unit
Fixed Overheads Rs. 36,000 per annum
Prepare a Cost Statement on the basis of Marginal Costing.
(b) From the following data of AB Ltd., you are required to
prepare Profit & Loss Account in traditional form as well as in
contribution from:
|
Rs. |
| Sales |
840,000 |
| Depreciation. Salaries and other fixed costs |
180,000 |
| Variable Production costs |
220,000 |
Operating expenses:-
Administration
selling expenses |
160,000
200,000 |
50% of administration expenses and 60% of selling expenses
are fixed.
Q9. What is Break-even Analysis? Discuss the assumptions,
uses and limitations of this technique.
MCO 05: Accounting for Management Decision
Q1. Explain different types of Accounting concepts which guide the accountant at the recording
stage.
Q2. Explain the nature of cost. Classify the costs according to areas of responsibility.
Q3. Describe the principal ratios which you consider significant while interpreting the published
accounts of company and explain the inferences which may be drawn from their use.
Q4. Explain the concept of Budgetary Control. How does it operate as a tool of management control?
Q5.(a) What is Performance Budgeting ? Explain its objectives by giving suitable examples.
(b) M.N. Ltd. wishes to prepare a production budget in respect of three products A, B and C, the sales forecast for which is 83,200 units, 72,840 units and 88,400 units respectively.
The estimated requirement of inventory both at the beginning and at the end of the budget period are shown in the following schedule :
| Inventory |
|
Products |
|
A |
B |
C |
| 1.1.2017(units) |
16,000 |
12,000 |
20,000 |
| 31.12.2017(units) |
20,800 |
11,160 |
27,600 |
You are required to draw up the Production Budget
Q6. from the following Balance Sheet of P.Q. Ltd. you are required to prepare a Schedule of Change in working Capital and a Statement of Flow of funds:
|
31.12.2016 |
31.12.2017 |
| Building |
50,000 |
50,000 |
| Building and Machinery |
24,000 |
34000 |
| Stock |
9,000 |
7000 |
| Debtors |
16,500 |
19500 |
| Cash at Bank |
4,000 |
9000 |
|
1,03,500 |
119500 |
| Capital |
80000 |
85000 |
| Profits & Loss Account |
14500 |
24500 |
| Creditors |
9000 |
5000 |
| Mortgage |
-- |
5000 |
Q7. Standard cost of product is:
Time 6 hours per unit
Rate Rs. 4 per hour
Actual cost:
production 1500 units
Hours taken 7600
idle time(hours) 400
total hours 8000
The Labour cost amounted to Rs. 40,000. calculate Labour Variance.
Q8. ‘‘The effect of increase in sales price is to increase the P/V ratio to bring down the break-even point and to widen the margin of safety.’’ Discuss.
Q9. What do you understand by activity-based costing ? How does activity-based costing differ from traditional costing approach?
MCO 05: Accounting for Management Decision
Q1. (a) Discuss the role of Management Accountant in a corporate entity.
(b) Classify costs on the basis of controllability.
Q2. What are the financial statements? How far are they useful for decision-making purposes?
Discuss the limitations of financial statements.
Q3. During the year 2017, Ram and Co. made sales of 4,00,000. Its gross profit ratio is 25% and
net profit ratio is 10%. The stock turnover ratio was 10 times. Calculate (a) Gross Profit, (b) Net
Profit, (c) Cost of Goods Sold and (d) Operating Expenses.
Q4. What is a cash flow statement ? Explain the techniques of preparing a cash flow statement. How does cash flow analysis help the management in decision-making?
Q5. (a) Define zero based budgeting. Explain its advantages and disadvantages.
(b) "Performance budgeting requires preparation of periodic performance reports." Explain.
Q6. Define Responsibility Accounting. What are the uses of responsibility accounting ? Also discuss
the essentials of success of responsibility
Q7. The following figures relate to the quantity material required for the production of a
product :
|
Standard |
Actual |
|
Quantity(k.g) |
Price |
Amount |
Quantity(k.g) |
Price |
Amount |
| A |
120 |
20 |
2400 |
160 |
24 |
3840 |
| B |
180 |
40 |
7200 |
120 |
50 |
6000 |
|
300 |
|
9600 |
280 |
|
9840 |
Compute:
(a) Material Cost Variance
(b) Material Price Variance
(c) Material Usage Variance
(d) Material Mix Variance
Q8. (a) What are the limitations of conventional financial accounting ?
