Seat No:______________ Enrollment No:______________

PARUL UNIVERSITY
FACULTY OF MANAGEMENT
MBA Winter Examination-2021
Semester: II Date: 04/10/2021
Subject Code: 06200151 Time: (2hr: 30min)
Subject Name: Cost & Management Accounting Total Marks: 60
Instructions
1. All questions are compulsory.
2. Figures to the right indicate full marks.
3. Make suitable assumptions wherever necessary.
4. Start new question on new page.

Q.1 Do as Directed.
A).Multiple choice type questions/Fill in the blanks. (Each of 1 mark) (05)
1. ...........costing is used in transport undertaking.
a) Operating c) Job
b) Process d) Batch
2. Sunk costs are:
a) relevant for decision making c) cost to be incurred in future
b) Not relevant for decision making d) future costs
3. Abnormal cost is the cost__________________.
a) Cost normally incurred at a given level c) Cost which is charged to customer
of
b)output
Cost not normally incurred at a given d) Cost which is included in the cost of the
level of output product
4. A company makes a single product and incurs fixed costs of Rs. 30,000 per annum. Variable
cost per unit is Rs. 5 and each unit sells for Rs. 15. Annual sales demand is 7,000 units. The
breakeven point is:
a) 2,000 units c) 4,000 units
b) 3,000 units d) 6,000 units
5. In ‘make or buy’ decision, it is profitable to buy from outside only when the supplier’s price is
below the firm’s own ______________.
a) Fixed Cost c) Total Cost
b) Variable Cost d) Prime Cost
B).Define the following. (Each of 1 mark) (05)
1. Marginal Cost
2. Period Cost
3. Zero Base Budget
4. Abnormal Gain
5. Out of Pocket Cost
C).Direct questions. (Each of 1 mark) (05)
1. Maximum Level
2. EOQ
3. Store Ledger
4. Sunk Cost
5. Bin Card
Q.2 Answer the following questions.
“The two accounting system plays a significant role, as the users are the internal management of
A).the organization. While cost accounting has a quantitative approach, management accounting (07)
gives emphasis on both quantitative and qualitative data” - Elucidate

Page 1 of 3
 From the books of Account of M/s ZYX enterprise the following financial details have been
extracted:
Particulars Amt
Opening stock of RM 188000
Closing stock of RM 200000
Purchases 832000
Direct Wages 238400
Indirect Wages 16000
Salaries to Staff 40000
Carriage Inward 32000
Carriage Outward 20000
Sales 1579800
Cash Discount 14000
Bad debts 18800
Repairs of P & M 42400
B). (08)
Rent & Rates- Factory 12000
Rent & Rates- Office 6400
Travelling Expenses 12400
Salesman Commission 33600
Depreciation on P&M 28900
Depreciation on Furniture 2400
Director Fees 24000
Electricity Charges- Factory 48000
Fuel for Machine 64000
Sale of Scrap 500
General Charges 24800
Managers Salary 48000

The Manager is devoting his time between the factory and office in the ratio of 20:80.
Prepare a Cost Sheet from the following data.
Q.3 Answer the following questions.
As a Manager there are two waging Payments method options available, Time Rate System and
A). Piece Rate system. Which method will you choose and why? Also discuss the pros and cons of (07)
each method.

The Following Data is related to Process Q.

Opening WIP: 4000 units

Degree of Completion:

Material 100% Rs.24000

Labour 60% Rs. 14400
Overheads 60% Rs.6400

B).  Received during the month of April from Process P: 40,000 units at Rs.171000 (08)
 Expenses Incurred during the month: Material 79000, Labour 138230, Overheads 69120
 Closing WIP -3000 units, ( Material 100%, Labour and Overheads 50% Competed)
 Units Scrapped – 4000 Units, ( Material 100%, labour and Overheads 80% completed)
 Normal Loss is 5% of Current Input
 Spoiled Goods realization – Rs. 1.5 per unit.
 Completed Units are transferred to warehouse.
You are required to prepare, Statement of Equivalent units, Statement of Cost and Process
Account.
Q.4 Attempt any two questions. (Each of 7.5 mark) (15)

Page 2 of 3
 1. A factory has undertaken to supply 400 units of a component per month for the ensuing 4
months. Every month a batch order is opened against which material and labour hours are
booked at actual. Overheads are levied at a rate per labour hour. The selling price contracted for
is Rs 16 per unit. From the following data present the cost and profit per piece of each batch
order and overall position of the order for 1200 units.

Month Batch Output Material Cost Direct Wages Direct Labour

(Units) Rs. Rs. Hours
January 420 1300 240 480
February 400 1280 280 560
March 440 1360 300 560
April 360 1260 280 540
The order details are:
Month Overheads Direct Labour
Rs. Hours
January 12000 4800
February 10560 4400
March 12000 5000
April 10580 4600

2. Radhe Krishna Manufactures can produce 8000 units of product at 100% capacity.
The following information is obtained from the books of account:

Particulars March 2020 April 2020

Production (in Units) 5600 7200
lightning 1000 1120
Power 3400 4000
Indirect Labour 1400 1800
Consumable Stores 2800 3600
Management Salaries 2000 2000
Rent of floor 400 480
Depreciation on Fixed Assets 2800 2800
Additional Information:

1. Rate of production per hour is 20 units.

2. Direct Material cost per unit is Rs.2 and direct wages per hour is Rs.8.
You are required to compute flexible budget at 60%, 80% and 100% Capacity.

3. What is job and Batch Costing? How do these two methods differentiate from each other? List
down the industries which use these both methods and why?

4. What is Zero Base Budgeting? Explain the use of this method in the modern business world.

Page 3 of 3