(b) Write short notes on any three of the following :
(i) Environmental Accounting
(ii) Activity Based Costing
(iii) Human Resources Accounting
(iv) Profit Volume Ratio (PV Ratio)
Q9. Shyam Ltd. furnishes the following data:
| Particulars |
Period I |
Period II |
| Sales (Rs.) |
45,000 |
50,000 |
| Total Cost(Rs.) |
40,000 |
43,000 |
Assuming that there is no change in price and variable costs and fixed expenses are incurred equally in the two periods, calculate the following :
(a)Profit Volume Ratio
(b) Fixed Expenses
(c)Break-Even Point
(d)Sales required to earn profit of 10,000
(e) Profit when sale is 80,000
MCO 05: Accounting for Management Decision
Q1.Discuss the functions and limitations of financial accounting.
Q2. State the nature and objectives of financial statements. How far these statements are helpful to the parties interested to know the financial position of the enterprise ?
Q3. (a) What is a Sales Budget ? Discuss the principal factors that should be considered in developing the sales budget.
(b) Identify the three methods of preparing cash budget and explain any one of these in detail.
Q4. Differentiate between standard costing and budgeting. Explain the advantages of standard costing.
Q5. Discuss various kinds of reports prepared by management accountant for different levels of
management.
Q6. From the following Balance Sheets of a company for the year ending 31st December, 2014 and 2015, prepare schedule of changes in Working Capital and a statement showing sources and application of funds:
| Liabilities |
2014(Rs.) |
2015(Rs.) |
Assets |
2014(Rs.) |
2015(Rs.) |
| Share capital |
300,000 |
400,000 |
machinery |
50,000 |
60,000 |
|
|
|
Furniture |
10,000 |
15,000 |
|
|
|
Stock |
85,000 |
105,000 |
| Sundry Creditors |
100,000 |
|
Debtors |
160,000 |
150,000 |
| P & L a/c |
15,000 |
30,000 |
Cash |
110,000 |
170,000 |
|
415,000 |
500,000 |
|
415,000 |
500,000 |
Q7. The following data are available from the records of a company :
Sales 60,000
Variable cost 30,000
Fixed cost 15,000
You are required to :
(a) Calculate the P/V ratio, Break-Even Point
and Margin of Safety at this level.
(b) Calculate the effect of 10% increase in sale price.
(c) Calculate the effect of 10% decrease in sale price.
Q8. From the following information regarding a standard product, calculate the Labour Cost, Rate
and Efficiency variances:
Labour Rate 50 paise per hour
Hours per unit 10 hours
Units produced 500
Hours worked 6,000
Actual labour cost 2,400
MCO 05: Accounting for Management Decision
Q1. "Management accounting is nothing more than the use of financial information for management
purposes." Explain this statement, and clearly distinguish between 'financial accounting' and
'management accounting'.
Q2. Identify the various bases of classification of costs and explain the various types of costs involved
under each base.
Q3. Explain the meaning and importance of fund flow statements, and state the usual sources and uses of funds.
Q4. What do you understand by 'Zero Based Budgeting' ? State the benefits that accrue from it and also its disadvantages.
Q5. "The effect of a price reduction is always to reduce the P/V ratio, to raise break even point and to shorten the margin of safety". Explain and illustrate with examples.
Q6. Given :
Current Ratio = 2.8
Acid-test Ratio =1.5
Working Capital = 1,62,000
Find out :
(a) Current Assets
(b) Current Liabilities, and
(c) Liquid Assets
Q7. A company is making a loss of Z 40,000 and relevant information is as follows:
Sales 1,20,000 ; Variable costs 60,000 ; Fixed costs 1,00,000.
Loss can be made good either by increasing the sales price or by increasing sales volume. What are Break even sales if :
(a) present volume of sales is maintained and selling price is increased.
(b) if present selling price is maintained and the sales volume is increased.
What would be the volume of sales if a profit of 1,00,000 is required?
Q8. Prepare a Production Budget for each month and a summarised Production Cost Budget for the six
months period ending 31st December 2015 from the following data of product 'X'.
(a) The units to be sold for different months are as follows :
July 2015: 1,100
August 2015: 1,100
September 2015: 1,700
October 2015: 1,900
November 2015: 2,500
December 2015: 2,300
January 2016: 2,000
(b) There will be no work in progress at the end of any month.
(c) Finished units equal to half the sales for the next month will be in stock at the end of each month (including June 2015).
(d) Budgeted production and production cost for the year ending 31st December 2015 are as follows :
Production (units) 22,000
Direct materials (per unit) Rs. 10
Direct wages (per unit) Rs. 4
Total Factory overheads apportioned to products Rs. 88,000.
